Social Security rules changed
A set of Social Security updates for 2026 — including revised earnings limits for those collecting while working and proposals to cap large payments — went into effect or circulated this week, changing tax and benefit math for retirees and near‑retirees. These shifts mean benefit timing, taxation thresholds and potential caps are now immediate planning triggers for older clients and late‑career earners. (fool.com) (newsweek.com)
The Social Security earnings test for 2026 sets the annual limit at $24,480 for beneficiaries under full retirement age, with the SSA withholding $1 in benefits for every $2 earned above that threshold, and a separate $65,160 limit in the year a worker reaches full retirement age where $1 is withheld for every $3 above that amount. (ssa.gov)) The Social Security maximum taxable earnings (wage base) rose to $184,500 for 2026, meaning earnings up to that amount are subject to the 6.2% Social Security payroll tax for employees and employers, while Medicare taxes apply to all earnings with no wage cap. (ssa.gov)) The highest possible individual retirement benefit in 2026 is $5,181 per month for someone claiming at age 70, which translates to $62,172 annually and a potential $10,362 monthly combined benefit for two maximum earners. (ssa.gov)) A white paper from the Committee for a Responsible Federal Budget proposes a “Six Figure Limit” that would cap annual Social Security payouts at $100,000 for couples and $50,000 for singles at normal retirement age, and the CRFB estimates indexing such a cap could close roughly one‑fifth of the program’s long‑term funding gap. (crfb.org)) The Social Security Board of Trustees’ 2025 report projects OASI trust fund reserves will be depleted around 2033 (with combined OASDI reserves near depletion in 2034), while alternative models such as the Penn Wharton Budget Model have produced earlier depletion estimates around 2032, sharpening near‑term reform debates. (ssa.gov)) For practice positioning: retirees and pre‑retirees face an explicit $24,480 work‑while‑collecting breakpoint that changes benefit withholding and tax‑planning conversations in 2026; small business owners and payroll decision‑makers must model the $184,500 wage base when structuring wages and S‑corp distributions; young professionals see the wage base rise as a long‑run factor for lifetime Social Security credits; and high‑net‑worth households that could approach the current maximum benefits should track the CRFB “Six Figure Limit” proposal given its potential to cap payouts above $100,000 for couples. (ssa.gov))
