Social Security undergoes annual changes to protect the buying power of benefits and to ensure changes in the average wage are reflected in the various formulas used to calculate payments. Understanding those changes is essential to financial planning.

Nevertheless, surveys recently conducted by T. Rowe Price and Nationwide Retirement Institute suggest three Social Security changes coming in January 2026 may surprise many (or even most) Americans. Here's what you need to know.

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1. Social Security benefits will be adjusted to protect their purchasing power from inflation

Investment manager T. Rowe Price surveyed 3,005 adults and found that many lack a basic understanding of the Social Security program. Most notably, 33% of participants ages 50 to 61 (and 19% of participants age 62 and older) incorrectly marked this statement as true: Social Security retirement benefits do not adjust with inflation.

That statement is false. Social Security benefits receive annual cost-of-living adjustments (COLAs) to protect their purchasing power from inflation. COLAs are based on a subset of the Consumer Price Index called the CPI-W. Specifically, the percent increase in the CPI-W during the third quarter (July through September) of the current year becomes the COLA in the next year.

The CPI-W increased 2.8% in Q3 2025, so Social Security benefits will get a 2.8% COLA in 2026. The chart below shows how that adjustment will impact the average payment to different types of beneficiaries.

Data source: The Social Security Administration. The average benefit before the 2.8% COLA reflects the average payments made in September 2025.

Importantly, the Social Security Administration will mail COLA notices in December. Those single-page forms will detail your updated benefit amount and any automatic deductions. COLA notices are also available online in your my Social Security account.

2. The maximum Social Security benefit for new retirees will increase to reflect changes in the average wage

Nationwide Retirement Institute recently surveyed 1,812 adults and found that, while many reported feeling confident in their knowledge about Social Security, misunderstandings are common. For instance, 39% of participants incorrectly said this statement was false: There is a cap to how much Social Security benefits you can get.

Social Security is capped because benefits are calculated as a percentage of lifetime income. But the benefits formula only includes income covered by the Social Security payroll tax, which is limited by law. In 2025, the taxable limit is $176,100; income above that limit is not subject to the payroll tax, nor is it counted by the benefits formula.

Importantly, the maximum taxable earnings limit generally increases each year to account for increases in the average wage. As a result, income included in the benefits formula also tends to increase each year, which means the maximum benefit generally rises over time. The chart below shows the maximum payout at different claiming ages in 2026.

Data source: The Social Security Administration.

3. Retirees who claim Social Security early will be able to earn more income before benefits are withheld

Nationwide Retirement Institute reports that 38% of survey participants incorrectly marked this statement as false: Some of your benefits may be withheld if you're still working before your full retirement age (FRA).

Workers who claim Social Security before FRA will have some benefits temporarily withheld if their income exceeds the retirement earnings test (RET) amounts. There are two RET limits: a lower amount that applies to individuals who will not reach FRA during the year, and a higher amount that applies to individuals who will reach FRA during the year.

In 2025, the lower RET limit is $23,400 and the higher RET limit is $62,160. However, the amounts generally increase each year to account for increases in the average wage. Detailed below are the RET limits for 2026 and what they mean for Social Security beneficiaries.

• The lower limit: $24,480. That means Social Security beneficiaries who will not reach FRA in 2026 will have $1 in benefits withheld for every $2 in income above $24,480.
• The upper limit: $65,160. That means. Social Security beneficiaries who will reach FRA in 2026 will have $1 in benefits withheld for every $3 in income above $65,160.

Importantly, the RET limits no longer apply once a beneficiary reaches FRA. Also, benefits withheld prior to that point are gradually repaid once you reach FRA. The Social Security Administration says RET-affected beneficiaries recoup most or all of the income withheld over the course of a typical lifespan.