Many assume that Social Security benefits are tax-free after a certain age or that only wages affect whether your Social Security benefits are taxed by the IRS, but the reality is more nuanced.

This quiz will test your knowledge of the often-misunderstood topic of Social Security taxation, including how provisional income works, how other income types affect your tax burden, and common misconceptions.

Read More About Social Security Taxes

• Social Security and Your Taxes: Five Things to Know
• How to Calculate Taxes on Social Security Benefits
• The New $6,000 Senior Bonus Deduction: What It Means for You

This 10-question True/False quiz covers the essential facts about the Initial Enrollment Period (IEP), late penalties, and the crucial distinction between Medicare's different parts. Test your knowledge now to ensure your transition to Medicare is smooth, timely and penalty-free.

Don't worry if you miss an answer; you can follow the links below the quiz to brush up on your knowledge.

More on Medicare, from the Kiplinger retirement team:

• 12 FAQs About Medicare: Your Medicare Questions Answered
• 11 Costly Medicare Mistakes You Should Avoid Making
• Can You Sign Up for Medicare While Still on an Employer Health Plan?
• Medicare Open Enrollment Occurs Annually from October to December — Here's What You Need to Know
• Medicare Advantage Open Enrollment Runs from January 1 to March 31

Social Security's annual cost-of-living adjustment (COLA) will be 2.8% in 2026, just a smidge higher than 2025's 2.5% increase, which was the lowest boost in benefits since 2021. The average monthly payment will rise by about $56, to an estimated $2,071, while the maximum that a recipient can take home at full retirement age is expected to hit $4,152 a month, up from $4,018 in 2025.

The modest COLA is a positive sign that inflation, despite creeping up lately due partly to tariffs, still remains far below recent pandemic-era highs. That good news may feel underwhelming, however, when you're at the checkout counter or paying your bills. Consumer prices have risen nearly 25% overall since 2020, and household staples such as eggs and beef have more than doubled in that period.

Adding to the sting for 2026: The 9.7% increase in Medicare premiums, which will raise monthly payments for coverage by $17.90 for the typical beneficiary, wiping out nearly one-third of the increase in Social Security benefits. And if you're among the 5 million high-income Medicare recipients who pay a premium surcharge known as the income-related monthly adjustment amount (IRMAA), your Social Security payments could actually go down next year after factoring in the Medicare price hike.

Retirees are feeling the pain. More than three-fourths of the respondents in a recent AARP poll said that a 3% COLA would not be enough to keep up with rising prices, while 72% said they'd need an adjustment of 5% or more to afford their living expenses.

"The loss of buying power for older Americans has really accumulated over the years," says Shannon Benton, executive director of The Senior Citizens League. Part of the problem, Benton notes, is that the Social Security Administration calculates the COLA using an inflation measure that reflects the expenses of urban wage earners rather than those of retirees.

For example, she says, health care doesn't get enough weight, while technology costs, which may have less relevance for retirees, have an outsize impact. "Every year that the COLA doesn't keep up with the actual inflation rate that older people experience, it increases the loss of buying power more and more," Benton says.

If the 2026 COLA won't keep up with your household's rising costs, these steps may help.

Get creative about trimming costs

You may be able to lower your bills by asking and shopping around for better rates on everything from your gym membership to your insurance policies. More than 90% of Americans who switch auto insurance carriers save money, the majority by $100 or more a year, according to a recent LendingTree survey. The online loan marketplace has also found that 95% of credit card holders who ask to have an annual fee waived or reduced are successful.

Another prime place to look for savings: "Subscriptions and service fees only go up," says Pam Krueger, founder and CEO of Wealthramp, a referral service for fiduciary financial advisers. "Think monthly streaming, extra cell lines and lots of apps you probably don't use. Review them, then cancel the subscriptions you really don't need."

If you have credit card debt — as do 42% of Americans ages 65 to 74 and 35% of those 75 and up — consider moving it to a balance-transfer card with a 0% introductory rate to give you a break on interest charges while you pay it down (the introductory rate lasts for 15 months, on average). "Credit card debt is something you should address head on," says Pedro Silva, principal partner at Apex Investment Group.

Generate extra income

After diligently building your retirement savings for decades, it can be psychologically difficult to switch to spending mode, but a modest bump in withdrawals could provide you with just enough extra cash to cover higher expenses.

More than one-fourth of retirees take less than 3% from portfolios every year, according to IRALogix, even though studies suggest a 4% to 4.7% withdrawal rate, adjusted annually for inflation, will not put most retirees at risk of outliving their assets.

Another option is to take on a part-time job or side hustle, something that one in five baby boomers now do, earning them an average of more than $900 per month, according to Bankrate. Sites such as SideHusl.com and RetirementJobs.com can help you find an opportunity that makes sense for your situation.

Read more: The Best-Paying Side Gigs For Retirees

Factor inflation into your investment plan

With tariffs projected to keep upward pressure on prices for the foreseeable future, retirees probably can't expect the challenge of what feels like an inadequate annual Social Security COLA to be resolved anytime soon, experts say. That makes it all the more important to include a longer-term inflation hedge in your financial strategy.

Your best bet, says Mike Lynch, managing director of applied insights at Hartford Funds, is to maintain a healthy dose of equities in your investment mix, along with fixed-income investments such as bonds and certificates of deposit. Stocks, historically, have delivered the best inflation-beating returns over long periods, he says, compared with other assets.

Other investment options that can help you hedge against cost increases include inflation-protected annuities, which provide an income stream that's guaranteed to keep pace with rising prices, as well as Treasury inflation-protected securities, or TIPS, which adjust their rates twice a year to reflect changes in the consumer price index.

Having a mix of assets is key. "We need to make sure we stay well diversified," Lynch says. "It's proven that, over time, a diversified portfolio will really help keep up with and, hopefully, outpace inflation."

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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This 10-question True/False quiz covers the essential facts you need to maximize your annual contributions and avoid costly mistakes. Don't worry if you miss an answer; you can follow the links below the quiz to brush up on your knowledge.

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• 6 Changes to IRAs, 401(k)s and HSAs in 2026
• The Average Retirement Savings by Age
• Roth IRAs: What They Are and How They Work
• IRA Conversion to Roth: Rules to Convert an IRA or 401(k) to a Roth IRA
• Roth IRA Contribution Limits for 2026
• SEP IRA Contribution Limits for 2026

This article clarifies the nuances of the earnings test, its implications on benefit amounts and how to navigate it effectively.

Earnings test fundamentals

The retirement earnings test (RET or earnings test) applies to Social Security beneficiaries who:

• Have not yet reached their full retirement age, and
• Receive Social Security retirement, spousal or survivor benefits and
• Continue to work and earn income above specific earnings thresholds

Once beneficiaries have reached their month of full retirement age (FRA), the earnings test no longer applies.

It's important to note that the amounts withheld are not lost. Once an individual reaches FRA, all withheld amounts are calculated and converted to the equivalent number of months withheld.

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

Benefits going forward are then increased as if the beneficiary had started claiming at a later date. This results in permanently higher future payments, which eventually should replace the money that had been previously withheld.

Earnings that count

The earnings test applies only to the income you earn, which includes:

• Wages. Salaries, bonuses and commissions
• Self-employment income. Net earnings from self-employment
• Deferred compensation. Income for services performed in earlier years

Income that is not counted

Only earned income is counted under the earnings test. Other sources of income do not count. SSA has a list from (literally) A through Z that describes those sources of income.

For example, some of the income sources that do not count include:

• Pensions, investment income and payments from certain annuities that are exempt from income tax
• Rental income (unless actively managing property as a business)
• Veterans or military disability benefits
• Gifts or inheritances

Annual earnings test thresholds and deduction rules

There are two retirement earnings test-exempt threshold amounts and deduction rules. The annual limits for these in 2025 (and in 2026) are:

• In the years before you reach your FRA, up through December of the year before hitting this age milestone, $23,400/year (rising to $24,480 in 2026). For every $2 earned above this amount, $1 is withheld from your Social Security checks.
• In the year you reach your FRA, up to but not including the FRA month, $62,160/year (rising to $65,160 in 2026). For every $3 earned above this, $1 is withheld from your Social Security checks until the month you reach your full retirement age.

During the month you reach your full retirement age and after that, there is no longer an earnings limit. Full benefits are paid regardless of how much you earn.

Monthly earnings test thresholds and deduction rules

There is a special earnings limit rule that could be helpful for some. In the first year of receiving benefits, a monthly test applies if you start your benefits midyear. This avoids individuals being penalized if they made more than the annual limit prior to receiving benefits.

Benefits may be paid for months when earnings are below the monthly limit. These monthly limits are:

• In the years before your FRA year. $1,950/month in 2025 (rising to $2,040 per month in 2026). For every $2 earned above this, $1 is withheld from your Social Security checks.
• In your FRA year. $5,180/month in 2025 (rising to $5,430 per month in 2026). For every $3 earned above this, $1 is withheld from your Social Security checks.

If the monthly earnings test applies, benefits are withheld only for months when earnings exceed the monthly limit, regardless of annual income.

The flow chart below demonstrates how the earnings and monthly earnings tests are applied.

The monthly threshold cannot be exceeded by even $1. If it is exceeded, the entire month of benefit isn't paid.

How withholding benefits works

SSA calculates the excess earnings for the year. Benefits are withheld in whole month increments until the required reduction is met. Payments resume once withholding requirements are satisfied.

Annual earnings test example for 2025:

• An individual filed in January 2024 at age 63 and receives a monthly benefit of $1,500. Their annual earnings are $35,000.
• Their excess earnings are $35,000 - $23,400 = $11,600.
• Their withholding will be $11,600 ÷ 2 = $5,800.
• SSA will withhold benefits for the first four months ($1,500 × 4 = $6,000).
• Full benefits resume in May.

Monthly earnings test example for 2025:

• An individual filed in June 2024 at age 64 and received a monthly benefit of $1,800 for June through December.
• The individual earned $2,600/month from January through May and then continued working a reduced schedule as they eased into retirement.
• They earned $2,100/month in June and July, $1,500 in August, September and October and $1,200 in November and December. The MET amount of $1,950/month would have applied to those months.
• This person would receive no monthly benefits for June and July because they exceeded the MET amount those months. However, they would get their full $1,800 Social Security check for the rest of the year, because their monthly earnings for each of those months were below the MET limit.
• The annual earnings limit (with $1 withheld per $2 earned over the threshold) would apply in the following year, based on their age of 65.

Recalculation of benefits after FRA

Once a beneficiary reaches their FRA month, the SSA determines the total amount that was withheld and converts that into the number of months of benefits that is equivalent to.

A recalculation is made by giving credit to the beneficiary for the total months that benefits were withheld. The credit is given as an adjustment to the date that benefits were started and results in a higher monthly benefit for the remainder of the beneficiary's life.

Recalculation example:

Consider the case of an individual who is collecting $2,000 per month and still working. For simplicity, assume that they earn $3,950 per month for two years, 24 months, and then stop working.

Each month the SSA will withhold $1 for every $2 over the lower threshold of $1,950. Since $3,950 minus $1,950 equals $2,000, an amount of $1,000 will be withheld each month.

This is 50% of the individual's monthly Social Security benefit amount. The total withheld then is equivalent to 12 months, or one year of credit to be given.

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After reaching FRA, the individual's benefit will be recalculated as if the individual had delayed filing for 12 months and had started collecting benefits at age 63, increasing the monthly benefit accordingly going forward.

This readjustment happens the month you hit full retirement age, so depending on how long you live, over time, you potentially will regain all the benefits that were withheld due to the earnings test.

Earnings test overpayments

Sometimes the SSA will overpay an individual who is subject to the earnings test and will send an overpayment recovery letter — meaning you got more than you should have, and you have to pay it back.

This overpayment can happen for a variety of reasons, such as a beneficiary starting work again after claiming or receiving a raise at their job that increases their earnings above the threshold.

Overpayment recovery process

The overpayment process begins when a beneficiary receives a notice detailing the overpayment amount. Their options include paying the entire amount as a lump sum repayment or monthly deductions from future benefits.

Beneficiaries can appeal by filing Form SSA-561, Request for Reconsideration. Make sure to file your request within 60 days.

Or you can request a waiver if repayment causes financial hardship (Form SSA-632-BK).

Strategies to minimize the impact of the earnings test

• Time your filing date strategically to align with lower earnings years.
• Track and report earnings accurately to avoid overpayment issues.
• Consider delaying benefits until your full retirement age to avoid the retirement earnings test entirely.

Conclusion

The Social Security earnings test can significantly affect cash flow for beneficiaries who continue to work while claiming benefits early.

By understanding its rules, limits and exceptions, you can better navigate its complexities, optimize benefits, and plan effectively for retirement.

Related Content

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• Want the Maximum Social Security Check in 2026? Here's What You Need to Do Now
• Social Security Asked You For Money Back — Now What?
• I Claimed Social Security Six Months Ago at 62, but My Checks Are Too Small. What Are my Options?
• Social Security Wisdom From a Financial Adviser Receiving Benefits Himself

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Most people think of retirement in two stages: accumulation, when you save and invest, and distribution, when you start spending. But there's a crucial middle phase that rarely gets the attention it deserves — the Critical 15.

These five years before you stop working and the first 10 after often determine how confident and comfortable you'll feel for the rest of your life.

It's the transition period in which paychecks end, withdrawals begin, and every decision carries extra weight.

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

Many retirees enter this phase unprepared, caught off guard by unexpected tax bills, Medicare surcharges or market downturns that hit just as they start drawing income.

How do you turn awareness into action? The first step in navigating the Critical 15 is creating a plan for a steady income so you can have control, flexibility and peace of mind no matter what the markets do.

Income planning during the Critical 15

The first step is learning how to create your own "retirement paycheck". Separate essentials (housing, health care, food) from discretionary expenses (travel, hobbies, gifts).

Your budget should work like a dashboard, giving you a clear view of your spending and helping you make adjustments, not a diet that makes you feel restricted.

Once you understand what you'll need to spend, the next step is deciding where that money should come from and when. The timing and source of your withdrawals can make a major difference in how long your savings last and how much you pay in taxes.

Social Security timing. The right time to claim isn't just about the biggest check, it's about how your benefits interact with taxes and investment withdrawals. In some cases, filing earlier can help preserve investments during a market downturn by reducing the need to sell assets at low prices.

Account sequencing. The order you draw from pretax, Roth or brokerage accounts directly affects how long your savings last. Instead of spending down one type of account first, it can be smart to blend withdrawals to help keep your taxable income consistent over time.

For example, you might pull from Roth accounts in high-income years or during market downturns and use taxable funds when gains can be realized at lower rates. The goal is to smooth your tax bill over the years rather than face costly surprises later.

Spending guardrails. Instead of sticking to a rigid 4% rule, build flexibility into your plan. Set spending thresholds that tell you when to adjust. If markets rise and your portfolio grows, you can safely increase withdrawals.

If markets drop, scale back slightly to give your investments time to recover. This approach keeps your plan sustainable without forcing unnecessary sacrifice when times are good or panic when they're not.

Retirement tax planning during the Critical 15

Income planning doesn't stop once you've figured out where the money will come from — it's just the start.

The real opportunity lies in how you manage taxes on that income, especially during the Critical 15 when small decisions compound over time. For most retirees, this is the last and best window to shape your lifetime tax bill.

Several moving parts make this period especially complex:

Social Security and taxes. Up to 85% of your benefits can be taxable, depending on how much other income you earn. Coordinating withdrawals and benefit timing helps you avoid unnecessary tax on your Social Security.

Medicare premiums. Higher income can trigger IRMAA surcharges, which are based on your tax return from two years earlier. Managing income levels in your early retirement years can prevent these surprise costs.

Account mix. Many retirees have most of their savings in pre-tax accounts, which can backfire when required minimum distributions (RMDs) begin. Building tax diversification early — across taxable, pre-tax and Roth accounts — gives you more control of your tax bracket later.

Heirs' taxes. A surviving spouse often ends up in a higher tax bracket filing as a single taxpayer, and non-spouse heirs must now empty inherited IRAs within 10 years. Thoughtful planning can reduce that future burden.

The most effective moves in this phase often include Roth conversions, in which you gradually shift money from pretax to Roth accounts to create tax-free income later, and tax diversification, blending withdrawals across account types to keep your effective tax rate steady over time.

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These steps might not make a big splash in a single year, but over a 20- or 30-year retirement, they can save hundreds of thousands in taxes and add years of longevity to your portfolio.

Investment planning during the Critical 15

The Critical 15 also brings one of retirement's biggest risks: sequence of returns — poor market performance early on that permanently damages your portfolio. Selling during downturns locks in losses and can derail even strong savers.

To protect yourself:

• Build a "war chest." Hold three to five years of essential expenses in stable assets such as Treasuries or short-term bonds.
• Match risk to timeline. Keep near-term funds conservative, but let long-term money keep growing.
• Stick to your plan. Reacting to headlines often hurts more than it helps. Let your strategy (not emotion) drive decisions.

Key steps to take during the Critical 15

After you've looked at income, taxes and investments, it's time to bring the pieces together. A checklist highlights the most important actions to take and revisit to stay organized and on track through this critical transition.

• Start early. Begin at least three years before your Critical 15 phase is due to begin. This will allow time to align your investments, taxes and income strategy.
• Build a flexible income plan. Design a spending approach that adjusts for markets, health costs or lifestyle shifts — think dashboard, not diet.
• Be proactive with taxes. Use Roth conversions, smart withdrawal sequencing and charitable giving to reduce your lifetime tax bill.
• Create a safety reserve. Keep several years of spending in low-volatility assets to weather market declines without panic selling.
• Plan for health care. Understand how income affects Medicare premiums and explore options such as health savings accounts (HSAs) or supplemental insurance.
• Revisit regularly. Update your withdrawal plan, tax projections and investment mix at least once a year — or sooner if life changes.

The Critical 15 isn't just another planning concept — it's the phase in which everything you've built finally comes together.

By coordinating income, taxes, investments and health care during this window, you gain flexibility and confidence for the years ahead.

Related Content

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• The 'Rule of 25' for Retirement Planning
• Retirement Income Strategies for the Long Haul
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• How to Create Retirement Income That's Driven by Cash Flow

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

As Social Security celebrates its 90th anniversary, she discusses current and future pressures on the system — and possible ways forward — with Kiplinger Personal Finance Magazine.

Q: In a recent Transamerica survey, "Social Security Turns 90," 71% of workers were concerned that Social Security won't be there when they are ready to retire. Does that concern you?

Yes, it worries me that the looming depletion of the Social Security Trust Fund [in 2033, for the retirement fund, based on recent estimates] may lead to suboptimal decision-making.

People may think, "I had better start claiming as soon as I’m able to," which for most is age 62. That could mean a steeply reduced benefit for the rest of their life.

The widespread fear that Social Security won’t be able to pay any benefits is not grounded in truth. Depletion means that, if that time comes, the system will be able to pay only 77% of guaranteed benefits.

As long as money is coming into the system through payroll taxes, which provide the majority of funding, there will be money available to pay some benefits.

Q: Do you think something will be done before a cut in benefits happens?

I have faith in the system. Social Security is the cornerstone of retirement income in this country.

It’s going to take political will and bipartisan efforts, but there’s way too much at stake for current and future generations of retirees. Legislation related to retirement security has a long and successful history of bipartisan collaboration. I expect that to continue.

Q: What kinds of Social Security reform could we see — and how can people prepare?

We could see a reduction in benefits, an increase in the payroll tax [now 6.2% each for employees and employers], raising the full retirement age [currently 67 for those born in 1960 or later] or a combination.

When people are planning for retirement, they should be mindful of how potential reforms may impact them. If you think there might be a cut in Social Security benefits, ask yourself, "Should I be working longer, maybe work part-time in retirement? How could I save more or reduce my debt?" Really explore the options.

Q: To address Social Security’s shortfall, respondents to your survey favored increasing the earnings subject to payroll taxes, raising the payroll tax rate and preserving benefits for retirees in greatest need. Just 22% said to raise the retirement age. What’s your view?

I think it’s going to take a combination of methods. Of the potential reforms, raising the retirement age is the one that worries me the most.

Many people find themselves forced into retirement sooner than expected due to circumstances beyond their control.

Our retirement age is already one of the oldest in the world. In France, it’s rising from 62 to 64 by 2030. In China, it’s going from 60 to 63 for men and from 50 to 55 or 58 for women in the next 15 years.

Q: Some experts think any changes to Social Security will only affect people younger than 50.

I’m not going to speculate. My hope is that people already collecting benefits will be exempt from changes; it would be difficult to pull the rug from under (older people) living on Social Security.

Q: Customer service at Social Security has become a bigger problem lately, with some people waiting hours for help. Any advice?

Budget extra time and energy. I don’t know that staffing shortages can be addressed overnight.

In time, we’re going to see some technological innovations and sophisticated tools that will really help people to plan what their Social Security benefits will look like, understand their claiming options and get personalized guidance. AI is going to be extremely helpful.

Q: Are you optimistic Social Security will be in better shape on its 100th anniversary in 10 years?

I certainly hope so. By then, we will have navigated through those reforms, and the Baby Boomer generation will be entering its 90s — and many will be passing away.

With smaller generations of retirees following them, the shift should eventually ease pressure on the Social Security system.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

Related content

• Social Security Basics: 12 Things You Must Know to Maximize Your Benefits
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Test your understanding of core HSA concepts, from eligibility to retirement-age withdrawals, with our 10-question true/false quiz. And don't worry if you miss an answer; you can follow the links below the quiz to brush up on your knowledge.

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• Social Security Basics: Things You Must Know About Claiming and Maximizing Your Social Security Benefits
• 10 Things You Need to Know About Health Savings Accounts
• How Your HSA Can Reimburse You for Medicare Premiums and Expenses
• Boost Your HSA Savings with These Smart and Savvy Moves
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Kiplinger: Your new book is about becoming a financial caregiver for your mother after she grew seriously ill due to complications from spinal surgery. What is financial caregiving?
BP: Financial caregiving is when you step into somebody else’s shoes and take over their affairs. Most people are dragged into this role sideways and have no idea how the person they’re helping has been handling money.

When I started helping my mom, I knew nothing about how she had been running her household, and she wasn’t in a position to tell me anything after her back surgery. To keep the mortgage paid and the lights on, I had to figure out how she had been paying her bills by sorting through the papers on her desk.

What are the most important steps people should take to prepare for the possibility of becoming a financial caregiver?
BP: You need to make sure the person you’re going to take care of has two key documents: a durable power of attorney that legally allows you to make financial decisions on their behalf and, if you’re also going to be making medical decisions, a health care proxy.

And make sure you have access to those documents. If you can’t put your hands on them, you’re going to be stuck and might end up in court.

For financial matters, a lot of people think it’s enough to be a joint owner on an account with an aging parent, but that can be problematic. There may be one account that you’re a joint signer on but other accounts you need access to — brokerage accounts, credit cards, that sort of thing.

You need power of attorney for the cable company, the electric company, the lawn care company. You never know when somebody’s going to say they need power of attorney in order to process whatever it is you want to process.

What if the tables are turned? How can people prepare their loved ones to step into the role of financial caregiver for them?
BP: Put together what I call a cheat sheet and a death file. My mom did this for me. The cheat sheet lists all of the person’s medicines and their doses, surgical history, key doctors, their Social Security number.

The death file is everything you need if something happens to them, like their will or trust, a list of their accounts, birth certificate, life insurance contract and cemetery plot information.

What’s the hardest thing about managing someone else’s money?
BP: The hardest part for me was trying to maintain my mom’s very precise financial routine. My mom was always very particular about her finances and a little old-fashioned. She didn’t trust electronic banking. It was all paper statements and paper checks.

I was managing her finances from a thousand miles away, and I had to take care of things electronically. I always thought she was going to be mad at me. I was afraid the whole time I wasn’t living up to her standards.

My general advice is to keep people in the loop. The person you’re taking care of or a sibling is going to want some accounting. I kept a spreadsheet of money coming in and going out of my mom’s account and things I paid out of my own pocket that I then reimbursed myself for.

What is one thing you wish your mom had done to better prepare you?
BP: I wish we had talked more openly in the years before she got sick, because there were a lot of things that didn’t occur to us to talk about once we were in emergency mode. These were small things, like asking about certain missing pieces of jewelry, but still important.

The one that haunts me is that I think she had a storage locker in the basement of her apartment building that had my grandmother’s paintings in it, and I couldn’t find any record of it after my mom died. Maybe someday the building will call me and say they found it.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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• How to Access Your Parents’ Medicare: Enroll and Manage Their Care
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This rule allows the Social Security Administration (SSA) to temporarily withhold a portion of your benefits if your earnings exceed a set annual limit. This surprise deduction often catches retirees off guard, significantly straining their budget and savings plans.

Who does the earnings test affect?

The earnings test applies to beneficiaries who are working and collecting Social Security retirement or survivor benefits and have not yet reached their Full Retirement Age (FRA). Once you reach your FRA, the test no longer applies, and you can earn any amount of money without having your Social Security benefits reduced.

If you are under your FRA: Your benefits are subject to the test.

In the year you reach FRA: The earnings limit disappears. You can work and earn any amount of income without affecting your Social Security benefits.

The SSA uses two different earnings limits for those working and collecting benefits, depending on how close you are to your FRA. The limits typically increase each year and are announced by the SSA in conjunction with the COLA and wage tax cap in mid-October.

The two earnings limits for 2025 and 2026

The specific dollar limits and the withholding rate depend on how close you are to your FRA.

An example of how the withholding works

Assume your Full Retirement Age is 67, and you are 64 in 2025 (under FRA all year).

Annual limit in 2025: $23,400

Your earnings: $30,000

Excess earnings: $30,000 (earnings)−$23,400 (annual limit) =$6,600

Benefits withheld (at the $1 for $2 rate): $6,600/2=$3,300

The SSA would temporarily withhold a total of $3,300 from your scheduled benefits for the year. This is typically done by withholding entire monthly checks until the total reduction is met.

Remember, not only will the reduction go away when you reach FRA, but you will also recoup any benefits lost to the reduction when you reach your FRA. More about that below.

The crucial recalculation: withheld money is not lost

The most misunderstood aspect of the Earnings Test is whether the withheld money is lost forever. The good news is that it is only temporarily withheld. Once you reach your FRA, the SSA performs a recalculation, increasing your future monthly benefit to credit you for all the months of benefits that were previously withheld. Essentially, the Earnings Test trades a temporary benefit reduction now for a permanent increase in your monthly benefit later.

The net result is that you receive the total value of your retirement benefits over your remaining lifespan. While it may not be preferable to have a portion of your Social Security benefits withheld until after you reach your FRA, this happens in the context of you being currently employed. As they say, forewarned is forearmed — you can plan for and around that reduced benefit until you hit your FRA.

What counts as "earnings"?

The Earnings Test is based solely on earned income.

The special first-year rule

The SSA has a special earnings rule for the first year you claim benefits. This helps those who retire mid-year after having already earned well over the annual limit. Under this rule, you can get a full Social Security check for any whole month you’re retired, regardless of your yearly earnings.

In your first year of claiming, the SSA can apply a monthly test. If you do not earn more than a specific monthly limit, $1,950 in 2025, for those under FRA all year, the SSA considers you "retired" for that month and will pay you a full benefit check, regardless of your total annual earnings from the months before you filed. This limit will increase by $90 to $2,040 in 2026.

If you reach FRA in 2025, you are considered retired in any month in which your earnings are $5,180 or less and you did not perform "substantial services in self-employment." In 2026, that number goes up to $5,430.

What the SSA considers "substantial services in self-employment": devoting more than 45 hours a month to the business, or between 15 and 45 hours to a business in a highly skilled occupation, or managing a sizable business. However, if you work less than 15 hours a month, you’re considered retired.

Working may defer some of your benefits, but will not reduce your benefits

If you are worried about losing some of your benefits because of the earnings test if you work after claiming Social Security, I hope you are relieved to know it's just a matter of time before you collect those 'lost' benefits. When you hit your FRA, your monthly benefit will be recalculated and raised to reflect all of the money temporarily withheld under the earnings test.

Related Content

• 2026 Social Security COLA is 2.8%: What You Need to Know
• Six Changes Coming to Social Security in 2026
• Social Security Tax Limit Rises Again: Who Pays More in 2026?

You’ve probably heard a lot about the COLA, but fewer people realize there’s a cap on how much of your earnings are subject to the Social Security payroll tax. This “wage base" (also known as the Social Security tax limit or wage cap) sets the maximum amount of income that can be taxed to help fund the program each year.

That's important since payroll taxes help fund Social Security, which more than 68 million Americans rely on for retirement, disability, or survivor benefits.

But the higher the wage cap, the more income is taxed, which particularly affects higher earners.

Here’s how that limit is changing for 2026 and what it could mean for your paycheck.

Social Security wage base 2026

The Social Security tax limit (aka wage base) will increase by about 4.8% to $184,500 for 2026.

The amount is adjusted annually for inflation. However, it’s important to note that the wage base and SS COLA are calculated using distinct methods and data sets.

The tax limit changes are particularly significant for high-income earners, who may pay more Social Security tax on their earnings next year. So, understanding the adjustment is crucial for effective financial planning.

Social Security tax rate

As noted, the 2026 Social Security tax limit rises to $184,500 for 2026. (The 2025 tax limit was $176,100.)

This 4.77% increase is less than the 5.2% jump from 2023 to 2024 but more than the 4.4% increase from 2024 to 2025.

Still, if you earn more than $176,100 this year, 2025, you haven’t had to pay the Social Security payroll tax on the amount of your income that exceeds that limit.) That can result in considerable tax savings.

• Take, for example, an employee with a 2025 annual salary that exceeded the tax limit by $10,000. Since the Social Security tax rate is 6.2% (your employer also pays 6.2%), they would save $620 on Social Security taxes.
• On the other hand, someone who earns wages exceeding the base by $30,000 would receive a $1,860 tax break.
• The more you make over the tax limit, the more your Social Security tax savings.

However, the Social Security tax limit increases yearly as the national average wage index increases. When that happens, more income is subject to the Social Security tax.

Note: Some people don’t have to pay Social Security taxes. (Exemptions from Social Security taxes may be available if certain requirements are met.)

Also, self-employed individuals pay the full 12.4% rate. However, if you're self-employed, you can deduct the employer-equivalent portion of that amount.

Medicare tax rate 2025 and 2026

It’s also worth noting that, unlike Social Security, the Medicare tax has no income cap.

The standard Medicare tax rate of 1.45% (paid by the employee, 2.9% total when added to the employer portion) applies to all earnings, regardless of income level.

High-income earners can be subject to an additional Medicare surtax of 0.9%. This applies to those with income above $200,000 for single filers or $250,000 for married couples filing jointly.

Self-employed individuals pay the employee and employer portions of Medicare tax but can claim a self-employment tax deduction. The 0.9% on high incomes may apply.

Social Security COLA 2026

Along with the wage tax base rate, the SSA announced the 2026 COLA increase, which is 2.8%.

On average, according to the SSA, Social Security retirement monthly benefits for an "average retiree" are expected to grow by about $57 as of January 2026.

For more information, see Kiplinger's report: The Social Security COLA for 2026: What You Need to Know.

Will the Social Security tax limit be eliminated soon?

As Social Security faces mounting long-term funding pressures, some lawmakers and policy groups are reviving calls to scrap the SS payroll tax income cap.

Removing the Social Security tax wage base/limit would mean high earners pay the 6.2% Social Security tax on all their income, not just earnings below the annual limit.

Right now, some wealthy taxpayers in the U.S. reach the wage limit quickly. For instance, someone earning $2 million a year would surpass the 2025 wage base of $176,100 in less than five traditional work days.

After that point, they no longer pay Social Security tax for the rest of the year, while middle-income workers continue contributing on every paycheck.

• Supporters contend that eliminating the cap would inject new revenue into the Social Security trust fund and make the tax system fairer by ensuring everyone contributes the same share of their pay.
• Some say scrapping the cap would also bring Social Security taxation in line with the Medicare tax, which has no earnings limit.
• But opponents argue that lifting the limit would amount to a tax increase on upper-income workers and small business owners.

Additionally, some point out that while high-income individuals might pay more in taxes, the current Social Security benefit calculation formula could result in them eventually receiving higher benefits in retirement. (That could further strain the system.)

For now, the limit remains in place, but continues to rise each year. So, if you're a high earner, plan accordingly or consult a tax professional to see how this shift might impact your bottom line.

Related

• Social Security Tax Limit 2025: What to Know
• Medicare Tax: Who Pays and How Much?
• Types of Income the IRS Won't Touch

This quick, 10-question quiz covers the essential basics of the earnings test, including who the test applies to, how benefits are affected by different income levels, and the all-important fact that any reduced benefits are not lost forever. Test your knowledge to ensure you understand this key component of your retirement strategy!

And don't worry if you miss an answer; you can follow the links below the quiz to brush up on your knowledge.

More on Social Security, from the Kiplinger team:

• 2026 Social Security COLA is 2.8%: What You Need to Know
• Six Changes Coming to Social Security in 2026
• Social Security Earnings Tests: Five Things You Must Know
• Social Security Basics: Things You Must Know About Claiming and Maximizing Your Social Security Benefits
• What's My Social Security Full Retirement Age (FRA)?
• Delay Social Security Benefits — Even by a Month — to Boost Your Check
• When To Take Social Security Payments: Your Age Matters
• Reasons to Take Social Security Early

Month after month, the educational workshops I hold are packed with people trying to learn more, and I sympathize with their struggle.

I'm actually drawing Social Security benefits myself. I have Medicare, and I'm a widower. Plus, I'm in my 50th year of working in the financial services industry.

So, I know how challenging it can be to keep up with the many rules and rule changes and look past the myths and misconceptions.

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

My recommendation, of course, is to work with a knowledgeable financial adviser who can lead you through the process while taking into account every personal factor that could affect your family's future.

Attending one workshop (or reading a few online articles) simply isn't enough to get through all the ands, ifs and buts that go into claiming your Social Security benefits — especially if you're married.

Wondering where to start? Here's a look at five things soon-to-be retirees should know about filing for Social Security — but often don't:

1. You can file when you turn 62, but your payments will be permanently reduced

To be eligible to receive 100% of your earned benefits, you must reach what the Social Security Administration (SSA) refers to as your full retirement age (FRA), which currently ranges from 66 to 67, depending on your birth year.

Additionally, if you put off filing until you're past your FRA, you'll get a delayed retirement credit every year (until you turn 70) that will boost the amount of your benefit.

For many people, that extra money is well worth the wait. But there are multiple factors to consider here.

If you're healthy and you and your spouse expect to live a long life in retirement, one or both of you may want to delay filing as long as possible. That way, you can keep growing your benefit. But if you need the money now, or if your health isn't great, you might choose to file earlier.

You can get an estimate of what your payments might look like at different ages by signing up for a "my Social Security account" at www.ssa.gov/myaccount.

Our firm and many others also have planning software that can help you determine which filing age makes sense for you.

2. Marital status matters — even if you're an ex

Most people underestimate how critical it is to coordinate their filing decisions with their spouse — because it will not only affect the income both can count on in retirement but also what the widowed spouse will receive.

Many couples don't realize that if they're both receiving Social Security benefits when one spouse dies, the lower of their two Social Security payments will go away almost immediately.

There are actually several rules that can affect the benefit a widow or widower receives, including their age when their spouse passes, if they have a disability and/or if they're caring for a child from the marriage who is younger than 16 or has a disability that began before he or she turned 22.

There are also rules that allow divorced spouses to file for a spousal or survivor's benefit on an ex's Social Security record — if they were married for at least 10 years. But again, when and how much you receive can vary if you qualify for this benefit.

Because so many couples get divorced these days — and may even remarry and divorce again — this is a topic I get many questions about.

To ensure that you get the highest payment possible, share the details of all your marriages with your financial adviser — and with the SSA when you file. (And by the way, your ex won't know you filed on their record unless you tell them.)

3. You can keep working after you file, but you may be subject to an earnings test

Social Security recipients can keep working, but if you choose to do so and you exceed the SSA's age-based earnings threshold, some of your benefit may be temporarily withheld from you. Here's how it works:

• For individuals younger than their FRA, the annual earnings limit for 2025 is $23,400. If you exceed this threshold, the SSA will withhold $1 for every $2 you earn over that amount.
• If you will reach your FRA in 2025, the earnings limit for the months before your birthday will be $62,160, and $1 will be deducted from your benefits for every $3 you earn over that amount.

Once you actually attain your FRA, the earnings limit goes away. It's also important to note that the SSA will recalculate and increase your monthly payment at this time to make up for the funds withheld earlier.

4. Yes, a portion of your benefits may be taxed

Until it came up during the 2024 presidential election, many soon-to-be retirees were unaware that their Social Security benefits could be taxed. Most people I talk with still don't understand how this tax works.

The IRS will look at your "provisional" or combined income to determine if you must pay federal income taxes on a percentage of your benefits. (Provisional income is calculated by adding your adjusted gross income for the year, any tax-free interest you received and 50% of your Social Security benefits.)

If you're filing as an individual and your provisional income is between $25,000 and $34,000, or if you're filing a joint return and have provisional income of between $32,000 and $44,000, you may have to pay federal income taxes on up to 50% of your benefits.

Also note that you might have to pay income taxes on up to 85% of your benefits if your provisional income is higher than those amounts.

Looking for expert tips to grow and preserve your wealth? Sign up for Adviser Intel (formerly known as Building Wealth), our free, twice-weekly newsletter.

In 2024, President Trump proposed eliminating federal taxes on Social Security benefits, but that policy has not been enacted so far. The One Big Beautiful Bill that Congress passed did provide significant tax relief for many older taxpayers, however.

Effective for 2025 through 2028, eligible taxpayers (based on income and marital status) who are 65 or older may claim an additional deduction of $6,000 on their income tax.

Still, if you plan to withdraw money from a tax-deferred retirement plan while you're also collecting Social Security, it's likely you could end up paying taxes on your benefit. Taxes also could become an issue if you decide to keep working after you and/or your spouse claim your benefits.

Bracket management is a must. Whether you qualify for the new tax break or not, tax-mitigating strategies should be part of your retirement plan.

5. You can get a filing do-over (with limitations)

If you change your mind after you file for your benefits, you can withdraw your application and reapply later. However, this is a one-time-only opportunity, and you must withdraw within 12 months.

You'll also have to repay any Social Security benefits you received.

Bonus tip: You don't have to go it alone

Clearly, there are many moving parts here. But you don't have to walk alone through this process. You can start by gathering information from the SSA website.

When you're ready, be sure to work with a retirement specialist who's well-versed and up to date on the rules. Don't lose out on getting the full benefits you've earned because you didn't know any better — and you didn't ask.

Kim Franke-Folstad contributed to this article.

The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.

Related Content

• Are You Entitled? A Social Security Spousal Benefits Quiz
• When To Take Social Security Payments: Your Age Matters
• Five Reasons You Should Take Social Security At 62 (and Five Reasons You Should Wait)
• I'm a Financial Adviser: This Is How You Could Be Leaving Six Figures in Social Security on the Table
• States That Tax Social Security Benefits in 2025

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

The 2026 COLA was originally scheduled to be released on October 15 and was delayed due to the impact of the government shutdown. Although the shutdown is ongoing, some employees at the Bureau of Labor Statistics (BLS) were recalled to prepare the September Consumer Price Index (CPI), which is essential to computing the 2026 COLA. CPI was also released on October 24.

The 2026 COLA in context

Although the 2.8% COLA is only 0.3% more than the 2.5% increase in 2025, it isn't far from the historical average.

"With current inflation at 3%, and inflation next year a bit less, the COLA should help seniors mostly keep up," said David Payne, economist for The Kiplinger Letter.

However, some retirees might find this COLA increase lacking. "A 2.8% increase is modest, especially for retirees whose cost increases may be higher in areas such as health care, housing, or other retirement-specific expenses," Martha Shedden, co-founder of the National Association of Registered Social Security Analysts (RSSA), told Kiplinger.

The COLA has averaged about 2.6% over the past 20 years. It went as low as 0.0% in 2016 amid declining prices, and as high as 8.7% in 2023 when inflation spiked after COVID disruptions.

How is the COLA calculated?

The Consumer Price Index (CPI-W) for Urban Wage Earners and Clerical Workers is the benchmark the SSA uses to determine the COLA, but that is a recent development. Initially, a new act of Congress was required each time benefits were increased. However, the rapid and persistent inflation in the 1970s was quickly eroding the purchasing power of fixed pensions and Social Security benefits. Congress enacted the COLA provision as part of the 1972 Social Security Amendments, and automatic annual COLAs began in 1975.

The COLA is now determined by the inflation observed in July, August, and September in the CPI-W. The SSA calculates the percentage change between average prices in the third quarter of the current year and the third quarter of the previous year.

This is the formula: (317.265 - 308.729) / 308.729 x 100 = 2.8 percent.

Some proposals call for the COLA to be based on the Consumer Price Index for Americans aged 62 or older (CPI-E), but they have so far failed. Proponents of using this price index say it reflects the costs incurred by older adults more accurately than the broader CPI-W. Medical expenses, an increasing burden on older adults, are weighted more heavily in the CPI-E than in the CPI-W.

In reality, the COLA is applied not only to retirement benefits, but to disability and survivor benefits. So, a COLA that is geared toward older beneficiaries wouldn't necessarily address their needs.

Earnings test when you receive benefits while working

Earned income can cost you if you continue to work after claiming Social Security benefits early. In this case, the Social Security earnings test for annual income is applied and reduces your monthly benefit. The SSA temporarily withholds $1 of your benefits for every $2 earned over $24,480 or $2,040 per month for 2026. In a year the worker hits full retirement age, the test is more generous — the worker forfeits $1 in benefits for every $3 in 2026 earnings above $65,160 or $5,430 per month.

Social Security tax wage cap for 2026

Social Security caps the amount of income you pay taxes on and get credit for when benefits are calculated. The new Social Security tax limit is $184,500 in 2026, up $8,400 from $176,100 in 2025. The tax limit is indexed to inflation, so you can anticipate it will rise again in 2027.

In 2025, the tax limit was $176,100, and it rose by $7,500 from $168,600 in 2024.

How much you need to earn to qualify for Social Security credits in 2026

You must earn a minimum of 40 Social Security credits to qualify for retirement benefits, and you are allowed to earn up to four credits per year. The SSA cannot pay you benefits if you don’t have enough credits.

The SSA also uses the number of credits you’ve earned to determine your eligibility for retirement or disability benefits, Medicare, and your family’s eligibility for survivor benefits.

To earn one credit in 2026, you must have wages and/or self-employment income of $1,890, and you must earn $7,560 to get four full credits. In 2025, you only needed to earn $1,810 to earn a credit, $80 less than what you needed to earn in 2026. This amount increases annually, so it will rise in 2027.

How you can increase your monthly Social Security benefits

One way to ensure a larger monthly Social Security benefit is to delay claiming your benefits until age 70. You receive an extra 2/3 of 1% for each month you delay after your birthday month, and you can further increase your benefit up to 8% for each full year you wait until age 70. If you wait until 70, your monthly benefit is 28% higher than if you started to collect benefits at your full retirement age (FRA).

Collecting benefits before your FRA can lead to a permanent decrease in your benefits. If you were born in 1960 or later, taking benefits at 62 would reduce your check by 30% and spousal benefits would be reduced by 35%. The maximum benefit for a spouse is only 50% of the benefit the worker would receive at FRA. The percentage reduction for the spouse would be applied after the automatic 50% reduction.

You can use your retirement savings to postpone receiving Social Security and create a 'Social Security bridge' to help reduce early-claiming penalties and collect a higher monthly income. Whether you have an IRA or 401(k), both offer strategies to help you delay claiming your benefits until your FRA, if not later.

Data for the average retiree check by year comes from Annual Statistical Supplement to the Social Security Bulletin, 2024. You can view the information by viewing Table 3.C4 Average monthly amount of Social Security (OASDI) benefits and Supplemental Security Income (SSI) payments, December 1950–2023. Averages for years 2024 and 2025 were sourced from the respective SSA COLA Fact Sheets.

Related Content

• The Delayed September CPI Report is Out. Here's What It Signals for the Fed
• Social Security Payment Schedule for 2026
• Seven Medicare Changes Coming in 2026
• Social Security Tax Limit Rises Again: Who Pays More in 2026?

Whether you've already been receiving Social Security payments by direct deposit or if you'll be starting to receive them that way soon, it's worth taking time to consider where your payments are being deposited. This decision could earn you valuable interest — or cost you in fees and missed opportunity.

That's because some bank accounts offer generous APYs, helping you earn more money and stay ahead of inflation, while some come with high fees, which can reduce your earnings. I'll show you which options are best for optimizing your earnings.

Outpace inflation with high-yield savings accounts

One smart solution is to deposit your Social Security payments directly into a high-yield savings account. You can find high-yield savings accounts (HYSA) that'll earn you over 4.00% APY, with no account fees or minimums.

This option works best if you treat your Social Security earnings as supplemental income, since you can have it sit and earn higher interest until you need to use the funds.

What I like best about high-yield savings accounts is their flexibility. Unlike CDs, where you have to pledge your money for a specified term, you can access your high-yield savings account anytime you need.

Considerations: Many HYSAs are from online banks, not brick-and-mortar, so you would not have the option of stopping into a local location to problem-solve. If you need to use the funds, you also have to contend with transferring them to, say, a checking account, which doesn't happen instantaneously, so you have to plan.

If you're concerned about signing up with an online bank for cash access, I recommend also opening a checking account with that online bank. Look for checking accounts that offer debit cards, which allow you quick access to your cash.

And if you're interested in signing up for a HYSA, use this Bankrate tool to find the best options quickly:

Try a savings account with checking account flexibility

Another option to consider is a money market account. What makes them unique is that you'll earn an APY that rivals some of the best high-yield savings accounts, but you have more options to access your cash than you do with a HYSA.

Most money market accounts come with debit card privileges. Some also offer check-writing capabilities. This way, you don't have to contend with paying ATM fees or waiting for transfers if you need access to your money.

Considerations: Many money market accounts have monthly transaction limits. If you exceed them, the bank can decide to decline the transaction or approve it and charge you a fee.

As such, only use a money market account if you don't plan to make many purchases on the account. Another thing to consider is that these accounts have monthly fees if you don't meet the minimum balance requirement – think $1,000 or more.

Can I use a local bank?

If you don't want to give up banking with your local branch, I don't blame you. There's a personalization there that's hard to come by with online banks. Plus, it can be a great undertaking to switch your bank accounts.

By that same token, many brick-and-mortar banks don't offer the same level of returns you can receive with an online bank. For example, I checked the savings rate with my local PNC Bank. For balances $1,000-$2,499, I would earn 0.02% APY. Anything above that earns me 0.03% APY.

By comparison, Newtek Bank has a high-yield savings account that earns 4.35% APY. Choosing this option, especially if you have $10,000 in the bank or more, ensures you earn hundreds of dollars in interest annually. So, if you do decide to go with a traditional bank, look for one that offers high-yield savings accounts, or else accept that you'll lose out on some money.

Considerations: Sometimes, it makes sense to stay with your local branch. If you have an aging parent who relies on a personal banker to help them with bill payments and budgeting, then I wouldn't recommend switching.

Some local banks also offer savings account bonuses, where you can earn hundreds of dollars for opening an account, setting up direct deposits of your Social Security check and keeping that account open for at least a few months. Use this in the interim if you can, but know eventually you'll need to switch to a savings account with a higher APY to keep your earnings growing.

The bottom line on where to deposit your Social Security check

With almost all Social Security recipients receiving their checks electronically, choosing the right bank account is vital. By selecting one that offers no account fees or minimums, with higher APYs, you're allowing your money to continue to grow to outpace inflation.

This is why high-yield savings accounts continue to be the best option to consider. However, if you want more flexibility in how you access your cash, money market accounts give you more ways to do so, while also earning far more than your local branch will pay you.

Related content

• Social Security Payment Schedule for 2026
• Best High-Yield Savings Accounts
• Six Changes Coming to Social Security Next Year

The Social Security annual cost-of-living adjustment (COLA) for 2026 is 2.8%, the Social Security Administration (SSA) announced on Friday, October 24. This is among the smallest COLA increases since 2020, as expected, and follows a 2.5% increase in 2025. This matches the estimate provided by David Payne, staff economist for the Kiplinger Letter.

The average monthly social security check

In August 2025, the average Social Security monthly check for all retirement beneficiaries was $2,008.31, according to the Social Security Administration's Monthly Snapshot (SSA). If you are interested in knowing more about SS benefit payments and how your check measures up to peers, take a look at what the average Social Security check is by age.

Schedule of Social Security benefit payments in 2026

Here are all the confirmed payment dates for retirees based on the Social Security payment schedule for 2026. Just find the day of the month you were born on the left side of the table. Then, look under each month for the specific payment date.

Why you should have a "my Social Security" account

You should definitely have a "my Social Security" account. For starters, during a government shutdown, you can use your my Social Security account to access your account information without disruption. The account can help you manage tasks such as requesting a replacement Social Security card, receiving updates about the COLA, updating your direct deposit information, and getting your Social Security 1099 form. And, if you are concerned about mail theft or travel often, you can opt out of mailed notices for those available online.

Related Content

• 2026 Social Security COLA is 2.8%: What You Need to Know
• Six Changes Coming to Social Security in 2026
• Four Things You Need to Know Before Applying for Social Security
• The 10 Most Costly Social Security Mistakes to Avoid
• The COLA Challenge: Test Your Knowledge of Social Security

And don't worry if you miss an answer, you can follow the links below the quiz to brush up on your knowledge.

More on Social Security, from the Kiplinger team:

• Social Security Basics: Things You Must Know About Claiming and Maximizing Your Social Security Benefits
• What's My Social Security Full Retirement Age (FRA)?
• Delay Social Security Benefits — Even by a Month — to Boost Your Check
• When To Take Social Security Payments: Your Age Matters
• Reasons to Take Social Security Early

Understanding common Social Security errors — from permanently reducing benefits by claiming too early to overlooking spousal strategies and hidden taxes — is the crucial first step toward maximizing your guaranteed lifetime income.

Here is a breakdown of the 10 critical missteps you must avoid to secure the retirement benefits you’ve earned.

1. Filing early and permanently reducing your benefit

Potential Cost: Collecting benefits as soon as possible, which for many people happens at age 62, will permanently reduce your monthly payment. For someone with a full retirement age (FRA) of 67, claiming at 62 results in a permanent reduction of up to 30%. This decision can cost you tens of thousands of dollars over a long retirement. Unless you absolutely need the income, delaying your claim is a significant way to maximize lifetime benefits.

2. Miscalculating your Full Retirement Age (FRA)

Your full retirement age (FRA) is the point at which you can collect 100% of your earned Social Security benefit. Your FRA is not age 65 for everyone. If you were born:

• In 1960 or later, your FRA is age 67
• In 1959, your FRA is age 66 and 10 months
• In 1957, your FRA is age 66 and six months
• In 1956, your FRA is age 66 and four month
• In 1955, your FRA is 66 and two months
• Between 1943 and 1954, your full retirement age (FRA) is age 66.

Potential Cost: Mistakenly assuming your FRA is 65 can lead to an unexpected, permanent reduction in your monthly check. You can also check your exact FRA at SSA.gov before making any decisions.

3. Failing to capitalize on delayed retirement credits

Potential Cost: The Social Security Administration (SSA) rewards patience. For every year you delay claiming benefits between your FRA and age 70, your benefit is boosted by an 8% increase, through delayed retirement credits. If 70 is too long to wait, consider waiting a month — you'll get an extra 2/3 of 1% for each month you delay after your reach your full retirement age.

These credits stop accumulating at age 70, making that the maximum age to file. If you have other resources like savings, investments, or a pension, using them to bridge the gap until age 70 can dramatically increase your lifetime Social Security benefits.

4. Overlooking spousal and survivor benefits

Social Security is not just based on your own work history. If you are married (for at least a year), divorced (after having been married at least 10 years), or widowed, you may be eligible to receive benefits on your spouse's or former spouse's record.

A spouse is generally entitled to up to 50% of the higher earner's FRA benefit.

A widow or widower can receive up to 100% of the deceased spouse's benefit.

Potential Cost: There are no delayed retirement credits on survivor benefits, but there are various strategies for claiming one benefit (like survivor benefits) while allowing your own worker benefit to grow until age 70. Not exploring these options can leave money on the table.

5. Not understanding how remarriage affects divorced spouse or survivor benefits

This mistake is complex and specific to those who are divorced or widowed. This is an instance where a simple oversight can cause a massive, permanent loss of benefits. The mistake? Remarrying at the wrong age or without understanding the specific Social Security rules that apply to your status.

For Divorced Spouses (10-year marriage rule): If you remarry, you generally lose your eligibility to claim benefits based on a former spouse's record. You would need that subsequent marriage to end, by death, divorce, or annulment, to become eligible for the former spouse's benefit again.

For Widows/Widowers claiming survivor benefits: This rule is age-dependent and extremely critical.

Remarrying before age 60 generally causes you to forfeit your survivor benefits based on the deceased spouse's record.

Remarrying at or after age 60 allows you to keep the higher survivor benefit.

The Cost: Failing to understand these precise age rules when considering remarriage can cost you 100% of a valuable spouse/survivor benefit you were counting on, making it a critical financial misstep.

6. Getting caught off guard by the earnings penalty while working

If you claim Social Security benefits before your FRA and continue to work, you may be subject to the earnings test (also called the retirement earnings limit).

For those under FRA all of 2025, the SSA withholds $1 for every $2 earned above a limit of $1,950 per month or $23,400 annually. These numbers go up to $2,040 per month and $24,480 annually in 2026.

For those reaching FRA in 2025, the limit is $5,180 per month or $62,160 annually for the months before your birthday, and the reduction is $1 for every $3 earned above that limit. These limits go up to $5,430 per month, $65,160 annually in 2026.

Potential Cost: The temporary benefit reduction can be an unwelcome surprise if you are not prepared. However, once you reach your FRA, the earnings limit disappears, and the SSA recalculates your benefit to give you credit for the amount that was withheld.

7. Not correcting errors in your earnings history

Your earnings record is built throughout your lifetime and serves as the basis for how much you or your dependents would receive when you apply for benefits.

Potential Cost: Your Social Security benefit is based on your 35 highest-earning years. Any year you didn't work counts as a zero, which reduces your average. Mistakes in your earnings record — due to a forgotten name change, an employer error or an incorrect Social Security number — can lower your future payments. It's important to review your earning records and correct any errors as soon as possible.

8. Ignoring your actual life expectancy

Some people claim benefits early because they doubt they will live long. Others delay too long without considering their health. A man reaching age 65 today can expect to live an average of 18 more years, and a woman more than 20 years, according to the National Council on Aging.

Potential Cost: If longevity runs in your family, delaying benefits to age 70 to maximize your monthly check can be a huge advantage. However, if your health is poor, claiming earlier may be a sensible choice. The key is to make an informed decision based on your financial situation and health, not a guess.

9. Being blindsided by taxes on benefits

Strategically timing withdrawals from traditional retirement accounts, such as 401(k)s and IRAs, versus Roth accounts can help manage your combined income and reduce the tax bite on your Social Security benefits.

Potential Cost: Up to 85% of your Social Security benefits could be subject to federal income tax, depending on your income. The IRS uses a figure called "combined income" (your Adjusted Gross Income (AGI) + nontaxable interest + one-half of your Social Security benefit) to determine taxability:

10. Treating social security as your entire retirement plan

Retirement experts commonly suggest you'll need 70% or more of your pre-retirement income to maintain your lifestyle. If you were earning $70,000, Social Security might only provide $28,000, leaving a significant gap. A successful retirement requires a plan that integrates Social Security with savings, investments, and other income sources.

Potential Cost: Social Security was designed to be a foundation, not the whole floor. On average, it replaces only about 40% of the income of a medium earner before retirement. For a high earner, the replacement rate is closer to 28%.

Knowing these rules will pay in the long run

The unfortunate truth is that many retirees file for benefits at the wrong time, often due to widespread misconceptions or simply an incomplete understanding of their options. The difference between a well-timed claim and a costly mistake can be the margin between financial comfort and struggling to make ends meet in your later years.

Related Content

• Six Changes Coming to Social Security in 2026
• The Social Security Test Every Wealthy Retiree Must Take
• Four Things You Need to Know Before Applying for Social Security
• When To Take Social Security Payments: Your Age Matters
• How to Manage Longevity Risk in Retirement
• How to Correct Errors on Your Social Security Statement and Collect Your Maximum Benefit

Sixty-two seems like the perfect age to retire. After all, you can start collecting Social Security. Plus, you're still young enough to enjoy it.

It's no wonder 62 is the average age of retirement in America. But retiring at that age or earlier could be one of the biggest mistakes a person can make.

At least according to retirement expert, author and podcaster Dave Ramsey.

“People underestimate how long they’ll live and how much money they’ll need,” Ramsey tells Kiplinger.com. “They retire broke or way too early. It's like jumping out of a plane without checking your parachute.”

This applies to the millions of people who choose to retire early, not the ones who are forced out of their jobs because of an illness, disability, workforce reduction, or a sick family member they have to care for.

Been There, Done That
Ramsey has seen it before. For over twenty years, the author, founder and CEO of Ramsey Solutions and host of “The Ramsey Show,” has helped millions of people get out of debt, take charge of their financial lives and achieve their retirement goals.

He speaks from experience. After running up thousands of dollars in debt and being forced to declare bankruptcy at age 26, Ramsey not only climbed out of the financial hole he created but went on to build a career teaching others how to achieve financial freedom.

The knock on retiring early

Retiring early is the dream of millions of Americans, regardless of whether that means exiting the workforce in their 50s or early 60s. While there are advantages to early retirement, there are also some clear disadvantages that make Ramsey staunchly against it.

For starters, if you retire before Medicare kicks in at 65, you will have to fund your own health care, which can get expensive. Plus, if you don’t plan to work at least part-time, you’ll have to figure out how to grow your savings and generate cash flow. With so many years without a steady income, there is a chance you could run out of money. If you retire at 62 and collect Social Security, be willing to take up to a 30% reduction in benefits for your lifetime.

All of this may be fine if you’ve saved enough for retirement and you're flush with cash. But if you rely on Social Security to supplement your monthly income, a reduction in your benefits because you retired early could impact your quality of life. Additionally, retiring early means less money saved, plus more years you have to draw from your savings.

“Don’t retire until you’re truly ready,” says Ramsey. “That means zero debt, a fully funded nest egg, and a clear monthly budget. Work longer if you need to, and budget like your future depends on it — because it does.”

Retire debt-free

Retiring with debt is another one of the biggest retirement mistakes Ramsey encounters. People think they can handle the monthly mortgage payment and/or car payment, but one unexpected illness or accident, and all of a sudden, they are in over their heads.

That’s why Ramsey says people should be entirely debt-free in retirement, including paying off their mortgage, regardless of a low interest rate. When you owe money, you can’t achieve financial freedom and security in retirement.

"They hang onto debt. Especially mortgages and car payments. Then they assume they’ll just ‘manage it’ in retirement,” says Ramsey. “The fix is simple. Attack that debt with intensity now, before you step into your golden years.”

It’s never too late to fix your retirement mistakes

Retirement isn’t the end of the road. If you make mistakes, such as retiring too early or with too little money, you have options to fix them. You can go back to work, downsize or reduce your budget.

If you haven’t retired yet, you can put in the work now to prepare for it or delay retiring to get yourself in a better position later.

"It’s never too late to start doing the right thing,” says Ramsey. “You may not have 40 years left, but you’ve got today. And that’s enough to start turning the ship around.”

Related Content

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• My Great Retirement Dream: Sell My House, Downsize, Live off the Proceeds and Dabble in Stocks. Here's How I’m Doing So Far.
• I’m 53, Make $500,000 a Year and Live Paycheck to Paycheck. I Want to Retire At 65, But We Only Have $200,000 Saved.

Take this quick, 10-question quiz to test your foundational knowledge and ensure you are well-prepared to select the coverage that is best for your health and budget this year.

And don't worry if you miss an answer, you can follow the links below the quiz to brush up on your knowledge.

More on Medicare, from the Kiplinger retirement team:

• What You Must Know About the Different Parts of Medicare
• Medicare Basics: 12 Things You Need to Know
• Seven Medicare Changes Coming in 2026
• Prior Authorization Coming to Traditional Medicare Starting in 2026
• How Medigap Insurance Is Affected by Preexisting Conditions
• 11 Costly Medicare Mistakes You Should Avoid Making
• Major Insurers Scale Back Medicare Advantage and Part D Plans for 2026

We've come to the fourth and final installment of our deep dive into the top 20 most common financial myths.

Throughout this series, we've examined a wide variety of topics, from stock and bond performance to retirement readiness, life insurance, Social Security, income taxes and more.

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

Here are myths 16-20, along with the facts:

16. Social Security and Medicare are 'entitlements' funded by the government (i.e. taxpayers)

Most people think of an entitlement as something they get for free, regardless of whether they work for a living.

But American workers pay into Social Security and Medicare their entire working lives (if you're self-employed, you're paying twice as much), so these programs aren't freebies.

However, it's important to remember that Social Security isn't an income replacement. Those on the lower end of the spectrum might receive about 65% to 80% of their earned income.

Higher-income earners will get a lot less, as a percentage, since Social Security benefits plateau at $61,000 per year for 2025.

Ultimately, Social Security and Medicare are crucial benefits but should ideally work alongside your other investments (company-sponsored 401(k), individual retirement account and self-directed accounts) to provide you with income in retirement.

17. Since life insurance payouts are income tax-free to my heirs, I won't owe estate taxes on these payouts

When someone with life insurance dies, their beneficiaries receive the policy's face value as a tax-free benefit.

But when their spouse or child prepares the decedent's final tax return, the estate might owe state or federal estate taxes, depending on how large the estate is.

While life insurance comes to you income tax-free, remember there are different types of taxes, and the decedent's estate could still be taxed.

If you're wealthy, you should consider taking extra steps to protect your estate. You can do this by transferring your life insurance policy into an irrevocable life insurance trust (ILIT), in which your beneficiaries, not the decedent, own the trust, so life insurance proceeds are not part of the decedent's taxable estate.

Another similar option for married couples is to open a spousal lifetime asset trust (SLAT), which allows the decedent's spouse to live off the income produced by the trust while the asset itself remains in the SLAT and is exempt from estate tax liabilities.

18. Reverse mortgages are 'bad' and make no financial sense for homeowners

As a financial planner, I reject the notion that any one financial strategy is inherently "good" or "bad." I consider each client's specific situation and recommend a plan that is right for them.

While reverse mortgages have gotten a bad rap for years, they can be an effective tool for a specific type of client: people who are income-poor but asset-rich.

Rules and regulations around reverse mortgages and, specifically, HECMs (home equity conversion mortgages) have been updated to protect against most of the problems incurred by consumers decades ago.

Several years ago, I worked with a retired woman who lived in a fully paid off house in a wealthy neighborhood, but had no income outside of Social Security.

She needed additional income, wanted to stay in her home, was estranged from her children and planned to leave her estate to charity. This could be a perfect scenario for taking out a reverse mortgage.

When you obtain a reverse mortgage, you're converting home equity into an income stream. The bank or mortgage provider determines the maximum size of your loan based on age, interest rate and equity.

Unfortunately, in a high-interest rate environment, you can burn through your equity quickly, so borrowers should think carefully about the potential impact it can have on beneficiaries.

Typically, clients have other assets to sell or borrow against for income, so reverse mortgages aren't something I normally recommend, though they can be very effective when used strategically.

19. Since I raised our children and never paid into Social Security, I won't be eligible for Social Security benefits

If you're a nonworking spouse, you can access up to 50% of your working spouse's Social Security benefit while they are alive, meaning that, for example, a woman whose husband qualifies for $4,000 in benefits will qualify for up to $2,000 of her own benefits.

In a case in which the husband dies first, she would then qualify for the survivor benefit at the higher amount, $4,000.

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Additionally, a divorced spouse can qualify for a portion of their former spouse's benefit if they were married for 10-plus years and haven't subsequently remarried.

Your spousal benefit won't impact your ex-spouse's own benefit; they won't even know you're receiving it.

20. Responsible financial planning dictates that individuals should carry life insurance throughout their lifetimes

People often think they need to carry life insurance throughout their lives, but that's wrong. As a financial planner, I look at life insurance primarily as a replacement for income when someone is in their working years and has others who depend on their salary (e.g., spouse, children).

If a couple has had a successful working life, made money and invested it smartly, there might be no need for life insurance, because there is no income to protect after they retire.

There are other reasons to carry life insurance. Wealthy people who own businesses or real estate often take out life insurance for liquidity at their passing.

For example, I used to work with a farmer in the Midwest who owned 1,000 acres of farmland valued at about $10 million; he had no other assets.

By taking out life insurance, he can provide his family with cash to pay any taxes owed on his estate, avoiding a potential fire sale and allowing his heirs to (potentially) continue farming the family's land.

Beyond estate taxes, some people take out policies for philanthropic pursuits, to leave a legacy or establish a scholarship or foundation, but it's unnecessary to do so from a pure income-replacement standpoint.

Knowledge is power. Now that we've gone through the full list of 20 financial myths, you can set the record straight when a friend or relative makes a simplistic or incorrect statement such as "Social Security is going bankrupt," or "investing in the S&P 500 means you're broadly diversified."

Financial planning is complex and not conducive to black-and-white answers. That's why it's important to speak with a knowledgeable professional who can guide you through the process and devise strategies that are right for you, your family and your unique circumstances.

Related Content

• Eight Biggest Financial Planning Myths: How Many Do You Believe?
• Five Retirement Myths vs the Reality
• Should I Get a Reverse Mortgage? Six Questions to Ask First
• Ignoring Your Old 401(k) Could Be a $130,000 Mistake
• IRA vs Roth vs 401(k): Which Do You Pick?

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Answer: Social Security might end up becoming a very essential source of retirement income for you. And that’s why it’s important to choose your filing age carefully.

In 2022, Social Security was the only source of income for 27% of adult recipients, reports Pew Research, citing data from the Census Bureau’s Survey of Income and Program Participation. And if you expect those benefits to constitute a large portion of your retirement income, then you may not want to claim them at the earliest possible age of 62. That’s because filing before your full retirement age results in a permanent reduction in those monthly payments.

In 2023, 26% of men and 27% of women claimed Social Security at 62, according to the Center for Retirement Research at Boston College. And while filing at 62 may work out just fine for some people, you may be feeling regretful if you made a similar choice six months ago and realize you’re struggling in the wake of a smaller monthly check.

All isn’t lost in this situation, though. You may still have options for boosting your Social Security checks despite having filed for benefits early.

You could undo your claim — but it’s not so easy

Because Social Security has a lot of rules to keep track of, you may not realize that all claimants are eligible for a single do-over in their lifetime.

As Aaron Brask, financial planner at Aaron Brask Capital, explains, "If you are within the 12-month window of the first claim, you can elect to repay the benefits and effectively pretend you never claimed.”

Once you withdraw your application and repay that money, you can file again at a later point in time to lock in larger monthly checks.

However, if you claimed Social Security six months ago and have been living on that money since, you may not have many options for paying those benefits back unless you have savings to tap. If so, Brask says, “It is often better to delay benefits and use money from one's liquid savings to bridge the gap until Social Security benefits start.”

In other words, if you can dip into your portfolio to refund the Social Security Administration the six months of benefits you were paid, you may come out ahead financially in the long run.

Pausing benefits is also an option

If you’re unable to repay the six months of benefits you received from Social Security so far, another option, says Brask, is to suspend your benefits until later on.

“You can also press the pause button on Social Security benefits once you reach full retirement age,” he explains. “Suspending allows you to earn delayed retirement credits up until age 70 that can boost your Social Security benefits by 8% per year.”

Thomas J. Brock, CFA and CPA at Annuity.org does warn, “This maneuver will not undo the smaller checks you locked in by initially claiming Social Security at 62.”

However, Brock says, “It can meaningfully increase your monthly benefit and provide more robust payments over the long term.”

How to avoid claiming Social Security early in the first place

There are several factors that might lead to an early Social Security claim — unexpected job loss, burnout at work, or the fear that Social Security is running out of money and on the verge of disappearing completely (it’s not).

Even if you come into retirement with a nice amount of savings, that money can run out eventually. Social Security, on the other hand, guarantees you a monthly benefit for life. The higher it is from the start, the more long-term stability you might enjoy as a retiree.

One of the easiest ways to avoid an early Social Security claim is to continue working until full retirement age arrives. If that’s not possible, Brock says, other options may include working part-time, cutting back on expenses, or tapping savings vehicles.

If you’re forced to retire at 62 but don’t want Social Security right away, one expense to look at cutting could be housing. Downsizing could not only lower your recurring housing costs but also potentially leave you with a pile of cash to cover your expenses until full retirement age arrives.

Brask recommends waiting on Social Security unless you have a major health issue that’s expected to shorten your lifespan substantially.

“Delaying Social Security benefits typically works out well for people with near or above-average longevity expectations,” he explains.

Brask is a fan of tapping savings to delay starting Social Security. And there are benefits to doing so beyond locking in larger monthly checks.

“Spending money from one's portfolio until they start Social Security can reduce taxes,” he says. “In particular, they may find themselves in lower tax brackets before Social Security starts. This means they might pay little or no tax when they withdraw from their portfolios.”

Read More

• How to Stop and Restart Social Security
• I Waited to Claim Social Security and Never Got Around to Filing By My 70th Birthday. Did I Goof?
• The '8-Year Rule of Social Security' — A Retirement Rule
• I'm 68, and Health Issues Forced Me to Retire. Should I Claim Social Security or Use My Savings Until I'm 70?

You're doing what you've been told to do: Save as much as possible, ideally in your 401(k) so you can defer tax.

After all, shouldn't you save on taxes today while you're making a bunch of money, and pay it later in retirement while you're in a lower tax bracket? That's what you're told.

And don't forget, you often also get free money in the form of your employer's matching contribution.

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

Between consistent contributions and wise investing, the compounding growth of a 401(k) can produce a large nest egg for your retirement. It feels great to see that balance.

However, when it's time to start withdrawing money from your 401(k), the tax bills start and your sense of comfort dissipates.

Here's what you need to understand: When you're ready to retire, a 401(k) becomes the highest-taxed asset(s) you own, and the IRS can't wait to get its share. The same goes for other pre-tax accounts, such as a 403(b) or traditional IRA.

What many people don't realize is that when they take money out of their 401(k), they could be taxed multiple times for each distribution. Here are the main reasons why you shouldn't leave your nest egg there, or at least not the majority of it.

Income tax and RMDs

The money you withdraw from a traditional defined contribution plan, such as a 401(k), is taxed as ordinary income at the rate of your tax bracket in the year you take the distribution.

A traditional 401(k) is subject to required minimum distributions (RMDs), which begin at age 73 for most people. If you save a lot of money in your 401(k), your annual RMDs could significantly increase your income, push you into a higher tax bracket and punish you in taxes.

By the time you reach your 80s, RMDs can become so large that they are a real problem, causing a shocking amount of taxation and leading to higher premiums on your Medicare.

Don't assume, as many people do, that you'll be in a lower tax bracket in retirement than the one you were in during your top earnings years. That's a big lie people are told.

If you do a good job saving for your retirement, aren't you going to be able to retire at roughly the same standard of living you enjoyed when you were working?

A similar standard of living equals a similar income, which leads to similar tax rates. Also consider that tax rates are likely to increase by the time you retire.

Social Security

Your 401(k) distributions could also make more of your Social Security benefits taxable. A withdrawal from a pre-tax account raises your combined income, an equation the IRS uses to determine how much of your Social Security may be subject to tax.

Up to 85% of your Social Security benefits may be taxable if you're single and earn more than $34,000 or are married and earn more than $44,000.

Higher Medicare premiums

When 401(k) distributions are added to your taxable income, it increases your modified adjusted gross income (MAGI). If your MAGI exceeds certain income thresholds, you must pay an income-related monthly adjustment amount (IRMAA), which is an additional surcharge on your Medicare Part B and D premiums.

Impact on the surviving spouse

If you're married and taking distributions from your 401(k), the good news is you're getting hit with all these taxes while you're in the most favorable tax bracket of married filing jointly.

But what happens when one of you dies? Then the surviving spouse goes into the higher tax obligation, filing single. The net effect is that the surviving spouse often sees their taxes doubled or more. We like to call this the "spousal tax trap."

The Roth solution

Part of financial fulfillment in retirement often comes down to this decision: Do you want to pay tax on the seed or on the harvest? With a traditional 401(k), you're saving tax on the seed, but you're paying tax on the harvest. That is the exact opposite of what you should be doing.

The 401(k) is a great tax shelter when you are working, but it's the worst place to have your money in retirement.

What can you do about it? The most obvious answer is to speak with a tax planner well in advance of your projected retirement. They can help you put together some type of Roth conversion glide path while using your current tax bracket.

With a Roth conversion, you transfer retirement assets from a 401(k) or other pre-tax accounts into a Roth IRA. You must pay income tax on the money you convert in the year you convert, according to your tax bracket at the time, but the advantages when you retire are well worth it.

Withdrawals are tax-free as long as you are at least 59½ and have had the account for a minimum of five years. And unlike other types of retirement accounts, Roth IRAs are not subject to RMDs.

Looking for expert tips to grow and preserve your wealth? Sign up for Adviser Intel (formerly known as Building Wealth), our free, twice-weekly newsletter.

Also, if you don't need part or all the money, you can let your Roth IRA keep growing and leave it to your heirs or your spouse. Roth IRAs aren't just tax-free for you; they are also tax-free to your beneficiaries.

There are no IRS limits on the amount of money you can convert from a traditional IRA or other pre-tax retirement account into a Roth IRA, but spreading the conversion over several years can help reduce your tax burden in those conversion years.

Roth misconceptions

Of course, it's far better to start contributing to a Roth IRA, or Roth 401(k), earlier in your work life. But what sometimes happens, if you're a high earner in your 40s and doing a good job saving, is that everyone tells you to make pre-tax contributions to your 401(k).

So here you are, maxing out your 401(k) contributions, putting $25,000 a year into your 401(k) and getting that tax deduction for that amount. It feels like the "smart" move, because that's what everyone tells you to do.

But socking money away in your 401(k) may not actually be the most efficient tax move. You may even want to consider doing the opposite by changing those contributions to Roth. You won't get the tax deduction up front, but you will certainly appreciate tax-free money as you approach retirement.

When it comes to Roth conversions, people often have two misconceptions that make them hesitant to do them.

One is that they mistakenly think they have to pay the tax on the conversion in one lump sum by writing a check to the IRS or withdrawing from their savings or investment account.

However, provided that you are over the age of 59½, you can simply do it by having the tax withheld by whatever financial firm holds your retirement account.

The second misconception: If you do a Roth conversion, you must wait five years before you touch that money. The truth is that you have to wait five years to touch the earnings on that money.

When you're over 59½, just withhold the tax and you can take distributions on the principal from day one.

Take action to avoid 401(k) tax bombs

Beware of building your traditional 401(k) during your working years while ignoring the tax repercussions you'll face in retirement.

Take action now by changing your 401(k) contributions to Roth and strongly consider converting any IRAs you have to a Roth.

Don't wait until you're near retirement. Give yourself a true sense of future financial security and remember: It's far better to pay tax on the seed rather than the harvest.

Dan Dunkin contributed to this article.

Centennial Advisors, LLC is an Investment Adviser registered with the U.S. Securities and Exchange Commission ("SEC"). Registration as an investment adviser does not imply a certain level of skill or training.

The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.

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• 5 Ways Your 401(k) Is a Tax Trap (and What to Do About It)

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Unfortunately, far too many Americans fall short when it comes to their financial retirement IQ. In fact, TIAA Institute and the Global Financial Literacy Excellence Center (GFLEC) gave Americans a failing grade when they asked adults six questions, ranging from how Social Security is calculated to the benefits of a 401(k) match. Just 45% could answer three or more correctly, and only 7% got five or six questions correct.

We developed our own six-question Retirement IQ test to help you gauge your knowledge. Think you can do better? Take our quiz below and find out!

More on Retirement, from the Kiplinger team:

• Need a Reason to Retire Early? Consider These Eye-Opening Stats
• When To Take Social Security Payments: Your Age Matters
• Should You Contribute to a 401(k) Without Employer Matching?
• Medicare Basics: 12 Things You Need to Know

If you lose your job coverage, move out of your plan's area or have another major life change, you get a Special Enrollment Period (SEP) — a brief window to change your plan. The rules we covered are your key to knowing when and how to make that penalty-free change.

Finally, remember that if you are currently in a Medicare Advantage plan (MA), the Medicare Advantage Open Enrollment Period (MAOEP) runs from January 1 through March 31. If your MA plan isn't working out, you have that one last chance to switch. Keep this guide handy; it's your essential Medicare roadmap until next fall!

Missed Medicare Open Enrollment? Here Are Your Options
Medicare and Moving: What You Need to Know
Medicare Advantage Open Enrollment Begins on January 1

Review Changes to Your Coverage to Get Ready for Medicare Open Enrollment

One week from today, on October 15, Medicare Open Enrollment will begin. The annual enrollment period runs until December 7. It’s an important opportunity for all Medicare beneficiaries to review their current coverage and make any changes to plan selections. The first step is to review your Annual Notice of Change (ANOC). Whether you are enrolled in a Medicare Advantage plan or Part D prescription drug plan, you should have received this information by September 30. If you haven’t received your copy, call your plan or check their website.

The notice provides a detailed summary of all the changes to the plan's benefits, costs, and coverage for the upcoming calendar year. Without reading the ANOC, you could be surprised on January 1 by higher costs, a medication no longer being covered, or that your doctor or preferred facility is no longer in your network.

Whether you decide to stay with your current plan or to explore other Medicare coverage options, you want to make a choice based on the facts. If you have any questions about the upcoming changes, contact your plan’s customer service department. They can help you understand the details of the changes to your coverage.

-Donna LeValley

Don't Toss It! Why Your Medicare Annual Notice of Change Matters

Download the 2026 Edition of Medicare and You

The 2026 edition of the Medicare guide, Medicare and You, is out and available for download. And, it’s a resource I highly recommend. It has an easy to use index located in the front and the online version has hyperlinks to definitions of Medicare terms. Outbound links will lead you to more information on a topic or help you complete a task, such as how to update the address on your Medicare bill.

The guide provides clear side-by-side comparisons of original Medicare and Medicare Advantage plans that you can use to decide which plan is best suited to your needs. You can learn more about your rights under Medicare and how to file an appeal. The last section is devoted to resources, showing you where to get more personalized help and all the different ways you can contact Medicare.

After you’re done downloading the guide, stop by our site to take our quiz: Do You Know What Medicare Gives You for Free?, to test your knowledge of the services that Medicare provides at no cost to you.

-Donna LeValley

Major Insurers Scale Back Medicare Advantage and Part D Plans for 2026

There is bad news for beneficiaries enrolled in certain Medicare Advantage and stand-alone Part D prescription drug plans. Three major insurers are significantly cutting their Medicare Advantage offerings for 2026, reducing both the number of plans and the areas they cover. Participants in these plans will need to select new coverage for 2026.

If you are enrolled in a Medicare Advantage plan or Part D drug plan through UnitedHealthcare, Humana, or Aetna (CVS Health) and want to know if your plan is being eliminated, read your Annual Notice of Change (ANOC).

There are resources available to help if you are among the MA plan participants who will need to find a new plan for 2026. You can use the Medicare.gov website that has a plan compare feature or contact your local SHIP (State Health Insurance Assistance Program) office for unbiased advice.

-Donna LeValley

Medicare 101: The Four Parts of Medicare and What They Cover

Understanding the different parts of Medicare is crucial because it directly impacts your health care coverage, costs, and choices. You can use this knowledge to select the combination of coverage that best fits your health needs, budget and preferred network of doctors and hospitals.

It's important to understand what benefits you will receive so you can decide if you need Part D prescription drug coverage, additional coverage through Medigap or a Medicare Advantage plan.

And, if you have a Medicare Advantage Plan, although your plan may have different rules than original Medicare, your plan must give you at least the same coverage as original Medicare.

In short, knowing how the different parts work empowers you to make informed decisions about your healthcare, ensures you have the coverage you need and enables you to manage your medical expenses effectively. So, here’s a quick guide to the different benefits provided through each part.

-Donna LeValley

What You Must Know About the Different Parts of Medicare

Traveling with Medicare in 2026?

When you are reviewing your current coverage, think about where you plan to go in 2026 and if you want to look for a Medicare Advantage or Medigap plan with a travel benefit. After all, when an emergency happens, you can't put off medical care until you get home. You have to be treated where you are and sort out the expenses after the emergency subsides. But that doesn't mean you can't plan. Understanding what your Medicare insurance does and doesn't cover when you are away from home is the first step.

Ultimately, whether or not you can expect assistance from Medicare when you travel boils down to what type of Medicare policy you have and whether you are traveling domestically or internationally. Some Medicare Advantage plans include travel benefits for when you need care away from home, and several Medigap plans offer some coverage for foreign travel emergencies. Fortunately, beneficiaries of both original Medicare and Medicare Advantage plans have options to pick up some travel coverage.

-Donna LeValley

What Medicare Covers When You Travel in the US and Abroad

Medicare Doesn’t Cover That?!?!

Medicare Part A and Part B, otherwise known as original Medicare, cover much of your health care costs in retirement, but not all of them. With Part A, you’ll get most of your inpatient hospital stays, skilled nursing facility stays, surgery, hospice care and even some home health care covered. Part B helps pay for doctors' visits, outpatient care, some preventive services, and some medical equipment and supplies.

Everything else — prescription drugs, annual exams, and a host of other things — will require additional coverage. To fill the gaps, retirees typically get extra coverage through a Medigap plan or a Medicare Advantage plan, which costs extra.

Wondering if you need that extra coverage? Check out what’s covered in original Medicare and what isn’t with our comprehensive guide.

-Donna Fuscaldo

How to Fight Rising Health Care Costs

The cost of health care is on the rise, with or without a deal in Congress, and that applies both to Medicare and out-of-pocket costs. Fidelity Investments’ 24th annual Retiree Health Care Cost Estimate pegs the cost at $174,500. That’s how much an individual aged 65, with Medicare, will spend in his or her lifetime on out-of-pocket health care expenses. That’s up 4% from $165,000 in 2024. Back in 2002, the first year Fidelity put out an annual estimate, it was a mere $80,000.

But that doesn’t mean you have to take it lying down. There are actions you can take to keep those expenses at bay. It all starts with thinking about the type of health care you want. Once you’ve figured that out, you can plan accordingly. Focusing on health and saving for long-term care helps too.

-Donna Fuscaldo

Five Smart Moves for Retirement Healthcare: From HSAs to Medigap Policies

Changes Coming to Medicare in 2026

It's never too early to start planning, and with the New Year just a mere ten weeks away, now is a good time to get a handle on changes coming to Medicare in 2026. And guess what, there are a lot of them. How many? Seven, according to our recent count.

They run the gamut from the big to the small and cover everything from your prescription drugs to how much you pay in premiums. For example, new in 2026, if you are on a Medicare Prescription Payment Plan (MPPP), you will be automatically enrolled each year thereafter. Or if you have a Medicare Part D plan, expect the deductible to increase. Knowledge is power, especially when Fidelity Investments estimates a person will spend $174,500 in out-of-pocket health care costs in retirement!

-Donna Fuscaldo

Prior Authorization Coming to Traditional Medicare Starting in 2026

Medicare Open Enrollment Is Here!

Medicare open enrollment begins this week, officially on October 15 and lasts through December 7. This is the period in which people with Medicare can change their health and prescription drug coverage.

Getting a handle on the basics of Medicare is crucial for protecting both your health and your retirement savings. Because of this, the choices you make during Medicare Open Enrollment are arguably some of the most important financial decisions of your life. That is why it's essential to know some key details about Medicare, including the open enrollment dates and the types of plans available to you.

There are ten key facts about Medicare that you should be well-versed in before selecting a new plan or sticking with your existing one. We lay them all out here.

-Donna Fuscaldo

18 Things Medicare Gives You for Free

Medicare Coverage Of Telehealth Out Amid Government Shutdown

Medicare patients across the country are getting their telemedicine appointments canceled or rescheduled amid the federal government shutdown.

Among the casualties of the government’s inability to extend the budget beyond September 30th was a provision that allowed Medicare to cover the cost of telehealth services for the millions of Americans over the age of 65 or those with disabilities. As a result, doctors have been forced to cancel or postpone virtual visits, according to the Center for Medicare Advocacy.

This is leaving some beneficiaries without services and is particularly troublesome for people in rural areas who lack transportation or cannot visit a doctor in person because of their health.

While Medicare has offered telehealth coverage for years, it was limited until the pandemic. Now millions of Americans have come to rely on it for their health care needs. All of which is in limbo amid the government shutdown.

-Donna Fuscaldo

Medicare Basics: 12 Things You Need to Know

How to Find the Best Plan in 2026

Searching for the right Medicare plan can feel overwhelming, but there are several excellent resources available to provide the free, unbiased help you need to make an informed decision. The most powerful digital tool at your disposal is the official Medicare Plan Finder at Medicare.gov/plan-compare. This online tool allows you to input your specific prescription drugs, dosages, and preferred pharmacies. The tool generates a personalized list of all available Medicare Advantage (Part C) and Part D Prescription Drug plans in your area, showing your estimated total yearly out-of-pocket costs (premiums, deductibles, and co-pays) for each plan. It's the essential first step to compare plans based on your unique health and financial needs.

For those who prefer one-on-one assistance or need deeper clarification, the most trusted resource is the State Health Insurance Assistance Program (SHIP). This is a national program, funded by the federal government, that offers free, confidential, and unbiased counseling to Medicare beneficiaries, their families, and caregivers. SHIP counselors are not insurance brokers, meaning they don't sell plans and aren't tied to any insurance company; their sole mission is to help you understand your coverage options, compare plans, and explore financial assistance programs like "Extra Help." You can find your local SHIP office and contact information by visiting shiphelp.org or by calling the national SHIP line at 1-877-839-2675.

Finally, you can always turn to 1-800-MEDICARE (1-800-633-4227), which operates 24 hours a day, 7 days a week (except some federal holidays). The representatives there can answer general questions about Medicare, walk you through the Plan Finder tool, and help you enroll in a plan. It's a great source for quick answers or assistance with the enrollment process itself.

-Donna LeValley

Medicare Open Enrollment: 10 Things to Know

How to Coordinate Medicare and Employer Health Insurance

Turning 65 marks a significant milestone in health coverage, but for many still working, it also introduces a major decision: Should you enroll in Medicare right away, or keep your employer-sponsored health plan? This choice is far more complex than a simple either/or, as it involves navigating coordination of benefits, avoiding costly late enrollment penalties, and understanding the financial impact on tools like Health Savings Accounts (HSAs). Making the wrong decision could lead to unnecessary premium costs, gaps in coverage or steep and permanent penalties for delaying your enrollment in Medicare Part B or Part D.

We break down the essential rules for those with employer-provided health care coverage at age 65. We explain the critical "20-employee rule" that determines whether your employer plan or Medicare pays first and when you can safely delay Part B enrollment using a Special Enrollment Period (SEP). Understanding these guidelines is crucial for ensuring you maximize your current benefits and avoid costly mistakes when you eventually retire.

-Donna LeValley

Can You Sign Up for Medicare While Still on an Employer Health Plan?

Answers to Frequently Asked Medicare Questions

The government categorizes Medicare as a mandatory program, which is funded by existing laws; therefore, it does not require an annual vote by Congress to continue operating. The upshot is that, under CMS, you will continue to receive Medicare benefits even during a shutdown. And that is why annual Medicare open enrollment is proceeding uninterrupted by the mandatory furloughs. But the combination of increased call volume during open enrollment and reduced staff can make it harder to get answers to pressing questions. That’s where we can help.

We’ve put together answers to 12 of the most frequently asked questions about Medicare, including when to sign up for benefits, why you might need Medigap insurance, how to manage costs, and how to appeal a Medicare denial. Hopefully, this list will provide you with the information you need without having to wait on hold.

-Donna LeValley

12 FAQs About Medicare: Your Medicare Questions Answered

Getting Closer to Learning the 2026 Medicare Premiums and Deductibles

The annual Medicare open enrollment period is underway, and I always thought it was a bit odd that it started before the new premiums and deductibles had been announced. Last year, the new numbers weren’t released until November. This year, the federal government shut down before the Bureau of Labor Statistics could release the September CPI report. Why does that matter? It’s an essential piece of information that the Social Security Administration (SSA) uses to calculate the 2026 COLA. The good news is that the September CPI, originally due for release on October 15, will now be released on October 24 at 8:30 am ET, the BLS announced. The COLA is expected to follow on the same day.

And, the COLA announcement always comes before the announcement of new Medicare premiums and deductibles.

Medicare Part B premiums are deducted directly from Social Security checks. Because of this, the Social Security Administration has a “hold harmless” provision that protects your Social Security benefit payment from decreasing due to an increase in your Medicare Part B premium. Medicare Part B premiums are projected to increase by $21.50 to $206.50 in 2026, a rise of 11.6% over the current 2025 premium of $185.00. The Social Security COLA is projected to rise between 2.7% and 2.8%, with a large part of that increase going to cover the Part B premium increase. Brass tax: The hold harmless provision is effectively a cap on the Medicare Part B increases.

The hold harmless provision does NOT protect you if:

• You are new to Medicare in 2026. Hold harmless does not apply to you because you have not been enrolled in Medicare Part B long enough to qualify.
• You are subject to IRMAA.
• You are enrolled in a Medicare Savings Program (MSP). However, the MSP should continue paying for your full Part B premium.
• You were enrolled in a Medicare Savings Program in 2025 but lost the program because your income increased or you failed to recertify.

-Donna LeValley

2026 Social Security COLA Announcement Is Back on Track Despite Government Shutdown

One More Thing To Worry About During Open Enrollment: The Medigap Trap!

When it comes to navigating Medicare and Medicare Advantage, a bit of foresight can go a long way in avoiding the Medigap trap. The trap occurs when you enroll in a Medicare Advantage plan, intending to switch later to original Medicare with a supplemental Medigap plan, only to find you no longer have a guaranteed right to buy a Medigap policy. If you are approved for coverage, you may face higher premiums.

That’s because in most states, Medigap plans are automatically available only in the first six months after an enrollee becomes eligible for Medicare. After that, health screening may be required and the plans can refuse coverage or charge higher rates for those with health issues.

To prevent that from happening, consider your health and your family’s health history before selecting your plan. If you do select a Medicare Advantage plan, you can switch to original Medicare during the annual open enrollment period, which runs from October 15 to December 7.

-Donna Fuscaldo

What’s the Best Medigap Plan?

Think You Know Medicare Open Enrollment? Take Our Quiz

Timing is everything, and that is true of Medicare Open Enrollment. Missing a deadline can result in late enrollment penalties that last a lifetime or, at the very least, delays in coverage.

But don’t worry, we've got you covered. Take our quiz on Medicare enrollment deadlines, and if you get any answers wrong, brush up on the correct information we provide, and take it again!

Once you’re done, you’ll know off the top of your head the purpose of the Annual Enrollment Period (AEP), how long the enrollment period runs, and much more! You won’t ever have to worry about making any Medicare Open Enrollment mistakes.

-Donna Fuscaldo

Medicare and Moving: What You Need to Know

Steer Clear of Scams During Medicare Open Enrollment

Applying for and managing your Medicare benefits can be stressful, and scammers can take advantage of that vulnerability. They use times like Medicare Open Enrollment to prey on people’s emotions, and attempt to trick them into revealing important personal and financial information for identity theft. That’s why safeguarding your information during this period is crucial.

Some scammers claim they need information, such as your Medicare number, bank account, or credit card information, to send a “new” Medicare card or process a medical equipment claim, according to the Federal Trade Commission. Here is some information that will help you avoid those, or any other scam during Open Enrollment.

A representative from Medicare will never unexpectedly call, email, text, or message you on social media. No one from Medicare would ever contact you to ask for your Medicare, Social Security, or bank account numbers. A Medicare representative would never try to sell you anything or tell you that you need to pay for your Medicare card. And don’t be fooled by caller ID. If you are worried by what a caller says and want to double check something, hang up and call 1-800-MEDICARE (1-800-633-4227) to confirm everything is okay.

If you think someone tried to scam you, you can report the situation directly to Medicare through the 1-800 number or the Senior Medicare Patrol (SNP). The SNP can help you find state level resources to help you.

-Donna LeValley

Retirement in the Age of Cyber Scams: How to Protect Your Next Chapter

Appealing Your IRMAA

The IRMAA can sneak up on you if you aren't careful. It only takes earning $1 above the threshold to trigger the surcharge. In 2025, that $1 of income would cost you an additional $1,052.40 annually in Medicare surcharges, consisting of $888 for Part B and $164.40 for Part D. That's just the first tier; there are four more.

How do you know if you’re liable? If you’re subject to the surcharge, you will receive a notice from the Social Security Administration known as an initial determination. The good news is that you can appeal this determination if your circumstances have changed. After all, a lot can happen in two years, and if you can demonstrate to Social Security that a “life-changing event” has affected your income, it will reduce or waive your premium surcharges. The Social Security Administration considers the following to be life-changing events: marriage, divorce, the death of a spouse, loss of income, and an employer settlement payment.

-Donna LeValley

How to Appeal the IRMAA for Medicare Parts B an

Use Your HSA to Reimburse Yourself for Medicare Premiums and Expenses

The cost of health care expenses has been going up year after year and shows no signs of slowing down. Health care costs have increased by 188% from 2005 to 2025, according to the Millman Medical Index. An HSA can help you pay for those expenses in retirement.

While it's true that you can’t make new contributions to a health savings account once you enroll in Medicare, you can withdraw the money tax-free from the account to pay Medicare premiums, copayments and deductibles. However, you can contribute to your spouse’s HSA if you are enrolled in Medicare and no longer HSA-eligible.

So, if you’ve had an HSA for several years and didn’t realize you could withdraw money tax-free for Medicare premiums, you could reimburse yourself for all those premiums at any time. You just need to show receipts that you paid for eligible expenses. One caveat — you can’t withdraw money for expenses you incurred before you opened up the HSA.

-Donna LeValley

10 Things You Need to Know About Health Savings Accounts

We’ll Be Back for the Final Week of Open Enrollment

Whether you want to switch from original Medicare to an Advantage plan, from an Advantage plan back to original Medicare or simply find a cheaper Part D prescription plan, the Medicare Open Enrollment period is an annual opportunity you can't afford to miss. By taking the time now to review your coverage — especially checking if your prescriptions or doctors are still covered next year — you can potentially save hundreds or even thousands of dollars

So, do the research, compare your current plan with new offerings, and secure your choice by the December 7th deadline. We're signing off for now, but we’ll be back here on December 3 for the final week of Open Enrollment to share last-minute tips, answer common questions, and help you cross the finish line with confidence. Until then, use the tools and links provided to get started on your crucial Medicare checkup!

-Donna LeValley

Time is Running Out! Your Last Chance to Make Medicare Changes is Ending Soon

The clock is ticking! Medicare Open Enrollment ends on December 7th. If you've been putting off reviewing your Medicare coverage for the upcoming year, now is the time to act. Don't risk starting the new year with a plan that doesn't fit your health or budget needs.

The changes you make during this period — from switching between original Medicare and Medicare Advantage, to enrolling in or changing a Part D prescription drug plan — will take effect on January 1, 2026. After the deadline, your options to change coverage are very limited.

Here is a three-step plan to help you make the most of these final few days.

Last-minute action plan: 1. Check your current plan's changes (The ANOC)

Every year, the costs, benefits and coverage of Medicare plans can change. Your plan should have sent you an Annual Notice of Change (ANOC). If you haven't reviewed it, do so now!

Pay attention to these vital aspects of your plan:

• Premiums and deductibles: Are your monthly costs and upfront deductibles increasing for 2026?
• Drug formulary: Has your plan removed any of your essential prescriptions from its list of covered drugs (the formulary), or moved them to a higher cost-sharing tier?
• Provider network: Are your preferred doctors, specialists, or hospitals still "in-network" for next year?

2. Review your personal health needs

Your health and financial situation may have changed in the last year. Does your current plan still make sense?

• New medications or conditions: Have you started taking new, expensive medications? Do you have a new chronic condition that requires seeing specialists more often? Your drug and provider network needs should be your top priority.
• Budget check: Do you anticipate incurring more medical expenses next year? Compare the total estimated out-of-pocket costs (premiums, deductibles, copays) of your current plan versus a new option. Sometimes, a plan with a slightly higher premium offers much lower out-of-pocket costs for the services you use most.

3. Use the official Medicare Plan Finder tool

The most efficient way to compare options in your area is the official Medicare Plan Finder tool at Medicare.gov. This tool allows you to plug in your current prescription medications, preferred pharmacies, and anticipated health care services to see which plans offer the best value for your specific needs.

-Donna LeValley

Related article:

What You Will Pay for Medicare in 2026

Get Free, Unbiased Help Navigating the Final Days of Medicare Open Enrollment

You'll encounter many people offering Medicare advice during this time — from insurance agents to plan representatives. While these individuals can provide valuable information about their specific plans, their primary role is often to sell or promote those plans. This isn't inherently bad, but it means their advice might not cover the full spectrum of all available options or objectively compare them against each other. Where can you get help? I recommend contacting your local SHIP (State Health Insurance Assistance Program.)

The State Health Insurance Assistance Program (SHIP) is a national program funded by the federal government, specifically designed to provide free, unbiased Medicare counseling to beneficiaries and their families. SHIP counselors are trained volunteers and staff, often seniors themselves, who are deeply knowledgeable about Medicare. They do not sell insurance, and their services are completely confidential.

What can SHIP do for you?

• Explain Medicare basics: What's the difference between original Medicare and Medicare Advantage? How do Parts A, B, C, and D work?
• Compare plans: Help you understand and compare Medicare Advantage plans, Medicare Part D prescription drug plans, and Medigap (Medicare Supplement) policies.
• Review your current plan: Help you understand your Annual Notice of Change (ANOC) and evaluate if your current plan is still the best fit for 2026.
• Analyze prescription drug costs: Input your specific medications into the Medicare Plan Finder to find the most cost-effective Part D plan.

How to find your local SHIP: The easiest way to connect with your local SHIP office is through their national website: www.shiphelp.org. Just enter your zip code or select your state, and you'll get their contact information. You can also call 1-877-839-2675 to get connected to your local SHIP.

Call Medicare directly: The official Medicare helpline, 1-800-MEDICARE (1-800-633-4227), is available 24 hours a day, 7 days a week. While they can't recommend specific plans, they can provide general Medicare information and help you navigate the official Medicare Plan Finder tool.

-Donna LeValley

Prior Authorization Coming to Traditional Medicare Starting in 2026

Medicare to Cover Obesity Drugs in 2026 for as Little as $50. What You Need to Know

Medicare to Cover Obesity Drugs in 2026 for as Little as $50. What You Need to Know

Medicare beneficiaries who are struggling to manage their weight will have access to popular weight loss drugs through Medicare Part D drug plans next year. Wegovy, Mounjaro and Zepbound will be covered by Medicare.

Initially, the Trump administration decided not to cover GLP-1 weight loss medications prescribed only to treat weight loss in 2026. Cost was a big factor. Medicare currently covers drugs that are used for weight loss, like Mounjaro and Ozempic, but only when they are prescribed by doctors for other reasons, like managing diabetes.

After negotiations with many major drug companies, a deal was made to both lower the costs of GLP-1 medications and enable Medicare coverage of the weight-loss drugs beginning in 2026. Medicare will pay $245 per month, down from list prices ranging from $1,000 to $1,350. Beneficiaries will pay a maximum of a $50 copay. Ozempic, Wegovy, Mounjaro and Zepbound will be covered by Medicare.

- Donna Levalley

9 Medicare Changes Coming in 2026

A 5-Question Quiz to Help You Choose Between Original Medicare and Medicare Advantage

Are you a globetrotter who demands the freedom to see any doctor, anywhere? Or do you prefer the convenience of an all-in-one plan that includes dental, vision and a gym membership? Your retirement lifestyle and priorities — not just your health — should determine your Medicare choice.

The difference between original Medicare and Medicare Advantage impacts everything from your ability to travel without worrying about networks to the size of your monthly health care budget.

This quiz is designed to highlight your preferences for cost, flexibility and coverage, which are the main factors in choosing between original Medicare (Part A and B, plus a Medigap/Part D) and a Medicare Advantage (Part C) Plan. Answer five simple questions about your preferences for network flexibility, premium cost, and extra benefits to reveal the Medicare path that truly fits your retirement life.

-Donna LeValley

11 Costly Medicare Mistakes You Should Avoid Making

12 FAQs About Medicare: Your Medicare Questions Answered

Medicare Open Enrollment ends this Sunday, December 7. If you are still deliberating, you still have a few days to choose a new Medicare Advantage or Part D drug plan, switch to a Medicare Advantage plan, or switch back to original Medicare. We have assembled some Medicare FAQs to help you make better choices during open enrollment.

What happens if you do nothing? Your coverage won’t be disrupted; your current selections will simply be renewed for 2026.

Original Medicare (Parts A and B): If you have original Medicare, you don't need to do anything to keep your coverage; it continues as long as you pay your Part B premiums (and Part A, if you have to pay a premium).

Medicare Advantage (Part C) or Part D Drug Plan: If you are enrolled in one of these private plans, it will usually automatically renew for the next year, assuming the plan is still being offered in your area.

If you're happy with the coverage you have now, and the plan is still being offered next year, you're all set. If you choose a new option for 2026, your new coverage will start on January 1.

-Donna LeValley

Medicare Premiums 2026: IRMAA Brackets and Surcharges for Parts B and D

Missed Medicare Open Enrollment? Here Are Your Options

If you missed Medicare open enrollment, you may still be able to change your Medicare selections, depending on your current coverage and why you fumbled the deadline. Your ability to make any changes after the December 7 deadline depends on whether you currently have original Medicare or Medicare Advantage and if there are extenuating circumstances that caused you to miss the cutoff.

Don't worry about seeing a doctor or filling a prescription — your Medicare coverage will continue uninterrupted despite missing the deadline. Your current insurance elections will be renewed automatically, and there will be no gaps in your coverage.

There are only limited opportunities for original Medicare beneficiaries to make coverage changes after that period ends. It will typically depend on circumstances and whether you qualify for the Special Enrollment Period (SEP). Medicare Advantage beneficiaries who want to make changes are in a better position and have a second chance to review and alter their selections in 2026.

If you qualify for the SEP, you can only change your Part D coverage. You are not able to switch from original Medicare to a Medicare Advantage plan during a SEP. The Medicare site offers a Q&A on how to qualify for the special enrollment period and gives more details about qualifying circumstances.

-Donna LeValley

What Medicare Covers When You Travel in the US and Abroad

Medicare Advantage Participants Get Another Go at Open Enrollment on January 1

If you're already an Advantage enrollee, there are two times a year — spring and fall — when you can switch from one plan to another or return to original Medicare. Spring enrollment starts January 1 and runs until March 31, while fall enrollment runs concurrently with Medicare's open enrollment period, from October 15 to December 7.

The best plan will depend on each individual's needs. Recently, a number of the large insurers that offer Advantage plans have reduced the number of Medicare Advantage and Part D plans they offer and have curtailed services in some markets.

To help you explore options, you can find more information on Medicare Plan Finder, which was designed to help you search for Medicare Advantage and Medicare Part D plans within your zip code. The finder also rates available plans in your area using a star system, where five stars are the highest rating. For 2026, there are 18 plans with five-star ratings.

-Donna LeValley

Major Insurers Scale Back Medicare Advantage and Part D Plans for 2026

The catch? Bisignano is also the current Commissioner of another massive federal agency: the Social Security Administration (SSA).

U.S. Treasury Secretary Scott Bessent, who is pulling double duty as IRS Commissioner, says the newly created position will involve overseeing the day-to-day operations of the federal tax agency. The role is also reportedly designed to help modernize the nation’s tax system.

“The IRS and SSA – two of the most public-facing and broadly impactful federal agencies – also share many of the same technological and customer service goals. This makes Mr. Bisignano a natural choice for this role,” Bessent stated in a release regarding the move.

The unusual appointment comes at a time of revolving leadership at the IRS and just as the tax agency must implement provisions in the massive GOP 2025 tax and spending bill, which President Donald Trump signed into law in July.

So, what could this new dual role mean for taxpayers and Social Security beneficiaries? Here’s more to know.

New IRS CEO also oversees Social Security

Frank Bisignano’s appointment to lead both the Internal Revenue Service and the Social Security Administration brings together two of the largest federal agencies under one executive.

A former chairman and CEO of global fintech and payments company, Fiserv, Bisignano is now responsible for overseeing operations that affect nearly every American.

Both the IRS and the SSA handle trillions of dollars a year and provide services to millions. Each agency faces significant operational challenges, including aging technology systems, staff reductions, and demands for improved customer service.

For example, both the IRS and SSA are operating with leaner workforces this year due to historic federal staffing reductions and the current government shutdown.

• The IRS, which once employed more than 100,000 people, has reportedly reduced its staff by roughly 25% this year.
• Supplemental funding from the Biden administration's Inflation Reduction Act will sustain operations for a short while during the current government shutdown.
• However, the reduced number of IRS employees overall could ultimately result in slower response times, longer processing delays, and a more limited tax enforcement footprint during the upcoming critical tax season.

Meanwhile, the SSA has reportedly lost about 7,000 employees since January 2025, leaving roughly 45,000 to 50,000 staff to manage Social Security benefits for millions of people in the United States. That translates to one employee serving nearly 1,500 beneficiaries.

Even with many staff members still on duty during the government shutdown, the SSA continues to face pressure to process claims, hearings, and service requests.

(Also, as many as 47 local Social Security field offices have been targeted by the Trump administration’s Department of Government Efficiency for closure this year. Though the SSA has said no local offices have been permanently closed.)

Chaos at the IRS?

The CEO shift also comes as the IRS has struggled with continuity in leadership.

As Kiplinger has reported, since January, when President Trump began his second term, the IRS has had seven confirmed or acting commissioners. Former IRS Commissioner Billy Long was dismissed shortly after being confirmed for the role, and Secretary Bessent has since stepped in.

That turnover has coincided with a so far turbulent year at the tax agency, including a series of layoffs, recent efforts at rehirings, budget cuts, and legal challenges, all while rolling out major tax reforms included in the 2025 Trump megabill.

Meanwhile, legal disputes over data sharing with agencies like Immigration and Customs Enforcement (ICE) continue to raise concerns about taxpayer privacy and the limits of interagency cooperation.

No more paper checks

If that weren’t enough to navigate, there’s the Treasury’s decision to end paper checks. This phase-out, which began Sept. 30, means all federal payments, including Social Security benefit checks and IRS tax refunds, will soon be issued electronically.

• For Social Security beneficiaries, especially older adults, this can expedite payments and reduce the risk of lost or stolen checks.
• But it could also create challenges for those without bank accounts or reliable internet access.

On the tax side, electronic payments could mean lower processing and mailing costs. However, the transition will need to support taxpayers who face challenges adapting or who lack digital access.

Implications for taxpayers and SS beneficiaries

Supporters cite Bisignano’s private-sector experience, which they suggest could help accelerate modernization efforts at the IRS and SSA.

However, others note risks associated with such an expanded role. For example, with one leader overseeing two massive agencies, it might be more difficult to maintain accountability and manage distinct priorities. Additionally, it seems that the role won’t require U.S. Senate confirmation.

Richard Neal (D-Mass), ranking member of the House Ways and Means Committee, expressed concern about the Trump administration "inventing positions out of thin air."

“Putting Commissioner Bisignano in charge of the IRS while he simultaneously oversees a chaotic and destructive operation at Social Security makes it clear that in Trump’s Washington, loyalty is rewarded, and competence is irrelevant,” Neal said in an Oct. 6 release.

Bottom line? For many, the effectiveness of these agencies is crucial to financial well-being. For example, the ability to receive timely tax refunds and navigate new tax law changes, many of which take effect in 2025, largely depends on stable and focused IRS leadership.

How effectively will this new CEO balance complex responsibilities at both agencies, like stabilizing workforces, managing modernization, and enhancing systems and services?

Stay tuned. Only time will tell.

Read More

• Treasury Paper Checks Going Away: What to Know
• How Many IRS Commissioners Have We Had This Year?
• Social Security and Your Taxes: Five Key Points for 2025
• What Will the Government Shutdown Do to the IRS?

Typically, during a shutdown, non-essential federal agencies are closed and most employees are furloughed without pay. Essential agencies, which include the Transportation Security Administration, the National Security Agency (NSA), and the majority of the Department of Veterans Affairs, remain open, although employees are not paid.

Depending on how long the shutdown lasts, retirees can see no interruptions or a whole lot of them. Here’s how the shutdown can impact everything from your health to your travels.

Your money during a government shutdown

The biggest question among retirees during a shutdown is will my Social Security benefit arrive on time? The answer: yes. Social Security and Supplemental Social Security payments are not delayed during a shutdown. They are considered mandatory spending and are untouchable.

But that doesn’t mean there won’t be any service delays. Expect interruptions in benefit verifications, earnings record corrections, and Medicare card replacement. To see the entire list of Social Security services that are open and closed, check out our story on how Social Security is affected by a government shutdown.

Tax refund delays?
While we are far from tax time, the Internal Revenue Service will be operating with a reduced staff if the shutdown stretches into next week. Under the IRS contingency plan, all staff will report to the IRS for five business days; after that, operations will be slowed. What impact the slowdown will have on income tax refunds in April is unclear, but if the shutdown lasts long, expect some delays.

“An extended shutdown could potentially impact the start of the 2026 filing season, which would be detrimental to the government’s ability to collect revenue and issue critical guidance on the new tax law,” said Melanie Lauridsen, Vice President of Tax Policy & Advocacy with the AICPA, in a press release. “Even a partial shutdown of the IRS for an extended period is deeply concerning.”

Your health during a government shutdown

Some operations of the Centers for Medicare and Medicaid, or CMS, are considered essential and continue operations during a government shutdown.

Just like Social Security, Medicare and Medicaid fall into the mandatory spending category too, which means you’ll continue to receive your Medicare benefits during the shutdown.

About 49% of CMS staff will be furloughed, and certain services paused during the shutdown, which could lead to longer wait times to speak with a CMS representative. You will also need to wait until the government reopens to replace your Medicare card. To learn more about the impact the government shutdown will have on Medicare, read our story on how Medicare is affected by a government shutdown.

Telemedicine is out for now.
Seeing a doctor from the comfort of your home or getting in-home care will be more difficult during the shutdown. That’s because funding for two COVID-era programs — telemedicine and the CMS Acute Hospital Care at Home initiative — was set to expire at the end of September, and the government shut down without Congress passing a new budget plan. As a result, Medicare beneficiaries lose access to those two services.

Is food less safe?
The Food and Drug Administration (FDA) is only partially open during the shutdown. Essential work, such as drug safety and foodborne illness response, continues, but oversight of new animal food ingredients is suspended due to staff furloughs.

That means the FDA won’t be able to ensure the meat, eggs, or milk you are consuming are safe.

Your travels during a government shutdown

The TSA is considered an essential agency, which means airport employees will continue to work without pay. Typically, TSA employees receive back pay once the government reopens. The agency said that about 61,000 of its 64,000 employees are exempt from the shutdown, and the remaining employees will be temporarily furloughed.

Still, if the shutdown goes on for a while, it could lead to delays at the airports.

“Government shutdowns reduce the safety and efficiency of the National Airspace System (NAS) and erode the layers of safety that allow the flying public to arrive safely and on time to their destinations,” the National Air Traffic Controllers Association (NATCA) said in a statement. “During a shutdown, critical safety support staff are furloughed, and support programs are suspended, making it difficult for air traffic controllers and other aviation safety

National parks may suffer.
You can get into a national park during a government shutdown, but if you are looking for any services, you will be disappointed. In past shutdowns, the National Park Service furloughed workers and shuttered many of the services visitors have come to love.

Some of the services that are closed during a government shutdown include: visitor centers, ranger services, and campgrounds. To learn more about national parks and government shutdowns, read what happens to national parks during a government shutdown.

Timing is everything during a shutdown

While nobody wants to see the federal government shut down, the longer it lasts, the more delays retirees will face in government services and travel (like at airports). The good news is that your Social Security and Medicare benefits will not be interrupted, giving you one less thing to worry about during this time.

Related content

• How A Government Shutdown Could Affect You
• What Happens to Your Money in a Government Shutdown?
• The Health Care Tax Credit Debate Behind the Government Shutdown

Test your knowledge on concepts like the primary insurance amount (PIA), claiming age reductions and the rules for divorced beneficiaries with this 10-question quiz on the basics of Social Security spousal benefits.

And don't worry if you miss an answer; you can follow the links below the quiz to brush up on your knowledge.

More on Social Security, from the Kiplinger retirement team:

• Can Both Spouses Collect Social Security Benefits?
• How Divorced Retirees Can Maximize Their Social Security Benefits: A Case Study
• 13 Answers to Pressing Social Security Questions
• Social Security Basics: Things You Must Know About Claiming and Maximizing Your Social Security Benefits
• What's My Social Security Full Retirement Age (FRA)?
• Delay Social Security Benefits — Even by a Month — to Boost Your Check
• When To Take Social Security Payments: Your Age Matters
• Reasons to Take Social Security Early

Answer: I'm sorry to hear about your health problems. It's hard to imagine when you're younger that poor health might sideline your work, but if it happens, you'll need to rethink your retirement plan.

A 2024 MassMutual survey aptly captured this dilemma, finding that 25% of respondents had to retire earlier than they had planned due to illness or injury. The survey also showed that, on average, respondents believe that age 63 is the optimal time to retire, although some people may be inclined to continue working for much longer.

There can be benefits to spending more time in the labor force. Oregon State University research found that working past age 65 could lead to a longer life. And health benefits aside, extending your career could allow you to boost your savings or better stretch whatever money you’ve accumulated so far.

However, there’s another massive benefit to working longer — giving yourself the option to delay Social Security for larger monthly checks. It’s an option you may be hoping to exercise.

But what if, at age 68, you can no longer work full-time due to health issues? That could derail plans you may have had to claim Social Security at age 70.

You may be tempted to live off of savings for a couple of years to stick to your original plan. But is that a smart idea? Maybe.

How Social Security’s delayed retirement credits work

Once you turn 62, you can file for Social Security benefits at any time. Waiting until full retirement age, which is 67 for folks born in 1960 or later, ensures that your monthly benefits aren’t reduced. Those benefits themselves are calculated based on your 35 highest-paid years in the labor force, using a specific formula that adjusts earlier wages for inflation.

For each year you delay Social Security beyond full retirement age, you accrue delayed retirement credits that boost your benefits by 8%. Those credits stop accumulating at 70, which is why there’s no sense in delaying Social Security benefits past that point.

You essentially have an eight-year window to claim Social Security, from 62 to 70, also known as the 8-year rule of Social Security.

To delay or not — that is the question

Since Social Security benefits are guaranteed for life, it can be tempting to chase the highest monthly paycheck. But if you’re unable to extend your work years to age 70, you may find that living off of savings for even a couple of years is a challenge — namely, because you don’t want to put your nest egg at risk of getting depleted.

Tom Buckingham, Chief Growth Officer at Nassau Financial Group, says, “If health issues force early retirement, claiming Social Security now rather than waiting can be a smart choice. It provides immediate income, reduces reliance on savings, and avoids the risk of delaying for benefits that may never be realized due to shortened lifespan.”

As he explains, claiming Social Security at 70 does mean receiving more money each month, but you’ll also get fewer individual benefit payments than if you were to file at 68. Depending on the nature of your health issues, it may be beneficial to receive the money sooner rather than wait, as delaying until 70 could result in receiving less Social Security over the course of your lifetime.

However, health issues that force an earlier retirement than expected aren’t always detrimental on a long-term basis.

As Buckingham says, “If health issues force early retirement but aren’t expected to shorten one’s lifespan, it may make sense to delay claiming Social Security if you have sufficient assets to cover interim expenses and provide a cushion for future healthcare needs in retirement.”

Buckingham points out that filing for Social Security at 68 would result in a monthly benefit approximately 14% lower than it would be at age 70. Whether that results in less lifetime income, however, depends on your lifespan — something you can’t predict. You’ll need to consider the nature of your health issues and think about the long-term impact you expect them to have.

Krisstin Petersmarck, President and Founder of New Horizon Retirement Solutions, agrees that you may need to bust out your crystal ball and try to determine whether your current health issues will have a long-term impact.

“If longevity is not a concern, then it could make the most sense to claim Social Security now,” she says.

But Petersmarck also says it’s important to think about how much money you have saved, and how much income your portfolio can likely generate in the near term.

“Because the market is doing well and expected to end the year staying in bull market territory, along with interest rates slowly coming down, can they create enough growth in their investments to delay claiming Social Security? Right now, even conservative risk profiles are performing quite well, which might be enough to provide the needed income.”

A decision you don’t have to make alone

Deciding whether to claim Social Security now versus two years later can seem like a gamble in the absence of knowing how long you’ll be around to collect those benefits. That’s why Petersmarck suggests not making that call on your own.

“Ultimately, the best advice is to work with an adviser who specializes in retirement income planning,” she says.

An adviser can help you assess your immediate and long-term income needs, as well as your portfolio size and composition, to figure out if it makes sense to take benefits now versus wait to receive your maximum monthly Social Security payout.

Keep in mind, though, that depending on the nature of your health issues, it may be feasible to continue working in some capacity instead of full-time. That could make the case for delaying Social Security and living on a combination of savings and whatever wages you’re able to bring in. So it’s worth looking at the situation from every angle and consulting a professional to help you weigh your options.

Read More

• The '8-Year Rule of Social Security' — A Retirement Rule
• Five Ways to Cash in on the $6,000 'Senior Bonus' Deduction
• I'm 60 With $2.8 Million Saved. I'm Tired of Working, But Need Health Insurance Until Medicare Kicks In
• Average Net Worth by Age: How Do You Measure Up?

Don't worry if you miss an answer; you can follow the links below the quiz to brush up on your knowledge.

More on Social Security, from the Kiplinger team:

• Social Security Basics: Things You Must Know About Claiming and Maximizing Your Social Security Benefits
• What's My Social Security Full Retirement Age (FRA)?
• Delay Social Security Benefits — Even by a Month — to Boost Your Check
• When To Take Social Security Payments: Your Age Matters
• Reasons to Take Social Security Early

As we saw in early spring, many retirees were thrown for a loop when the stock market briefly collapsed in response to President Donald Trump's ongoing tariff announcements.

The recent One Big Beautiful Bill (OBBB) is the latest news from the Capitol that will impact retirees.

While the act didn't quite deliver on eliminating taxes on Social Security, as claimed by a misleading statement from the Social Security Administration, it does include a few significant changes for older people.

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

It will take years to see the true long-term impact of the changes, such as tax-cut extensions and Medicaid cuts, but the time to plan is now. This is an opportunity to proactively plan, help protect your finances and boost your retirement.

Tax changes

Older adults have already benefited from lower tax rates from the Tax Cuts and Jobs Act, and those taxes were set to expire after the 2025 tax season. Not only does this act extend those cuts through at least 2028, but it adds a new $6,000 deduction for people age 65 and older.

The new tax deduction for many retirees was added instead of eliminating taxes on Social Security, and taxpayers 65 and older who earn under $75,000 as single filers and under $150,000 as joint filers are eligible. It's estimated to provide an average tax relief of about $1,100.

The security of additional years with lower tax rates and an additional deduction for older people means they should revisit their tax plans.

Roth conversions are a crucial part of retirement plans, and older individuals can use the tax deduction to reduce taxation for future generations through their retirement accounts.

Tax-deferred retirement accounts can lead to hefty tax bills when income is withdrawn from the account. This new tax deduction presents an opportunity, as you can use that deduction to offset taxes accrued from a Roth conversion.

It also allows you to take advantage of capital gains in a Roth account tax-free. Take advantage of this additional tax break by revisiting your Roth conversion plan and considering converting more retirement assets into Roth accounts.

Another benefit from additional tax deductions is an adjustment to Medicare premiums. These are calculated using modified adjusted gross income (MAGI), which is the income after tax adjustments, from two years ago.

While it will take a couple of years to take effect, a lower tax burden would reduce older adults' MAGI and potentially lower their Medicare premiums.

Long-term care

People older than 65 have almost a 70% chance of needing long-term care, and that can cost hundreds of thousands of dollars. Medicare doesn't cover long-term care, and a recent survey found that almost half of older adults don't know how to plan for their long-term care needs. That's a problem.

As a result, millions of Americans 65 and older rely on Medicaid, which covers thousands of Americans who can't afford health care otherwise. It's a crucial resource for older people looking for long-term care.

Some older people without long-term care plans spend down their income or assets to meet Medicaid's financial limits in their respective states and become eligible.

The OBBB makes changes to Medicaid that will raise prices for older people and limit funding for its services. We don't know the exact effect of these cuts, but it's a sobering reminder of our need to plan for health care costs in retirement.

Long-term care insurance is the easiest way to cover your expenses, but it's best to get a policy earlier rather than later because it can be difficult to qualify later.

Some annuities also have long-term care riders built into them that can help cover the cost. Health savings accounts (HSAs) can be an option to cover expenses.

Even though you can't contribute to an HSA once you are enrolled in Medicare, if you contributed to one before retirement and have money in the account, you can use the funds for costs covered by Medicare.

Looking for expert tips to grow and preserve your wealth? Sign up for Adviser Intel (formerly known as Building Wealth), our free, twice-weekly newsletter.

Having a retirement plan is the first step to enjoying your golden years, but proper management requires constant adjustment to fit your unique goals.

The ripple effects from this budget act will continue to unfold in the coming years, and while it's difficult to predict the exact impact in the present, we can anticipate and proactively prepare your financial future.

Many impactful changes are constantly unfolding, and it's important to have a plan.

As retirees, you can't afford to risk your future. Take this as an opportunity to visit with a financial adviser to discuss your financial goals and help adjust your retirement plan for success.

Related Content

• Potential Trouble for Retirees: A Wealth Adviser's Guide to the OBBB's Impact on Retirement
• Is the One Big Beautiful Bill Really All That Great for Your Retirement?
• What the OBBB Means for Social Security Taxes and Your Retirement: A Wealth Adviser's Guide
• Your Golden Years Just Got a Tax Break, But There's a Catch
• Widow's Penalty: Three Ways to Protect Your Finances

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Some furloughed government workers are being called back to produce a critical piece of September inflation data needed for the calculation. This is a relief to retirees who were concerned the shutdown would indefinitely delay their much-anticipated benefit increase news.

Although the government remains shut down, some workers at the Bureau of Labor Statistics (BLS) have been brought back to prepare the September consumer price index (CPI), needed to compile the annual COLA.

The September CPI, originally due for release on October 15, will now be released on October 24 at 8:30 am ET, the BLS announced on Wednesday. The COLA is expected to follow on the same day.

"This release allows the Social Security Administration (SSA) to meet statutory deadlines necessary to ensure the accurate and timely payment of benefits," the BLS said in a statement, noting that no other releases will be scheduled or produced until the resumption of regular government services.

The October 1 shutdown of the federal government raised fears earlier this month that the announcement of the annual Social Security COLA would be delayed indefinitely while the government remained closed.

However, even with the delay in the announcement, an increase in Social Security benefits as a result of the COLA is still expected to take effect in January, the same as was originally planned.

The longest government shutdown lasted 35 days.

I want to be clear that a shutdown will not impact the payment of Social Security benefits to any recipients. Retiree benefits, disability payments, and Supplemental Security Income (SSI) will be paid in full and on time with no changes to SSA's 2025 payment schedule.

The government shutdown resulted in the furlough of most BLS staff, leading to the suspension of data collection, processing, and scheduled releases, including the September Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The September CPI-W is the last piece of data needed to calculate the COLA.

This delay impacts more than the COLA announcement. The new numbers are also used to calculate the limits for the Social Security earnings test and the tax wage cap for 2026.

How the COLA is determined

The Social Security COLA is calculated automatically based on the year-over-year change in the CPI-W. The calculation compares the average CPI-W for the third calendar quarter, which includes July, August and September of the current year, to the third-quarter average of the last year.

While we have the data for July and August, the September report was scheduled to be released on October 15. Based on two months of the required data, the estimated 2026 COLA sits at 2.7%.

The BLS, which is part of the Department of Labor, is responsible for collecting, processing and publishing this crucial inflation data. The final piece of data needed for the calculation — the September CPI-W report — will now be released on October 24, despite the ongoing shutdown.

The COLA announcement is now also expected on October 24.

90 days remain until COLA adjustments take place

Even with the delay to the release of the September data, the new benefit amount will still take effect with the January Social Security payments. A delay is only expected in the announcement of the percentage, not the application of the increase itself.

Until then, tens of millions of beneficiaries will remain in suspense about the exact size of their benefit increase.

Related Content

• 2026 Social Security COLA: The Little Known Data Shift That Could Impact Millions of Retirees' Benefits
• 2026 Social Security COLA August Projection
• How Social Security Is Affected by a Government Shutdown
• Six Changes Coming to Social Security in 2026

And don't worry if you miss an answer, you can follow the links below the quiz to brush up on your knowledge.

More on Social Security, from the Kiplinger team:

• What is the IRMAA (Income-Related Monthly Adjustment Amount)?
• Medicare Premiums 2025: IRMAA Brackets and Surcharges for Parts B and D
• Medicare Premiums 2026: Projected IRMAA Brackets and Surcharges for Parts B and D
• How to Appeal the IRMAA for Medicare Parts B and D
• 9 Things You Must Know About Medicare's Income-Related Monthly Adjustment Amount (IRMAA) Surcharges
• I Missed the 2-Year IRMAA Rule, Now My Medicare Costs Are Skyrocketing.
• Your Medicare Costs Are Set to Soar: What to Expect Over the Next Decade
• Want to Avoid the IRMAA? Consider a Roth Conversion

And don't worry if you miss an answer, you can follow the links below the quiz to brush up on your knowledge.

More on Social Security, from the Kiplinger team:

• Social Security Basics: Things You Must Know About Claiming and Maximizing Your Social Security Benefits
• 2026 Social Security COLA Projection
• The Average Monthly Social Security Check: August 2025
• The Average Social Security Check by Age
• How Much Would Social Security's 2033 Shortfall Cost You?
• Presidents and Social Security: How Presidents Have Impacted America's First Social Insurance Policy
• Six Changes Coming to Social Security in 2026

Before you plan how to spend those tax savings, let's clear something up: This is not making Social Security tax‑free. What it does is create a special tax deduction for certain retirees starting in 2025. (However, there is a separate bill in Congress now, called the You Earned It, You Keep It Act, that could end taxes on Social Security as soon as next year.)

The special deduction in the OBBB is a nice perk if you qualify, but it comes with rules, income limits and a shelf life. Let's break it down, because the details matter.

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

What this deduction actually means

Beginning in the 2025 tax year, if you're 65 or older, you might be able to claim a deduction of:

• Up to $6,000 if you're a single filer
• Up to $12,000 if you're married, filing jointly

This deduction is on top of your standard deduction. It doesn't erase the taxes on your Social Security, but it can lower your taxable income.

Who qualifies (and who doesn't)

Like most things in the tax code, it's not as simple as "everyone gets it." There are income limits based on modified adjusted gross income (MAGI).

Here's how it works:

If you're under the full‑deduction income limit, you get the whole amount. Go above it, and the deduction starts shrinking.

How the phase‑out works

Once your income passes the threshold, the deduction drops by 6 cents for every dollar above the limit.

Example: Let's say you're single, 67 and your MAGI is $125,000. You're $50,000 above the $75,000 limit. Multiply that $50,000 by 0.06, and you get $3,000.

That $3,000 gets subtracted from the $6,000 deduction, leaving you with a $3,000 deduction.

Standard deduction or itemized — it doesn't matter

One nice part about this deduction: You get it whether you take the standard deduction or itemize. You don't have to overhaul your tax-filing approach to take advantage of it.

Here's the catch: This deduction isn't here to stay. It's set to expire after the 2028 tax year, unless Congress renews it.

That means retirees might want to look at their income strategies for the next few years. For some, spreading out withdrawals from retirement accounts or carefully managing taxable income could make the deduction work harder for them while it's still around.

Looking for expert tips to grow and preserve your wealth? Sign up for Adviser Intel (formerly known as Building Wealth), our free, twice-weekly newsletter.

What it means for Social Security's future

There's another side to this. If fewer people are paying taxes on Social Security benefits (because of the deduction), that means less money flowing into the Social Security trust fund.

That's a big deal because the trust fund is already projected to become depleted in 2033 if nothing changes.

"Become depleted" doesn't mean Social Security disappears — it will still be collecting payroll taxes. But without adjustments, benefits could be reduced by about 20%.

This deduction doesn't fix that problem, but it does add another wrinkle to the ongoing discussion about Social Security's long‑term stability.

Key takeaways

Here's the quick version:

• This is not tax‑free Social Security — it's a deduction
• Full deduction: MAGI below $75,000 (single) or $150,000 (joint)
• Phase‑out: Starts above those thresholds, ends at $175,000 (single) and $250,000 (joint)
• It works whether you take the standard deduction or itemize
• It's temporary — 2025 through 2028 unless renewed
• Social Security's trust fund still faces long‑term challenges

The bottom line

The OBBB's Social Security deduction is a nice bonus for some retirees, but it's not the sweeping change "tax‑free" headlines make it out to be. It's targeted, income‑based and temporary.

For retirees and those close to retirement, understanding how it works could help keep more money in your pocket in the next few years.

But just as important: Keep an eye on the bigger conversation about Social Security's future — it's not going away.

Financial planning and Investment advisory services offered through Diversified, LLC. Diversified is a registered investment adviser, and the registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the SEC. A copy of Diversified's current written disclosure brochure which discusses, among other things, the firm's business practices, services and fees, is available through the SEC's website at: www.adviserinfo.sec.gov. Diversified, LLC does not provide tax advice and should not be relied upon for purposes of filing taxes, estimating tax liabilities or avoiding any tax or penalty imposed by law. The information provided by Diversified, LLC should not be a substitute for consulting a qualified tax advisor, accountant, or other professional concerning the application of tax law or an individual tax situation. Nothing provided on this site constitutes tax advice. Individuals should seek the advice of their own tax advisor for specific information regarding tax consequences of investments. Investments in securities entail risk and are not suitable for all investors. This site is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction.

Related Content

• What the OBBB Means for Social Security Taxes and Your Retirement: A Wealth Adviser's Guide
• The Five Social Security Blind Spots Retirees Often Miss
• The Big Red Bucket Theory: A Financial Adviser's Simple Way to Visualize Your Retirement Plan
• I'm a Financial Planner: This Is the Key to Successful Retirement Planning
• How Your Net Worth Should Change as You Age

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

The IRS, Social Security Administration (SSA), U.S. Department of Veterans Affairs and other federal government agencies are phasing out physical checks by September 30. Where does that leave you?

We’ll cover the ins and outs of what to know before the date approaches — so you can be prepared if you’re still receiving paper checks for tax refunds, Social Security benefits or other payments from the government.

IRS Deadline September 30

• Generally, after September 30, 2025, the Treasury Department has said that all federal agencies will cease sending and receiving paper checks as a form of payment.
• However, there are ways to pay the IRS without a check and to get a tax refund without a bank account.
• Some individuals might be granted an exception to this rule through a waiver (PDF), particularly for those who receive Social Security benefits.

FAQs

Are paper checks going away?

In general, all federal agencies will phase out sending and receiving paper checks after the September 30 deadline. This includes:

• The Internal Revenue Service (IRS).
• Social Security Administration (SSA).
• Department of Veterans Affairs (VA).
• U.S. Department of the Treasury.
• U.S. Department of Labor (DOL).
• Railroad Retirement Board (RRB).
• Federal Motor Carrier Safety Administration (FMCSA).

Other federal government agencies that issue benefits will also cease sending and receiving physical check payments. That includes, for example, the Defense Finance and Accounting Service, the Bureau of Alcohol, Tobacco, and Firearms (TTB) and the Office of Personnel Management (Civil Service).

Why the shift to electronic payments?

According to the Bureau of Fiscal Service, check fraud has increased nationwide by 385% since the beginning of the COVID-19 pandemic. This fraud has impacted IRS and Social Security payments.

• Additionally, issuing paper checks is relatively expensive, costing the federal government about 50 cents per payment compared with an electronic funds transfer (EFT), which might cost less than 15 cents per check.
• Physical checks are also 16 times more likely to get “lost, stolen, altered or delayed,” making printed payment methods more inefficient than digital payments.

Can I still pay my taxes with a check?

Under the new rule, payments made to the federal government — including taxes and fees — generally must be made electronically. You might not be able to pay via check after September 30 (unless you qualify for a waiver — more on that later).

Instead, you can use the Electronic Federal Tax Payment System (EFTPS) to pay your federal taxes. Alternatively, you can pay your federal tax bill via IRS Direct Pay, through your online IRS account, or by way of debit card, credit card or digital wallet.

For more information, check out Kiplinger’s report How to Pay the IRS if You Owe Taxes.

Note: No action is required if you currently make or receive payments electronically during this transition.

How will I get my IRS tax refund?

If you typically receive a paper check for your federal tax refund, you'll need to set up a digital payment method:

• Direct Deposit into your bank account.
• Mobile payment app (such as PayPal).
• Directly into a reloadable prepaid debit card.

However, while some of these methods might be acceptable to the IRS, your state tax agency might have different rules and requirements for digital payments (or might still accept print checks).

Be sure to check your state’s Department of Revenue website to see which methods of payment are acceptable.

Related: Five Ways Trump’s 2025 Tax Bill Could Boost Your Tax Refund (or Shrink It)

Will Social Security benefits go away?

While printed Social Security checks are going away, Social Security benefits aren’t impacted. Social Security beneficiaries should set up one of the following payment options to ensure their checks are not interrupted after September 30, per the SSA:

• Direct deposit. Sign up to have funds transferred directly into your bank account. If you don’t have a bank account, the Treasury recommends opening one by visiting the FDIC website or MyCreditUnion.gov.
• Direct Express card. Use a prepaid debit card designed for federal benefit recipients.

You can enroll online for digital payments from several federal agencies (such as Social Security, Veterans Affairs, SSI, etc.) at GoDirect.gov or by calling Go Direct at 1-877-874-6347.

• But if you need assistance setting up your online payment method, you can also contact the SSA at 1-800-772-1213.
• Similarly, federal tax refund assistance can be reached via the IRS at 1-800-829-1040.

For all other federal agencies, visit the applicable website for potential ways to receive assistance setting up your digital payment.

Will my Medicare premiums be affected?

Medicare premiums can be affected by the September 30 deadline if you currently pay your premiums by direct deduction from a paper Social Security check.

If you receive physical Social Security checks, it’s important to switch to an electronic payment method by the deadline to avoid delays or interruptions in your health coverage.

Otherwise, if you already pay your premiums directly to Medicare (for Part A and/or B) or to a private plan provider (Part C and D), no action is required. The same goes if you already have payments set up electronically.

What if I don't have a bank account?

You can use a Direct Express Prepaid Debit Card to receive digital payments from the SSA or the IRS if you don’t have a bank account, according to the U.S. Treasury.

The prepaid card functions similarly to a traditional debit card and has no enrollment fees, minimum balance requirements or credit checks for preapproval to get the card.

Alternatively, there might be limited exceptions for people who don't have bank accounts who need to receive Social Security benefits or an IRS tax refund via a physical check, per Trump via the executive order:

• Individuals without access to digital banking services (or other electronic payment systems).
• Emergency payments (those that could cause an undue hardship, like a FEMA disaster relief payment).
• National security matters.

These “rare circumstances” might also apply to beneficiaries of other federal agency checks, such as recipients from Veterans Affairs and the Civil Service.

What are the September 30 waiver requirements?

After September 30, you might be granted a waiver to continue receiving federal benefit payments by physical check. However, waivers are by application only and are issued at the discretion of the Treasury Electronic Payment Solution Center.

Here are the general waiver requirements (you must meet one):

• Mental impairment. You have a documented mental disability that makes it difficult to manage electronic payments.
• Remote location. You’re living in a remote area that cannot support electronic banking.

Additionally, Go Direct (a program to help you set up digital payments for several federal benefits) states that print check recipients who are age 90 or older might be eligible for a waiver.

But these criteria generally apply to federal beneficiaries. If you need a waiver to make a payment to a federal agency, such as the IRS, reach out to that department directly for a potential exception.

Where’s the September 30 waiver form for Social Security benefits?

If you wish to continue receiving Social Security checks after the September 30 deadline, you might be eligible for a waiver. Here are the steps to apply:

• Call the U.S. Treasury's Electronic Payment Solution Waiver Line at 1-855-290-1545.
• Request an application over the phone.
• Alternatively, you can print and fill out FMS Form 1201W (PDF) to request a waiver to receive printed Social Security checks. Still, you must meet the strict eligibility requirements mentioned above.

What are the latest scams to look out for today?

Unfortunately, government officials are already issuing warnings about the high likelihood of scams emerging during the transition from paper to paperless checks.

To help protect yourself and your loved ones from potential scammers, remember these tips:

• No federal agency will contact you asking for your login or banking information. This includes via email, phone, or text message.
• Only update your payment information through official government sites like SSA.gov or IRS.gov.
• If in doubt, talk to a trusted friend, family member, or neighbor about any seemingly “urgent” messages coming from a federal agency.

Related: AI Tax Scams Target Middle and Older Adults: What to Know

Read More

• IRS Income Tax Refund Schedule for 2025
• New Bill Would End Taxes on Social Security Benefits
• IRS in Turmoil: Budget Cuts and Staff Shake-Ups Threaten Taxpayer Services
• Old Tax Rules for Social Security Are Costing Retirees Money

More recently, Fed meetings have become must-watch events on Wall Street after inflation hit a pandemic-induced 40-year peak in 2022 – which forced the central bank into an aggressive rate-hiking campaign that lifted the federal funds rate to its highest level in more than two decades.

With the next Fed meeting on deck, we decided to test your knowledge on the Federal Reserve. Don't worry if you miss an answer or two. We've included links to several of Kiplinger's most popular Fed articles at the end of this quiz.

More on the Federal Reserve, from the Kiplinger team:

• When Is the Next Fed Meeting?
• How Does the Federal Reserve Work?
• Best Stocks to Buy for Fed Rate Cuts
• How the Federal Reserve Affects Mortgage Rates — and What It Means for Homebuyers in 2025
• What Is the Federal Funds Rate?
• Kiplinger Interest Rates Outlook

And don't worry if you miss an answer, you can follow the links below the quiz to brush up on your knowledge.

More on Social Security, from the Kiplinger team:

• Social Security Basics: 12 Things You Must Know About Claiming and Maximizing Your Social Security Benefits
• What's My Social Security Full Retirement Age (FRA)?
• Delay Social Security Benefits — Even by a Month — to Boost Your Check
• When To Take Social Security Payments: Your Age Matters
• Five Reasons to Take Social Security Early
• Eight Strategies for Deciding When to File for Social Security
• The Average Social Security Check by Age
• How Your Social Security Check Changes at Ages 62, 65, 66, 67 and 70
• Six Changes Coming to Social Security in 2026

Many retirees wondered if 2025 would be the year that Congress would finally pass legislation to provide some relief. That question was amplified, for some, by President Donald Trump’s recent campaign pledge to eliminate taxes on Social Security benefits in his second term.

However, despite what you might have heard, the GOP mega tax bill that Trump signed into law on July 4, 2025, doesn’t change Social Security taxation.

Now there’s another push to erase taxes on Social Security as soon as next year. It’s called the You Earned It, You Keep It Act, and here’s what it could mean for retirees.

What is the You Earned It, You Keep It Act?

On September 4, Sen. Ruben Gallego (D-Ariz.), joined by Rep. Angie Craig (D-Minn.), who introduced a parallel bill in the U.S. House of Representatives in April, unveiled the You Earned It, You Keep It Act (PDF) in the U.S. Senate.

• The bill would permanently abolish federal taxes on Social Security benefits.
• Unlike prior measures, which would chip away at taxes or raise income brackets, this bill calls for a full repeal.
• If Congress passes the act this year, taxes on Social Security benefits would end starting in 2026 — impacting income tax returns filed in 2027.

“Like a lot of Americans, I’ve been paying into Social Security since my first job at 14. But despite decades of paying into the system, seniors are still forced to pay taxes on their hard-earned benefits — all while the ultra-wealthy barely pay into the system at all,” Gallego stated in a release regarding the bill.

“Trump claimed he ended taxes on Social Security. My bill actually does it. Permanently,” Gallego added.

To pay for this tax relief and safeguard Social Security’s long-term stability, the bill proposes an increase in the Social Security payroll tax wage base (also known as the tax limit). If approved, starting in 2026, all wages $250,000 and above would be subject to the 6.2% payroll tax, up from this year’s $176,100 cap.

That means higher earners would continue contributing, helping offset the lost revenue from retiree tax cuts and extending the trust fund’s solvency by decades.

According to projections, this approach would enable the Social Security (SS) Administration to maintain payments until at least 2058. That's well beyond the program’s current solvency forecast of 2034.

Why are Social Security Benefits taxed, and why the push for change?

• Right now, up to 85% of Social Security benefits can be taxable for retirees whose combined income (adjusted gross income plus tax-free interest and half of their Social Security benefits) of $25,000 and higher for singles or $32,000 and higher for couples.
• As Kiplinger has reported, these SS thresholds have remained unchanged since 1984, while the percentage of recipients paying some tax has increased from under 10% to nearly 56% today.
• Some lawmakers from both parties argue that the tax penalizes those who have worked for decades. With inflation biting into retirement budgets, a growing number of representatives cite fairness in calls for a tax repeal.

Since a sticking point when it comes to taxes on SS is the loss of federal revenue, other proposals, such as the RETIREES FIRST Act (PDF), raise income thresholds instead of eliminating taxes.

That legislation, introduced by Sens. Marsha Blackburn (R-Tenn.) and Roger Marshall (R-Kan.), would increase the provisional income thresholds that trigger taxes on Social Security benefits. It would raise them to $34,000 for individuals and $68,000 for couples filing jointly. (The current thresholds of $25,000 and $32,000, respectively.)

“Retirees across the country depend on Social Security, especially after enduring the record-high inflation of the last four years,” Blackburn stated in a press release, adding, “This bill would cut taxes on seniors’ benefits, helping them keep more of their hard-earned money.”

Given some historical context, the impact of such a change could be significant.

• In 1984, less than 10% of Social Security beneficiaries paid taxes on their benefits.
• Today, that figure has risen to nearly 56%.

Supporters say incorporating an annual inflation adjustment to the thresholds could help prevent future "bracket creep.”

Social Security taxes: What should retirees expect next year?

If the You Earned It, You Keep It Act passes this fall, older adults could see an end to Social Security taxes on their 2026 tax returns, typically filed in early 2027. But passage remains uncertain, with negotiations and highly partisan political bargaining always a factor on Capitol Hill.

Still, for millions of U.S. taxpayers who see Social Security as a benefit they earned through hard work, it’s a tax debate worth watching.

In the meantime, the new GOP tax megabill contains a new $6,000 temporary tax break targeted to older adults. For more information, see our report: How the New Senior Bonus Tax Deduction Works.

Read More

• How to Calculate Taxes on Social Security Benefits
• Social Security and Your Taxes: Five Things to Know
• SS Turns 90: Here Are the Outdated Rules Still Costing Retirees Money

Answer: Given that many private-sector employers have phased out pensions and that the median retirement savings balance among Americans 65 to 74 was only $200,000 as of 2022, Social Security is clearly an extremely important income source for retirees. Many older Americans rely on Social Security to cover their basic expenses. And even those with decent savings appreciate having those benefits to supplement their retirement plan withdrawals.

Of course, the tricky thing about Social Security is figuring out when to start taking benefits. Signing up at full retirement age (FRA) means you can collect your monthly benefits without a reduction. However, the Social Security Administration (SSA) dangles a carrot by making those benefits available as early as age 62, albeit at a reduced rate. And, not surprisingly, many beneficiaries opt to claim Social Security as soon as they are eligible.

On the flipside, the SSA rewards filers for being patient. Waiting beyond full retirement age to claim Social Security results in delayed retirement credits, which are worth 8% per year. Put another way, someone with a full retirement age of 67 who’s entitled to $2,000 a month at that time can grow their monthly benefit to $2,160 by waiting an extra year.

That incentive, however, eventually runs out. Come age 70, you don’t get credit for delaying Social Security, which is why it’s generally considered the “latest” age to sign up.

But what if your 70th birthday has come and gone, and you still haven’t claimed Social Security? It’s a situation you’ll want to rectify right away to avoid losing money.

Waiting only pays up to a point

One big misconception about how Social Security works is that if you don’t end up filing by age 70, you’ll be signed up to get benefits automatically, since there’s no financial incentive to have you hold off beyond that point. But Andrew Matz, Financial Planner at Oak Road Wealth Management, says, “The Social Security Administration will not automatically start sending you checks when you turn 70. You must file an application to start getting the money you've earned.”

In this situation, Matz’s advice is to file for Social Security as soon as possible. However, all may not be lost.

As Matz explains, Social Security will pay up to six months of retroactive benefits in a lump sum. So, if you realize your mistake before turning 70 and a half, you may not end up forfeiting any money.

However, he says, in general, “Waiting past age 70 is a mistake, because you're only leaving money on the table.”

Matz also explains that retroactive payments from Social Security may be applicable to six months of spousal benefits. But those benefits come with a whole different set of rules.

“For spousal benefits, you should file no later than your full retirement age, because there are no delayed retirement credits,” he says. “Delaying until age 70 would cost you money in this case. By filing at your full retirement age, you can receive up to 50% of your spouse’s benefit based on their full retirement age.”

The rules apply even if you're still working

You might assume that if you’re still working at age 70, then it pays to wait on Social Security since you don’t need the money or, worse yet, might get penalized for claiming your benefits and double dipping, so to speak. But Brandon Wellman, Financial Advisor at Prudential Financial, says the rules are the rules whether you’re working or not — there’s no financial upside to delaying Social Security past age 70, period.

Not only that, but there’s no need to worry about a penalty on the part of the SSA if you’re filing for benefits at 70 while still working. If you work and receive benefits prior to reaching full retirement age, you’re subject to an earnings test where having too high an income could result in having benefits withheld. However, once full retirement age is reached, that risk disappears.

Furthermore, Wellman says, people who are still working past age 70 “may even be able to increase their benefit amount if their earned income is high enough.”

As he explains, the SSA looks at your highest 35 years of earnings to determine what monthly benefit you get. If you earn high enough wages after claiming benefits, you can replace a year of lower earnings with higher earnings, resulting in a boost to your monthly checks.

Take action as soon as possible

After paying into Social Security your entire life, you deserve all of the money you’re entitled to from it. So if you didn’t get around to claiming benefits by your 70th birthday, create an account on SSA.gov and sign up immediately. You can also contact the SSA by phone at 1-800-772-1213 to claim your benefits or file in person at a Social Security office near you.

• 15 Social Security Tasks You Can Do Online
• The '8-Year Rule of Social Security' — A Retirement Rule
• The Average Social Security Check by Age
• Is Trump's Tax Plan Speeding Up the Looming Social Security Funding Crisis?

These figures highlight the significant impact that the claiming age has on your monthly income and overall financial security in retirement.

To quote the rocker, Joan Jett, "Nobody knows what anticipation is anymore. Everything is so immediate." Social Security, however, is the exception to that adage.

In simple terms, you can get a bigger Social Security check for the rest of your life for every month you wait to claim your benefits after your full retirement age (FRA). You'll earn a delayed retirement credit worth an extra two-thirds of 1% for each month you delay after your FRA, adding up to 8% for each full year you wait until age 70.

On the flip side, in the case of early retirement, you'll permanently shrink your Social Security check for every month you retire before your FRA. Benefits are reduced by five-ninths of 1% for each month before your FRA, up to 36 months. If the number of months exceeds 36, the benefit is further reduced by five-twelfths of 1% per month.

Let's look at the real-world consequences of the eight-year window that makes up your Social Security claiming age by digging into Social Security's Annual Supplement for 2025. Tables are based on data found in Table 5.A1.1 (PDF)

Retired-worker beneficiaries: Number and average monthly benefit, by age and sex, December 2024 and Table 5.A3a. (PDF)

Retired-worker beneficiaries with benefits reduced for early retirement: Number and average monthly benefit, by age and sex, December 2024.

Claiming early: Age 62

Age 62 is the earliest you can claim Social Security retirement benefits. Any time you claim benefits before your FRA, you'll reduce your monthly benefits for the rest of your life.

This is critical information for anyone who needs to access retirement income early due to job loss, health issues, caregiving demands or other financial needs.

While it provides income sooner, it also means a lower monthly payment for the rest of your life. (If you claimed benefits within the past 12 months and changed your mind, you might be able to stop Social Security and restart it later.)

Why it's important: Claiming at 62 results in a permanently reduced monthly benefit. The reduction can be substantial, as much as 30% for those with an FRA of 67.

The average check at age 62: The average check at 62 of $1,341.61 is significantly lower than the average check at FRA or later. How does it compare to the average check for those age 70? It's 37.6% less than the $2,148.12 the average 70-year-old receives.

Claiming early: Age 65

Age 65 is a significant milestone, as it marks your eligibility to enroll in Medicare. This is the earliest you can enroll in Medicare; there are no provisions or exceptions for those who retire before 65. Access to health care is an obstacle that prevents many employees from retiring earlier who would otherwise do so.

The decline of employer-provided health care in retirement has made Medicare eligibility more important to retirees, according to a paper by the Center for Retirement Research. That's because if an employee leaves work before age 65, they must purchase insurance on their own without the subsidies that usually accompany workplace-provided health insurance.

If you retire at age 65, you will have access to Medicare, but any time you claim benefits before your FRA, you'll reduce your monthly benefits for the rest of your life.

Why it's important: Claiming at 65 results in a permanently reduced monthly benefit, and the reduction can be significant. If your FRA is 67 and you claim at 65, 24 months early, your benefit will be permanently reduced by approximately 13.3% (24 months times five-ninths of 1% per month).

The average check at 65: Did you know that 2007 was the last year 65 was the FRA for retirees? Now, FRA is somewhere from 66 to 67, depending on the year you were born. As collecting benefits at 65 would be before the FRA, the average check at 65 is lower than the average check at FRA or at 70 with maximum delayed retirement credits.

Let's compare the average check of a retired worker age 65, $1,611.00, to that of a 70-year-old with a reduction for early claiming, which is $2,148.12. The difference is significant at 25%, or $537.12 per month, or $6,445.44 annually.

Claiming ages 67/66: full retirement age

Your full retirement age is the point at which you are entitled to receive 100% of your Social Security benefit, which is based on your lifetime earnings record. This age varies depending on your year of birth. For anyone born in 1960 or later, the FRA is 67.

Why it's important: If you continue to work after reaching your FRA, your benefits won't be reduced, regardless of how much you earn.

The average check at 66/67: You've made it to the finish line, and at this point, there's only one way to increase the size of your check — wait even longer to claim your benefits. The average benefit at age 67 is $1,929.73, which is $218.29 less per month than the average benefit received at age 70.

An even more interesting comparison is what the average benefit is at age 67 and at that same age with a reduction for claiming early benefits. The 67-year-old collecting reduced benefits gets $215.24 less monthly, or 11% less than their counterpart without a reduction.

Claiming at 70: Eligible for maximum delayed credits

Why it's important: For each year you delay claiming past your FRA, your monthly benefit increases by an extra two-thirds of 1% for each month, known as Delayed Retirement Credits. This increase adds up to 8% for each full year you wait until age 70.

The average check at 70: The average check at age 70 can be substantially higher than the check at your FRA. For a person with an FRA of 67, waiting until 70 can result in a monthly benefit that is 24% higher. This provides a significant boost to a person's retirement income, particularly for those who have other sources of income and can afford to wait.

The difference between the average checks at 62 and 70 can be dramatic. It's easy to illustrate by comparing the average benefit at age 70 with the average benefit of those workers who claimed earlier than 70. The average benefit is almost 20% greater, at $2,148.12, compared with $1,724.15.

Here are the maximum possible benefits in 2025

By comparing the maximum benefit by age, it's easy to quantify the bump in benefits you receive when you delay collecting benefits until age 70. The difference in 2025 between the maximum benefit for someone who retires early at 62, vs waiting until 70 is $2,187.

In the table below, the maximum benefit is $5,018 at age 70, and the maximum reduced benefit is $2,831 at age 62. This is a loss of 45% or $2,187. When compared to the benefit at FRA, there is a 31% reduction, or $1,187, monthly.

The broader impact of your claiming age

The full retirement age for Social Security benefits and Medicare eligibility used to be in sync. In the past, you could retire at age 65 and collect your full retirement benefit and health care coverage through Medicare. Everyone born after 1942 faces a full retirement age from 66 to 67 years old.

There are additional factors to consider when determining your claiming age. Ultimately, whether you claimed early, at FRA or waited until 70, that amount becomes the basis for your future cost-of-living adjustments and potential spousal benefits.

In particular, you should understand how claiming Social Security early will affect your spousal benefits, or vice versa. Because the maximum amount you can claim is 50% of your spouse’s full benefit, half of a reduced benefit might not be enough to support your household.

The Social Security Administration (SSA) recently reported a rise in new claims across all age groups, likely due to concerns about DOGE's involvement and Social Security's funding woes.

Most experts recommend that your strategy for when to claim not change due to these issues; focusing on your age continues to be the most important factor to maximize your monthly check.

At the end of the day, the "best" age to claim is a highly personal decision that depends on your individual circumstances, including your health, life expectancy, other sources of retirement income, and whether you're single or married. Those are the factors you need to consider in addition to the financial consequences.

To learn more about what you stand to lose if you claim your benefits early, use the Social Security Administration's "Full Retirement and Age 62 Benefit By Year Of Birth" table to get a detailed list of reductions based on your FRA.

You can also take a look at Kiplinger's Retirement Calculator to help you estimate what your retirement savings will be worth in the future.

Related content

• Six Changes Coming to Social Security in 2026
• The '8-Year Rule of Social Security' — A Retirement Rule
• The Average Monthly Social Security Check
• The Average Social Security Check by Age
• The Average Social Security Check in Every State

An analysis from the Office of the Chief Actuary at the Social Security Administration (SSA) confirms what opponents of the megabill feared would happen. Trump's 2025 reconciliation law accelerates the depletion of Social Security's combined trust funds by nearly half a year, in early 2034 instead of late 2034.

The findings, released in response to a request from Sen. Ron Wyden (D-Ore.), note how several provisions in Trump’s so-called One Big Beautiful Bill (OBBB) reduce revenue directed at the Social Security (SS) program.

“Because the revenue from income taxation of Social Security benefits is directed to the Social Security and Medicare trust funds, implementation of the OBBB will have material effects on the financial status of the Social Security trust funds,” the report (PDF) stated.

The program’s chief actuary estimates that the tax cuts and spending megabill will cost the trust funds roughly $169 billion in the next decade.

Here’s what you need to know about Social Security’s funding and how it impacts you.

Social Security reserve funds may be exhausted in under 10 years

Social Security just turned 90 this year, but the nation’s largest retirement trust fund is slated to run out of money before it reaches 100.

The federal program’s Old-Age and Survivors Insurance (OASI) Trust Fund is projected to become insolvent by the fourth quarter of 2032, the program’s chief actuary reported, instead of the first quarter of 2033. That’s in as little as seven years.

Meanwhile, the Disability Insurance (DI) reserves are “not projected to be depleted during the 75-year projected period.”

The combined trust funds are expected to be exhausted by early 2034, the chief actuary found. But a further analysis from the Committee for a Responsible Federal Budget (CRFB) argues that folks could see their benefits cut as soon as 2032.

According to the analysis, several provisions tucked within Trump’s megabill impact revenue that flows to Social Security trust funds, which include:

• Making the lower income tax rates and adjusted tax brackets originally enacted under Trump’s Tax Cuts and Jobs Act (TCJA) of 2017 permanent.
• Temporarily changing standard and itemized deduction amounts.
• Temporarily offering a bonus standard tax deduction amounts for individuals age 65 and older for tax years 2024 through 2028.

“The combined net effect of these income tax provisions results in less overall tax liability for Social Security beneficiaries,” the report stated. “In turn, the trust funds will receive lower levels of projected revenue from income taxation on Social Security benefits for all years beginning in 2025.”

Is Trump to blame for Social Security's financial challenges?

While the Trump administration’s newly enacted tax legislation speeds up the insolvency date for Social Security, it’s not the only aggravator.

Social Security funding has been in financial trouble for more than a decade, and lawmakers have done little to solve the issue.

As an example, the passage of the bipartisan Social Security Fairness Act in January was projected to cost the program $200 billion in the next 10 years, the Congressional Budget Office (CBO) found, particularly, since the measure allows some state and local government workers to “double dip” on retirement savings.

What Social Security insolvency could mean for you

The clock is ticking for Social Security as you know it. The program’s retirement trust fund reserve is projected to zero out in less than a decade.

If Congress does nothing to replenish Social Security’s retirement trust fund in seven years, benefits will be cut automatically by 24% for every beneficiary, according to estimates from the Committee for a Responsible Federal Budget (CRFB).

As Kiplinger has reported, how much SS benefits you could lose after the program reaches insolvency will depend on your age, marital status and work history. Some examples provided by the CRFB show:

• A low-income dual-income couple could see benefits shrink by $11,200 annually, while a middle-income couple would face an $18,400 cut in benefits.
• A middle-income couple living on one income source could see benefits decrease by $13,800, after the Social Security program reaches insolvency.
• A high-earning dual-income couple retiring after SSA insolvency could see benefits shrink by $24,000.

Congress must act to replenish SS funds

Social Security’s retirement trust fund is expected to be exhausted by late 2032, which means that Congress and the president who succeeds Trump must come up with a solution.

Without congressional action, retirement benefits will automatically be cut by roughly one-fifth for all beneficiaries during the 2032 election campaign, the Tax Policy Center warns.

“The funding shortfall is an action-forcing event,” Nancy Altman, president for Social Security Works, previously told Kiplinger. “There is absolutely zero chance that Congress is not going to act and let that go into effect.”

Social Security is navigating a crisis that goes beyond financial turmoil.

The Social Security Administration is among the federal agencies that have been hit by budget and staffing cuts under the Trump administration. While workforce reductions won’t reduce your benefit amount, they could impact your experience with SSA customer representatives or the application process to receive benefits.

The U.S. Treasury also announced it would phase out paper checks starting September 30, 2025. It's unclear if staff reductions could impact Social Security beneficiaries.

Stay tuned to Kiplinger as we cover this developing news.

Related

• What's Wrong With Trump's Pledge to End Taxes on Social Security Benefits
• Social Security and Your Taxes: Five Things to Know for 2025
• SS Turns 90: How Outdated Tax Rules Are Still Costing Retirees

On August 26, Charles Borges, the chief data officer (CDO) at the Social Security Administration (SSA), alleged that DOGE (Department of Government Efficiency) employees copied ultrasensitive data to a cloud server that does not meet government standards for protecting data privacy.

The whistleblower complaint was submitted by the Government Accountability Project.

The database that Borges said was copied contains records of every Social Security number the federal government has issued to Americans, along with names, addresses and birthdates.

DOGE copies data to the cloud in a "high-risk" project

The Government Accountability Project assisted Borges in submitting a protected whistleblower disclosure to the Office of the Special Counsel, as well as to congressional committees.

In the whistleblower complaint, Borges alleges that DOGE officials employed by SSA have created a live copy of a critical database, known as the NUMIDENT file, in a cloud environment.

The complaint includes emails from John Solly, a software engineer working at Social Security, who asked a career agency employee about making the copy shortly after the Supreme Court allowed DOGE access.

The NUMIDENT file is a database with over 548 million Social Security numbers, along with the identifying information of everyone living or dead who has ever had a Social Security number.

The complaint also enumerates the following allegations.

• The virtual cloud environment on the internal agency server was accessible only by DOGE employees.
• DOGE was warned that copying the data could make Americans vulnerable to identity theft, but proceeded with the project anyway.
• No verified audit or oversight mechanisms were in place to determine what the data was being used for or whether it was properly secured, and there was no independent security monitoring of the cloud environment.
• DOGE briefly circumvented a March 20 temporary order prohibiting access to certain Social Security data.
• DOGE officials bypassed normal procedures to receive "improper" access to other databases with sensitive information.

The complaint included a copy of an email from Joe Cunningham, the agency's acting chief information security officer, warning that "after a thorough review, we have determined that this request [to copy the information] poses a high risk."

Potential risk from DOGE actions

Borges' complaint shows that, despite privacy concerns, Cunningham requested and received the approval of Michael Russo, a senior DOGE-aligned official at Social Security, to sign off on the project of copying the database to the cloud server, despite making clear that his recommendations to anonymize the personal data had not been followed.

Further emails revealed that the data was transferred despite official security assessments warning that if it were compromised, it would have a "catastrophic impact" on Social Security beneficiaries.

"I have determined the business need is higher than the security risk associated with this implementation and I accept all risks," Aram Moghaddassi, Social Security's chief information officer, and a former employee of Elon Musk at X and Neuralink, wrote in a July 15 memo, as reported by NPR.

Borges disagrees with this assessment. "Should bad actors gain access to this cloud environment, Americans may be susceptible to widespread identity theft, may lose vital health care and food benefits, and the government may be responsible for reissuing every American a new Social Security number at great cost," Borges' complaint said.

No evidence of a data breach

While Borges' allegations are serious, the good news is that it appears no data has been compromised — at least not yet.

Nick Perrine, a spokesman for the SSA, stated that the agency was "not aware of any compromise to this environment," according to the New York Times.

Perrine also defended the actions taken by DOGE, stating, "S.S.A. stores all personal data in secure environments that have robust safeguards in place to protect vital information. The data referenced in the complaint is stored in a longstanding environment used by S.S.A. and walled off from the internet. High-level career S.S.A. officials have administrative access to this system with oversight by S.S.A.'s information security team."

Perrine added that the agency was and remained "dedicated to protecting sensitive personal data."

Congressional investigations may provide more insight into Borges' complaint.

How to protect your data and identity

In the meantime, it's a good idea to follow best practices for protecting against identity theft. Here are some steps to help you quickly protect your data.

• Check your credit report regularly (it's free) and address any errors or unknown accounts you find.
• Consider freezing your credit to prevent the use of your Social Security number and other identifying information.
• Stay informed and read up on the latest identity theft trends of 2025.

Read More

• What Trump Has Done With Social Security So Far
• Eight Ways Trump Could Impact Your 401(k), Nest Egg and Retirement Readiness
• Six Changes Coming to Social Security in 2026

After all, you pay Social Security taxes on your wages while you work, and then when you retire, you might expect those payments to come tax-free.

But up to 85% of Social Security payments may be taxed as you receive them. And even if you don’t think you’ll be subject to that much tax, your year-end bill might still surprise you. Factors like high income and unplanned withholding can result in a substantial tax bill to the IRS.

Here are three key ways your Social Security benefit taxes could be higher than expected when you retire.

1. Your Social Security combined income is high

Your Social Security benefits tax is calculated using an IRS figure called “combined income.”

• “Combined income” is your adjusted gross income (AGI) added to nontaxable interest, plus half of your Social Security benefits from the year.
• Certain deductions and exclusions can indirectly lower your combined income, like the standard deduction, the bonus standard deduction, or the state and local tax (SALT) deduction.

The higher your AGI and nontaxable interest is, the more you might pay in taxes on Social Security benefits.

• There is no federal tax on Social Security benefits for married filing joint couples with less than $32,000 in combined income (single filers with less than $25,000).
• Up to 50% of Social Security benefits may be subject to federal tax for married couples filing jointly with $32,000 to $44,000 in combined income ($25,000 to $34,000 for single filers).
• Up to 85% of Social Security benefits may be taxed if your combined income is above $44,000 for married filing jointly couples or single filers making above $34,000.

So, what are some ways that combined income might grow unexpectedly and lead to a big tax bill? Say you’re downsizing in retirement with tax benefits. Even if you qualify for a capital gains exclusion, selling your home could impact how much of your Social Security benefits are taxed.

Or, your combined income could rise when the Social Security cost-of-living (COLA) amount increases. The Social Security Administration (SSA) uses inflation-adjusted COLA to determine how much your Social Security benefits should change. A rate increase can cause wealthier taxpayers to pay more tax.

Surprise windfalls are just one reason you could get a higher tax bill on your Social Security benefits in retirement. Utilizing strategies to reduce taxes on Social Security benefits may be one way to avoid the unexpected.

2. You’re stuck between RMDs and Social Security benefits

Contrary to myth, there isn’t an age when you stop paying federal taxes on Social Security. Nor does your age directly affect how your Social Security benefits will be taxed.

But the age at which you claim Social Security might affect your overall tax situation. Here’s an explanation:

• You can claim Social Security between the ages of 62 and 70.
• If you claim at 62, your monthly payments will be permanently reduced over your lifetime.
• If you wait to claim your benefits until your full retirement age (FRA), you could get your full monthly benefit amount (the current FRA is 67 for those born in 1960 or later).
• However, many people have traditional individual retirement accounts (IRAs), including 401(k)s, 403(b)s, etc..
• Traditional IRAs have a separate rule called “required minimum distribution” (RMD) age, which requires you to withdraw a specific taxable amount each year, or you’ll be penalized (the current RMD age is between 72 and 75, depending on when you were born).
• The problem is, by withdrawing RMDs, your combined income goes up, and that can trigger up to 85% tax on your Social Security benefits.

How can you avoid the RMD vs. Social Security benefit tax trap? One way is to start strategically withdrawing from traditional retirement accounts before you reach the RMD age (withdrawals before age 59 ½, however, will face a penalty).

By making gradual withdrawals from traditional IRAs, you spread out your “RMD liability” over several years, instead of sharply raising your combined income when it’s time to claim Social Security benefits. However, you’ll be cutting short any tax-deferred growth on those investments by withdrawing earlier, and your taxable income will still increase for the year of withdrawal.

If you’re already at RMD age, you may lower your combined income by making a qualified charitable distribution (QCD). QCDs may lower your AGI and potentially reduce Medicare premiums. But taking a QCD also decreases the amount of income you receive.

Related: Seven Common RMD Mistakes to Avoid.

3. You don’t have a tax withholding plan for Social Security benefits

Not only is tax withholding a good idea, but it’s required if you owe taxes on your Social Security benefits. The IRS requires you to pay federal taxes on your payments through either monthly withholding or quarterly estimates.

• The federal withholding rate options are 7%, 10%, 12%, or 22% of your benefits.
• However, you can’t withhold state taxes on Social Security benefits.
• Alternatively, you can make quarterly estimated payments for federal and state taxes.

How can inadequate tax withholding on Social Security benefits increase your end-of-year bill? While you were working, you might have set up your tax withholding once through your employer and called it quits. But by carefully reviewing your tax withholding every year, you can account for anticipated capital gains, interest, and dividend income that you know you’ll receive one year and maybe not the next.

Form W-4V (Voluntary Withholding Request) may be used to calculate your Social Security benefits withholding. Unlike Form W-4, which you might’ve used while working, the W-4V is submitted directly to the SSA.

Quarterly estimated payments should also be enough to pay your tax and avoid an IRS underpayment penalty when filing your annual income return (if you opt for that method instead).

By planning adequately for withholding tax from your Social Security benefits, you may prepay a portion of your “surprise” tax bill before the end of the year.

Social Security taxes on benefits: Avoid surprises

Overall, every retiree’s financial situation is unique. Factors impacting taxes on your Social Security benefits may include:

• The size of your retirement nest egg.
• Your income streams.
• Your financial goals.

Additionally, state taxes on Social Security benefits can also affect your savings. So don’t forget to keep an eye on your state’s Department of Revenue website for changes in retirement income tax rules, which may also help avoid any potential surprise tax bills on your Social Security benefits in retirement.

Also see our report: States That Tax Social Security Benefits in 2025.

Read More

• How Outdated Social Security Tax Rules Are Costing Retirees Thousands
• Key Ways the IRS Taxes Retirement Income
• Retirees Should Watch These Four Key Tax Changes in 2025
• How All 50 States Tax Retirement Income

The agency says in a press release it has reduced the average speed of answer on its 800 number to 13 minutes, which it says is a 35% reduction compared to this time last year and over a 50% reduction compared to last year’s annual average.

But the agency’s current claims are “not credible,” says Nancy Altman, president of the advocacy organization Social Security Works, “given how many experienced employees have been forced out and all the chaos the Trump administration has created.”

The Washington Post, citing internal data, reported, “the amount of time that callers who ring the national number wait on hold or in a queue before speaking to an agent has risen. For the last three full months of the Biden administration, callers waited an average of 75 minutes. For the first five months of the Trump administration, callers have waited an average of 93 minutes.”

SSA says new Commissioner Frank J. Bisignano has “a vision to transform the agency into a premier service organization” and “an organization that operates at peak efficiency and delivers outstanding service to every American.”

Others say it’s a facade. Jessica LaPointe, president of Council 220 of the American Federation of Government Employees, says the agency is transferring staff from overworked field offices to help answer calls to the overwhelmed 800 number. “Without conducting staffing assessments, SSA enticed buyouts of about 2,000 front-line staff on the 800 number and in field offices in March of this year,” she says. “Since January, SSA has driven 7,000 workers — both frontline and support staff — out of the agency. It has gotten so bad that SSA deployed 1,000-2,000 community-based field office staff to the national 800 number in July.”

Social Security spokesman Stephen McGraw told the Washington Post that the redeployment affects 4% of field office staff.

Altman suggests beneficiaries be wary of agency claims of improved call times. “What is known,” she adds, “is that the Trump administration changed the metrics so that the comparisons became unhelpful apples to oranges…. Consequently, Congress and the public must rely on anecdotes, which all point in the same direction: degradation of the service to the public.”

LaPointe says the situation is dire. “By every metric, SSA is in a staffing crisis,” she says. “Leading into January, SSA was at a 50-year low in staffing while serving an all-time high rate of beneficiaries. Technology has never been able to — and I would argue will never be able to — replace the complexity, human compassion and expertise an SSA worker is vetted and trained to provide to the American people.”

The controversy comes on the heels of an email the agency sent to beneficiaries, implying that the new tax law had ended taxes on 90% of Social Security benefits. In reality, the new law provides a temporary, income-based tax deduction rather than a full repeal of Social Security benefit taxes. That deduction boost could, for some, indirectly affect how much Social Security income is subject to tax.

Note: This item first appeared in Kiplinger Retirement Report, our popular monthly periodical that covers key concerns of affluent older Americans who are retired or preparing for retirement. Subscribe for retirement advice that’s right on the money.

Read More

• Social Security Phone Wait Times: The Best Times to Call
• Social Security Check Late? Four Reasons Why and What To Do
• The Average Monthly Social Security Check

Q: What is unique about the challenges that Generation X faces when it comes to retirement compared with other generations?

Hannon: The 64 million people in this generation, who range in age from 45 to 60, entered the workplace when traditional pensions were sliding out of view and 401(k)s were stepping onto the scene. In the early years, nobody really understood what a 401(k) was, and there was little assistance from your employer. And Gen X didn’t have the benefit of automated-participation features that are helping younger workers save earlier for retirement.

They have also lived through a lot of economic upheaval that has dealt a blow to their retirement savings: the dot-com bust, the Great Recession, and then the pandemic. And many of them have a ton of credit card debt, more than any other generation.

Q: That’s a pretty bleak picture. Is there anything that’s working in their financial favor?

Hannon: Absolutely. All that economic upheaval has made them very resilient and self-reliant. We’ve seen them, in recent years, truly buckling down and starting to save more. They’re very entrepreneurial as well. This is a group who’s coming to understand the need to work longer than previous generations, and they’re already thinking about what they might do and what skills they need to add.

Another positive thing is that many Gen Xers have a lot of equity in their homes. It may not be money stashed away in a retirement account, but they have access to financial viability through home equity. And the younger Gen Xers, who are in their forties, may be beneficiaries of the great wealth transfer from the generation above them. That will help augment their retirement savings as well.

Q: What are the key steps Gen Xers need to take now to ensure a comfortable retirement?

Hannon: As they become empty nesters, Gen Xers will have more opportunity to become super savers and take advantage of things like the catch-up contributions that people 50 and older can make to their retirement accounts. It might also be a good time to pull some of that valuable equity out of their homes and relocate to a place where the cost of living is lower, maybe buy a home with cash so they have no mortgage. That would tee them up nicely for a more financially secure retirement.

Q: The oldest Gen Xers are close to being old enough to claim Social Security early, at age 62. Any advice about timing those benefits?

Hannon: We are collectively living longer lives. If you step out of work at age 62 or even age 65, you could have three decades or more to support yourself in retirement, and that is daunting. Of course, none of us knows how long we’ll live, so it’s a bit of a gamble. But if you keep working and hold off collecting benefits until age 70, or at least until full retirement age [age 67 for Gen X], that bigger check could be very helpful moving forward.

Q: Are there any practical or motivational tools you can recommend to help Gen Xers with this last big push toward retirement?

Hannon: One idea is to shift how you frame things. I always tell people, you’re not saving for retirement, you’re saving for your life, which means being able to spend more time with family, pursue hobbies you love, travel. I like the idea of visualization as psychological motivation for saving and managing money, literally creating a vision board about what you want your retirement to look like and letting yourself dream.

There are also so many great digital resources out there to help us run our numbers and make it easier to find a financial adviser — possibilities that weren’t there for previous generations. You do not have to do this alone. But you do have to do it: It is time for Gen X to get clear-eyed and serious about how to make sure their retirement is on track.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

Related content

• How Gen X Could Reinvent Retirement
• Median Income by Generation: How Do You Compare?
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If you were to ask 10 different people what age they would recommend you start claiming Social Security benefits, you might get 10 different responses.

Some recommend taking it when you're first eligible at 62, others say wait until 65, 67 or even 70.

It's a delicate topic because Social Security has an uncertain future — the Social Security trust fund is set to run out in 2033 — and the right decision truly depends on your unique situation.

The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.

Factors like you and your partner's benefit amounts, age, taxes and break-even points all come into play, and they can be vastly different from person to person.

There isn't a cookie-cutter recommendation that financial advisers can provide, but when determining the ideal age to optimize Social Security benefits, here are a few things that everyone should consider.

View Social Security as an asset

It starts by viewing Social Security as another asset in your retirement portfolio. Like your 401(k) plan or IRA, Social Security provides a regular paycheck that can add up to a lot of money over time.

For example, if you start claiming benefits at age 62 and you stand to earn $2,000 a month with a life expectancy of 87, you would collect $600,000 throughout your lifetime. That's a significant amount.

However, your Social Security benefit amount increases the longer you wait to claim. If you wait until age 70 to claim full Social Security payments, you can collect 80% more annually if you start at 62.

Not everyone should wait until age 70, but approaching your benefits the same way as we would an IRA can help you determine the right age to optimize the amount of money you receive over your lifetime.

Remove emotion

Many Americans are worried about the future of Social Security. — nearing retirement at ages 45 to 60 — are worried that Social Security won't be available when they retire.

Their fears stem from the fact that the Social Security trust fund is set to be depleted in eight years. Additional spending included in President Trump's recent One Big Beautiful Bill could speed up that timeline.

This wouldn't mean Social Security payments would stop; rather, Americans would receive just 77% of their benefits.

Don't let this uncertainty affect your timeline.

We don't know what Social Security will look like in 30 years, but we also can't predict it. Making an impulsive decision to start your benefits at 62 because you're worried it won't be available at 70 could lead to a poor choice for your situation.

While we can't be 100% certain, Social Security is likely to exist in some form over the next decade. Remove your emotions and evaluate your unique situation.

A financial adviser can calculate multiple scenarios and determine which one is the best for you. If you would rather remove the stress of worrying about Social Security's availability, they can help you create a retirement plan that doesn't rely on this asset. That way, you're prepared for a future with or without the benefit.

Understand taxes

Taxes are included in everything we do, and Social Security is no exception. While the Big Beautiful Bill had a goal of eliminating taxes on Social Security, that didn't come to fruition.

That means you may have to pay taxes on up to 85% of your benefits if your total provisional income is more than $32,000 when filing jointly and over $25,000 when filing as an individual. Around half of beneficiaries pay taxes on their benefits.

If you're still working while receiving Social Security benefits, understand how that tax comes into play. There may be a day in the future when taxes on those earnings are eliminated, but we can't plan for what could happen in the future.

Looking for expert tips to grow and preserve your wealth? Sign up for Building Wealth, our free, twice-weekly newsletter.

Factor in your potential tax liability in your decision, just like you would with tax-deferred retirement assets and Roth conversions. If a day comes when taxes are eliminated, then you could enjoy extra, unexpected benefits.

Even though there is a lot of uncertainty around what Social Security could look like in the future, embrace it. Now is the opportunity to create a plan that can provide an informed decision about the best way to utilize Social Security.

Working with a financial adviser can help give you comfort in your retirement plan by determining what age makes sense for your unique circumstances, and giving you comfort in your financial future.

Investment advisory products and services made available through Impact Partnership Wealth, LLC ("IPW"), a Registered Investment Adviser. Neither the firm nor its agents or representatives may give tax or legal advice. Individuals should consult with a qualified professional for guidance before making any purchasing decisions. Medalist Wealth Management is not affiliated with or endorsed by the U.S. government or any governmental agency. 4691669-07/25

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Suze Orman, The New York Times best-selling author of "The Ultimate Retirement Guide for 50+," podcaster, finance guru and motivational speaker, has seen it all when it comes to retirement mistakes.

In her nearly 40 years as a financial adviser, people have come to her when they’ve spent too much money, paid too much in taxes or made hasty decisions that lost them too much money.

The biggest mistake, the one that Orman sees all the time, the one that people lose thousands of dollars over, is claiming Social Security early.

What constitutes early for Orman? Claiming anytime before at least your full retirement age, which is 67 for anyone born in 1960 or after.

“Everybody thinks Social Security isn’t going to be there. Everybody is scared to death, but I wouldn’t be,” says Orman. By claiming early, “you’re passing up an 8% increase each year in your Social Security from your full retirement age all the way to 70.”

You might not think delaying filing for Social Security makes that big a difference in terms of your benefit amount, but it could add up to a lot more money than you realize.

The maximum a 62-year-old can receive monthly in 2025 is $2,831. If that person waits until they turn age 66/67 to file for benefits, their monthly check increases to $4,018. If they hold off until age 70, their check increases to $5,108.

Don’t let fear cost you money

Many people collect Social Security early out of fear it won’t be around for much longer, but Orman doesn’t think that's a viable reason to claim benefits. While it's true that the Old-Age and Survivors Insurance Trust Fund, which pays Social Security retiree benefits, is projected to become insolvent in the first quarter of 2033, that doesn’t mean it'll collapse. If nothing is done by then, benefits would face a 23% cut, and beneficiaries would then receive 77% of their benefits.

If you have a serious illness or need the money to get by, you might have to collect Social Security early. But otherwise, collecting Social Security before you've at least reached your full retirement age can backfire, leaving you short on cash over your lifetime. Retirement can last 20 years or more for many people.

“They find out it's a lot more expensive in retirement than they thought,” says Orman.

They're spending the same, if not more, and they're dealing with inflation. At the same time, they're withdrawing from their retirement accounts and depleting their savings.

Their Social Security payment is already locked in at a lower rate, and it's not enough. As a result, they're now either forced to change their lifestyles or return to work, she says.

The better option, says Orman, is to wait to file for benefits.

“Where else are you going to make that money? You're not,” says Orman. “Claiming Social Security before full retirement age is one of the biggest mistakes you could possibly make."

Second place: Ignoring the Roth option

In wanting to be generous with Orman’s advice, we're also sharing her second-place all-time mistake — and this one is geared toward pre-retirees.

Ignoring the Roth conversion

“You don’t want to be partners with Uncle Sam,” says Orman. “A big mistake everybody is making leading up to retirement is not taking advantage of the Roth 401(k), 403(b) or Roth IRA.”

Pre-retirees and retirees like traditional 401(k)s, funded by pre-tax dollars, because they get a tax break now while they're still working and potentially are in a higher tax bracket than when they retire. They figure their income tax bracket will be lower when they're retired and start withdrawing from their retirement accounts.

What some people don’t take into account are required minimum distributions or RMDs, says Orman. RMDs kick in when you turn 73 and require you to withdraw a percentage of your 401(k) or IRA each year. The withdrawal is treated as ordinary income, which can be a big tax hit if the RMD is large enough.

“The money in your retirement account is compounding and growing, and it's growing ... for you and Uncle Sam,” says Orman. “Why do you think Uncle Sam is allowing you that long (before RMDs)? Because the more time it's in there, the larger it grows, the more they are going to get in income taxes.”

Don’t forget your heirs

From an estate planning standpoint, it's also a mistake to ignore a Roth conversion, says Orman.

That's because non-spousal beneficiaries of an inherited 401(k) or IRA must withdraw all funds from the account and pay the taxes within 10 years.

“If you give up that tax write-off today, the money you leave your kids gets to grow tax-free, and they don’t have RMDs later on in life,” says Orman.

Remember, a Roth conversion is a taxable event; You should contact a financial adviser and/or a tax professional before making any moves. If you retire and are in a high tax bracket, another option may be the better choice.

“I don’t care how old you are, if you’ve gone back to work and are making $20,000 or $30,000, if your employer offers it, get it,” says Orman. “A big mistake you’ll make is not taking advantage of the Roth IRA.”

Live and learn with Orman

Other mistakes Orman has seen over her illustrious career include:

• Living above your means: “You have to live below your means and within your needs.”
• Buying a life insurance annuity: “People go to these retirement seminars, get a free dinner and end up walking away with a life insurance annuity product. It's a huge mistake that so many of you make.”
• Not having a revocable living trust: “Everybody thinks in terms of death. Death is easy. What is not easy is an incapacity. I see it all the time.”
• Assuming you’ll always have an income: “Everyone thinks I don’t have to save today, I’ll always have an income coming in, until they don't.”

Nobody’s retirement is perfect. There are many bumps along the way, and mistakes are bound to happen.

But hopefully, this bit of advice from Orman can make the journey a little smoother.

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But old tax rules are quietly undermining the program’s promise. A big reason why? The income thresholds for taxing Social Security benefits haven’t changed in more than 30 years.

That has caused more retirees to pay federal taxes on SS benefits, often on money they spent decades earning and contributing to through payroll taxes.

And while the 2025 so-called “big beautiful bill,” signed by President Trump in July, gives those 65 and older a temporary new bonus deduction, the new massive legislation doesn’t alter Social Security tax rules.

So, where does that leave retirees? Here’s more to know.

How much of Social Security is taxable

For nearly 50 years after President Franklin D. Roosevelt signed the Social Security Act into law in 1935, benefits were exempt from federal tax.

• That changed in 1983, when Congress passed amendments that allowed up to 50% of benefits to be taxed for retirees with incomes above certain levels.
• In 1993, lawmakers raised the maximum taxable portion to 85% for higher‑income beneficiaries.

Today, taxability is based on “combined income”: Adjusted gross income plus nontaxable interest plus half of Social Security benefits.

The thresholds are:

• Under $25,000 (single) or $32,000 (married): No tax on benefits.
• $25,000–$34,000 (single) or $32,000–$44,000 (married): Up to 50% of benefits taxed.
• Above $34,000 / $44,000: Up to 85% taxed.

When you cross the top threshold, up to 85% of benefits become taxable income. When pensions, part‑time earnings, or retirement withdrawals are considered, that can mean high effective tax rates for some retirees, particularly in states that still tax Social Security.

For retirees who have already paid payroll taxes on these earnings during their working years, this can feel like double taxation: once in the paycheck and then again in retirement.

The problem: SS thresholds aren't adjusted for inflation

What makes the Social Security tax rules unusual is that the thresholds haven’t been indexed to inflation.

Many provisions in the federal tax code, from income tax brackets to the standard deduction and more, are adjusted for inflation each year. (Even Social Security benefit amounts are adjusted with a yearly COLA.)

Why does that matter?

• Back in the early 1990s, fewer than 10% of Social Security recipients paid federal income tax on their benefits, according to historical Social Security Administration data and various tax policy analyses.
• At that time, the thresholds were set high enough that most retirees fell below them.
• Today, however, nearly half of all beneficiaries reportedly pay tax on at least some portion of their Social Security income.

That increase isn’t necessarily due to retirees becoming wealthier. Instead, the Social Security COLA and modest retirement income are pushing more households past the outdated thresholds.

This phenomenon is often referred to as “bracket creep.” Inflation moves taxpayers into tax brackets they were never intended to be in. For older adults on fixed incomes, this creep can operat as a stealth tax increase, essentially reducing income without necessarily improving purchasing power.

Taxes on Social Security benefits matter in 2025

Social Security is a key source of retirement income for many retirees in the U.S.

• As of 2025, data show that about 73.9 million people receive Social Security benefits.
• According to the Pew Research Center, this includes roughly 52.6 million retired workers, along with spouses, children, survivors, and disabled workers who also qualify for various Social Security programs.
• Nearly three-quarters of the U.S. population benefits from at least one Social Security program as of this year.

It’s worth noting that the average monthly benefit — just over $1,900 in 2025 — often covers basic needs. Taxing those benefits can reduce the cushion for some and complicate planning. Even a small IRA withdrawal or part-time job can push a retiree into a higher tax bracket, leaving less for housing, groceries, or medical bills.

There is some recognition among policymakers that the rules are outdated. Some suggested approaches floating around are indexing the tax thresholds to inflation or substantially raising the thresholds.

For example, H.R. 904, the “No Tax on Social Security” bill introduced earlier this year, proposes to lift or eliminate the current $25,000/$32,000 and $34,000/$44,000 limits. The bill hasn’t progressed in Congress.

Then there’s fiscal impact. Taxes on Social Security benefits contribute billions annually to the federal budget and trust funds. Some say eliminating that revenue could worsen long-term solvency for the Social Security trust funds unless offset by other income sources.

At what age is Social Security no longer taxed?

Speaking of milestones, a common question about taxes on Social Security benefits is whether there's an age when retirees stop paying.

The fact is, there is no specific age at which your Social Security benefits automatically become nontaxable. However, it’s totally understandable why many people believe that age matters with taxes on Social Security.

Keep in mind this one key rule: that how much of your Social Security benefits get taxed depends on your income, not your age. So, whether you're 62 or 82, the same rules apply.

• If Social Security is your only income, you're unlikely to be taxed on those benefits.
• However, up to 85% of your benefits could be taxable if you have additional income sources.

For more information, see: Do You Stop Paying Taxes on Social Security at a Certain Age?

SS 90th Anniversary: Bottom line

Social Security’s 90th birthday is a good time to revisit whether tax rules frozen since the early 1990s still make sense. Each year those limits remain unchanged, more retirees are swept into taxable territory, often because inflation slowly pushes them there.

For now, there are no changes to taxes on Social Security for 2025. So, it’s essential to familiarize yourself with the relevant IRS rules.

Remember: The key to reducing taxes on Social Security benefits is keeping your combined income, which includes your other earnings plus half of your Social Security benefits, below the IRS thresholds.

Popular strategies may include converting traditional retirement accounts to Roth IRAs, managing withdrawals to avoid higher tax brackets, investing in tax-efficient assets, and making charitable IRA distributions after reaching age 70½.

Also, the GOP’s 2025 tax bill contains a new temporary bonus deduction for filers 65 and older. That bonus tax break is in addition to a higher standard deduction and the existing extra standard deduction for those over 65.

Consult a trusted and qualified tax professional or financial planner to find the best approach for you.

Read More about Taxes on SS

• How to Calculate Taxes on Social Security Benefits
• Social Security Email Causes Confusion Over Taxes
• Taxes on Social Security Benefits: Five Things to Know for 2025
• Will You Get a ‘Surprise’ Tax Bill on Your Social Security Benefits in Retirement?

The Social Security annual cost-of-living adjustment (COLA) for 2026 is 2.8%, the Social Security Administration (SSA) announced on October 24. This is among the smallest COLA increases since 2020, as expected, and follows a 2.5% increase in 2025.

These changes don't only impact retirees — they impact current workers. Workers need to keep an eye on accumulating enough Social Security credits to get benefits, correct errors in their earnings record and understand how much of their wages will be subject to the 6.2% Social Security tax.

The 2026 COLA was originally scheduled to be released on October 15 and was delayed due to the impact of the government shutdown. Although the shutdown is ongoing, some employees at the Bureau of Labor Statistics (BLS) were recalled to prepare the September Consumer Price Index (CPI), which is essential to computing the 2026 COLA. CPI was also released (PDF) on October 24.

Let's look at what's in store for 2026:

1. Social Security cost of living adjustment (COLA) for 2026 is 2.8%

The COLA for 2026 is 2.8%, which is slightly higher than last year's COLA of 2.5%. This matches the estimate provided by David Payne, staff economist for the Kiplinger Letter.

Older people are caught in a "COLA catch-22." A higher COLA means more money for retirees, but it's a direct result of higher inflation.

Conversely, a lower COLA means inflationary pressure is less acute, but it provides less money to help retirees with rising costs such as medical expenses and housing.

A big increase in Medicare premiums can consume almost half your annual increase. The 2025 Social Security Trustees Report projects a $206.50 monthly premium for next year, up $21.50 or 11.6% from 2025. That would represent the largest Part B increase in dollar terms since 2022, when premiums rose by $21.60.

According to the SSA, the 2.8% increase will translate to an additional $56 for the average retiree, resulting in an average monthly check of $2,071, up from $2,015 in 2025. Married couples will see an average increase of $88, raising their monthly benefit to $3,208 from $3,120 in 2025.

The Social Security Administration (SSA) automatically deducts the Part B premium cost from the Social Security benefits of most Medicare recipients.

That would effectively reduce the increase to the average Social Security check in 2026 from $56 to $34.50, after subtracting the projected Part B increase ($21.50) from the 2026 COLA raise ($56). In that scenario, the Part B increase will consume almost 40% of the monthly increase.

2. Full retirement age (FRA) goes up in 2026

In November 2025, the full retirement age (FRA) — the age at which individuals qualify to receive 100% of their Social Security benefits — will increase to 66 years and 10 months for those born in 1959. FRA gradually rises month by month, so in November 2025, those born in January 1959 reach FRA. The following month, December 2025, marks the point when those born in February 1959 hit their FRA, and this pattern continues into 2026.

Important note: The Social Security Administration has a special rule for those born on the first of the month: your benefits and FRA are calculated using the previous month for the birthday. Similarly, people born on January 1 should refer to the previous year.

In November 2026, the FRA will reach 67 for those born in 1960 or later — a threshold that will mark the culmination of the 42-year-long shift in raising the retirement age. The increase kicks in each November.

This is the final step in a gradual schedule to increase the retirement age from 65 to 67, initiated by the 1983 amendments to the Social Security Act. The legislation was intended to reflect longer life expectancies, reduce financial strain on the program, and bolster the trust fund.

Here is when the new FRA takes effect, by birth year:

• If you were born in 1960 or later, your FRA is age 67 and will be reached starting in November 2026 and after
• If you were born in 1959, your FRA is age 66 and 10 months and is reached starting in November 2025 and after
• If you were born in 1958, your FRA is age 66 and six months, and was reached in November 2024 and after

When you claim your Social Security benefits can greatly impact the size of your monthly check. If you retire at age 62, the earliest possible Social Security retirement age, your benefit will be lower than if you wait until your FRA. The more months remaining between age 62 and your FRA, the more your monthly payments will be reduced.

Early retirement will reduce your benefits by 5/9 of 1% for each month before normal retirement age, up to 36 months. If the number of months exceeds 36, then the benefit is further reduced by 5/12 of 1% per month.

If you choose to continue working beyond your full retirement age and delay applying for benefits, you can increase future Social Security benefits in two ways: Each extra year you work adds another year of earnings to your Social Security record, and higher lifetime earnings can mean higher benefits when you retire.

If you delay taking your benefits, your monthly check will increase for every month you wait, until age 70. You'll get an extra 2/3 of 1% for each month you delay after your birthday month, adding up to 8% for each full year you wait until age 70. You stop accumulating delayed retirement credits when you turn 70.

 3. Social Security tax limit

In 2026, the wage cap for Social Security taxes will increase.

Social Security caps the amount of income you pay taxes on and get credit for when benefits are calculated. The Social Security tax limit in 2025 is $184,500, up $8,400 from $176,100 in 2025. The tax limit is indexed to inflation and is estimated to rise in 2027.

The 2025 Social Security Board of Trustees Report (PDF) estimated the maximum taxable earnings limit would be $183,600 in 2026, an increase of $7,500 from the 2025 ceiling of $176,100. The actual number came in $900 higher. The increase in the wage base will translate into paying a total tax of $11,439 for 2026.

Social Security will stop withholding taxes once you reach the maximum income amount for the year. However, there is no cap on Medicare taxes, meaning your total wages are subject to the 1.45% tax.

There is also an additional 0.9% tax for individuals earning more than $200,000 per year, $250,000 for married couples filing jointly, or $125,000 for married people filing separately. Employers are responsible for withholding this amount from your paycheck, although they're not required to match it.

4. Earnings test: You can earn more from work in 2026 while collecting benefits

Continuing to work while collecting Social Security might reduce your monthly benefits check due to a rule called the Social Security earnings test. Fortunately, those limits typically rise every year, leaving more of your monthly Social Security intact.

The Social Security Administration temporarily withholds $1 of a worker's benefits for every $2 earned above $24,480 ($2,040 a month) in 2026, up from $23,400 ($1,950 a month) in 2025.

When you reach full retirement age, the test is more generous — you only forfeit $1 in benefits for every $3 in 2026 earnings above $65,160, an increase of $3,000 over the 2025 limit of $62,160. Once you reach your FRA, there is no limit on earnings for the remainder of the year, and any withheld benefits are restored.

For beneficiaries younger than full retirement age (FRA) throughout the year in 2026: The annual earnings limit is $24,480; $1 in benefits will be withheld for every $2 earned above this limit.

For beneficiaries reaching FRA in 2026: The annual earnings limit is $65,160; $1 in benefits will be withheld for every $3 earned above this limit until the month the beneficiary reaches FRA.

 5. Earning Social Security credits in 2026

In 2025, you must earn more to qualify for Social Security credits.

You must earn a minimum number of Social Security credits to qualify for retirement benefits. The Social Security Administration (SSA) can't pay you benefits if you don’t have enough credits.

You must earn 40 work credits to become eligible for benefits, and you're allowed to earn up to four credits per year.

The SSA also uses the number of credits you’ve earned to determine your eligibility for retirement or disability benefits, Medicare and your family’s eligibility for survivor benefits.

To earn one credit in 2026, you must have wages and self-employment income of $1,890, and you must earn $7,560 to get four full credits. This amount increases annually, so it'll rise in 2027. In 2025, you only needed to earn $1,810 to earn a credit, $80 less than what you needed to earn in 2026.

Once you earn the 40 credits, earning more credits won’t increase your benefit payment. Instead, your retirement benefit is based on how much you earned during your working years.

6. The Social Security Trust Fund will be seven years away from facing insolvency

In Greek mythology, Icarus ignored the wise counsel of his father, flew too close to the sun with wings made with wax, and suffered the consequences. Today, politicians are ignoring the flashing red lights and increasingly dire insolvency predictions from the Trustees Report and have only acted to hasten the depletion.

How? By increasing benefits for some with the passage of the Social Security Fairness Act (SSFA) and depriving the fund of tax revenue through the new senior deduction included in the One Big Beautiful Bill (OBBB). The deduction will lower the taxable income for some seniors, which can decrease the amount of income tax they pay on their Social Security benefits.

From 2024 to 2025, the date of insolvency has moved up moderately, and the likely reduction in benefits that would be triggered by an insolvency has increased.

The reduction in benefits could trigger a 23% cut that would require future beneficiaries to save almost $150,000 to cover the shortfall; aspiring Gen X retirees would need to sock away an additional $701 a month. The longer the issue is ignored, the more drastic the solutions will have to be.

Preparing for 2026

Since the start of President Donald Trump's second term and the Department of Government Efficiency's (DOGE) audit of the SSA, the Social Security program and bureaucracy have come under intense scrutiny.

Since the confirmation of the new commissioner, Frank Bisignano, things have quieted down.

However, for 2026, there are still concerns about how tariffs will impact Social Security and Medicare funding and the cost of imported medications and equipment.

For more information about the 2026 changes, read:

Medicare Premiums 2026: IRMAA Brackets and Surcharges for Parts B and D

Nine Medicare Changes Coming in 2026

Higher Health Costs in 2026: A Look at Projected Medicare Premiums

6 Changes to IRAs, 401(k)s and HSAs in 2026

Related Content

• Social Security COLA for 2026 is 2.8%: What You Need to Know
• Medicare Premiums 2026: IRMAA Brackets and Surcharges for Parts B and D
• Social Security Payment Schedule for 2026
• The Average Monthly Social Security Check
• The Average Social Security Check by Age
• The 10 Most Costly Social Security Mistakes to Avoid
• 6 Changes to IRAs, 401(k)s and HSAs in 2026