While Social Security most likely won’t be the largest part of your retirement income, it can provide a solid financial foundation. When you’re planning for retirement, it’s helpful to know how to maximize your benefits. A little basic knowledge will help you avoid costly mistakes and allow you to take full advantage of what Social Security has to offer, which is good not just for you, but also for your family and your survivors.
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First, here’s a summary of updates for cost-of-living adjustments (COLA) for 2026:
- The 2.8% cost-of-living adjustment (COLA) will begin with benefits payable to Social Security beneficiaries in January 2026.
- The maximum amount of earnings subject to the Social Security tax will increase to $184,500.
- The earnings limit for workers who are younger than full retirement age will increase to $24,480. Social Security will withhold $1 in benefits for every $2 earned above this amount.
- The earnings limit for people reaching their full retirement age in 2026 will increase to $65,160. Social Security will withhold $1 in benefits for every $3 earned above this amount until the month the worker reaches full retirement age.
- There is no limit on earnings for workers who are at full retirement age or older for the entire year.
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Four Important Tips To Consider Before Filing For Social Security:
1. Understand How Claiming Age Affects Your Benefit
One of the most important decisions when filing for Social Security is choosing when to begin receiving benefits. You can claim as early as age 62, but doing so generally results in a permanently reduced monthly benefit. Waiting until your full retirement age allows you to receive your full benefit amount, while delaying benefits beyond full retirement age can increase your monthly payment through delayed retirement credits, up to age 70. Before filing, consider your health, life expectancy, income needs, and retirement goals to determine the claiming age that best fits your situation.
2. Review Your Earnings Record for Accuracy
Your Social Security benefit is based on your highest 35 years of earnings, so it is important to make sure the Social Security Administration has an accurate record of your work history. Create an online Social Security account and review your earnings statement for errors, missing years, or incorrect income amounts. Even small mistakes can affect your future benefits. If you find discrepancies, gather supporting documents such as W-2 forms or tax returns and contact the Social Security Administration to request corrections before filing.
3. Consider Spousal and Survivor Benefits
Married, divorced, and widowed individuals may be eligible for benefits based on a spouse's work record. In some cases, a spousal benefit may provide a higher payment than an individual's own retirement benefit. Likewise, survivor benefits can be an important source of income for widows and widowers. Understanding these options before filing can help maximize household retirement income. Because the rules can be complex, it may be worthwhile to discuss your options with a financial professional or Social Security representative before making a final decision.
4. Apply Several Months Before You Want Benefits to Start
Although the Social Security application process is generally straightforward, it is wise to begin preparing several months before you want your benefits to start. Gather important documents such as your birth certificate, Social Security number, banking information for direct deposit, and any military service records if applicable. Filing early gives you time to address any questions, resolve documentation issues, and ensure your benefits begin on schedule. Applying ahead of time can help make the transition into retirement smoother and reduce the risk of unexpected delays.
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Pensions and Other Factors
- Pension income can affect your overall retirement tax picture. While receiving a pension generally does not reduce your Social Security retirement benefit, pension payments are typically taxable and can increase your total income during retirement. Higher income levels may cause a larger portion of your Social Security benefits to become subject to federal income taxes.
- Taxes can reduce your spendable retirement income. Withdrawals from traditional IRAs, 401(k) plans, and many pension plans are usually taxed as ordinary income. As a result, your after-tax income may be significantly lower than the amount you receive, making tax planning an important part of retirement preparation.
- Certain public pensions may affect Social Security benefits. Some retirees receive pensions from employment that was not covered by Social Security taxes. Depending on current law and individual circumstances, special rules may apply that affect the calculation of Social Security-related benefits. Retirees should review how pension income interacts with Social Security and other retirement income sources when developing a retirement income strategy.
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Working with a financial advisor can give you clarity into how to maximize your benefits as well as a sense of security knowing that you’re getting accurate information.
Talk with one of our professionals to get your questions answered!