My Plan Keeper My Plan Keeper Learn Hub
Grace AI

Financial Insights — Monday, January 12, 2026

News that affects your money, your health, and your future — explained by Grace AI.

Retirement Planning · Social Security

Social Security Full Retirement Age Rises to 67 in 2026 – Plan Your Claiming Strategy Now

Starting in 2026, full retirement age (FRA) officially becomes 67 for those born in 1960 or later. Claiming before FRA permanently reduces monthly payments, while delaying to age 70 increases benefits by up to 24%. This marks the final phase of a policy adjustment that began in 1983 to account for longer life expectancies.

Source: Finger Lakes 1 / Social Security Administration ·

Grace AI Grace's Take

Starting in 2026, if you were born in 1960 or later, you'll need to wait until age 67 to claim your full Social Security benefits. If you can wait until 70 to claim, you'll get up to 24% more each month, which can really help your budget in retirement. Think about your health and financial needs when deciding when to claim—delaying might be best for some, while others may need those benefits a bit earlier.

  • •Delaying from 67 to 70 increases monthly checks by 24% through delayed retirement credits (8% annually)
  • •Break-even analysis typically shows age 80 as the crossover point where delayed claiming becomes financially advantageous
  • •Those with serious health concerns may prefer earlier claiming despite lower monthly amounts
Retirement Impact

Critical for near-retirees: If you're 1-5 years from retirement, you need to calculate your personal break-even age. Those expecting to live into their late 80s-90s should strongly consider delaying past 67. The 24% increase in monthly benefits provides guaranteed lifetime income growth that cannot be matched by market returns, making this especially valuable for risk-averse retirees concerned about running out of money.

Retirement Planning · Social Security · Inflation

2026 Social Security COLA Increase of 2.8% – Average Benefit Now $2,071/Month

The 2026 cost-of-living adjustment (COLA) for Social Security is 2.8%, raising the average retired worker benefit to approximately $2,071 per month—about $56 more than 2025. This modest increase reflects lower inflation compared to recent years and underscores why Social Security alone (replacing only 40% of pre-retirement earnings) requires supplemental retirement income strategies.

Source: Finger Lakes 1 ·

Grace AI Grace's Take

Social Security is set to increase by 2.8% in 2026, raising the average monthly benefit to about $2,071. While this is a nice boost, it’s important to remember that Social Security typically only covers about 40% of what you earned before retirement, so you'll want to consider other income sources. As you approach retirement, maximizing your savings in 401(k)s and IRAs can help fill this gap and provide more financial peace of mind.

  • •2.8% COLA is lower than the 3.2% increase in 2025, indicating moderating inflation
  • •Social Security replaces only 40% of pre-retirement earnings, making diversified income sources essential
  • •Near-retirees should maximize 401(k) and IRA contributions to bridge the income gap
Retirement Impact

For those 1-5 years from retirement, this modest COLA increase highlights the critical importance of portfolio de-risking and income diversification. Relying solely on Social Security leaves significant income shortfalls. Prioritize maximizing tax-advantaged retirement accounts (401k, IRA, Roth) and consider dividend-paying stocks or bonds to supplement Social Security's limited replacement rate.

Retirement Planning · Social Security

Social Security 'Do-Over' Strategy: Withdraw Claims Within 12 Months to Reset Benefits

Retirees who claimed Social Security within the past 12 months can withdraw their application, repay all benefits received, and re-file later at a higher benefit level. This little-known strategy allows a one-time reset of benefits, potentially increasing lifetime payments significantly. Those at full retirement age can also suspend benefits to allow them to grow without repayment requirements.

Source: Finger Lakes 1 ·

Grace AI Grace's Take

If you've claimed Social Security in the past year, you have a chance to withdraw your application, pay back what you’ve received, and then reapply for a higher benefit later on. This can be a smart move if you have other income sources and expect to live longer, as it could boost your total payments. Remember, this option is only available once in your life, so if you might benefit, it’s worth discussing with your financial planner as you prepare for retirement.

  • •Withdrawal option available only within 12 months of claiming and can be used only once in lifetime
  • •Suspension at full retirement age requires no repayment and allows benefits to grow until age 70
  • •Strategy works best for those with other income sources and longer life expectancy
Retirement Impact

If you claimed Social Security early and regret the decision, this strategy offers a second chance—but only if you act within 12 months. For near-retirees still working or with portfolio income, suspending benefits at FRA (67) to allow 8% annual growth until 70 can increase lifetime benefits by 24%. This is particularly valuable for those concerned about longevity risk and running out of money in their 80s-90s.

Retirement Planning · Social Security · Employment

2026 Earnings Limits Rise for Working Retirees – Earn Up to $24,480 Before Benefit Reduction

Social Security's earnings test thresholds increase in 2026, allowing early claimers to earn more before benefits are reduced. Those under full retirement age can now earn $24,480 annually (up from $23,400 in 2025) with $1 withheld per $2 earned above the limit. Those reaching FRA in 2026 can earn up to $65,160 with $1 withheld per $3 earned.

Source: AOL / Social Security Administration ·

Grace AI Grace's Take

Starting in 2026, if you're under full retirement age and still working, you can earn up to $24,480 a year without seeing a reduction in your Social Security benefits—up from $23,400 in 2025. If you're close to reaching full retirement age, you can make up to $65,160 with only some benefits being withheld. This means you can continue to work a bit longer and boost your savings while enjoying your benefits, providing a little extra cushion as you approach retirement.

  • •Earnings limit for those under full retirement age increases to $24,480
  • •For those reaching FRA, the limit is $65,160 with adjusted withholding rules
  • •Increased thresholds encourage continued work and earnings among retirees
Retirement Impact

The higher earning limits provide more flexibility for retirees to work without significantly impacting their Social Security benefits. This change may help retirees supplement their income while delaying benefits, allowing for greater financial security.

Market Overview

Key Trends

  • Increasing Full Retirement Age
  • Rising Earnings Limits for Working Retirees
  • Modest Social Security COLAs
  • Importance of Portfolio De-risking

What This Means for You

  • Consider delaying Social Security claims until 70 to maximize benefits, especially for those with expected lifespans into their late 80s or longer.
  • Prioritize maximizing contributions to 401(k) and IRA accounts to secure additional retirement income, knowing that Social Security alone may cover only a fraction of pre-retirement income.
  • Implement a healthcare bridge strategy to cover healthcare costs before Medicare kicks in at age 65. Evaluate options like Health Savings Accounts (HSAs) to save for medical expenses.
  • Utilize a balanced mix of dividend-paying stocks and bonds for stable income, as moving to a more conservative investment strategy is advisable in the years leading up to retirement.

Risk Factors to Watch

  • Potential volatility in equity markets could negatively impact the values of retirement portfolios, making careful asset allocation vital.
  • Rising healthcare costs represent a substantial risk factor for those near retirement, necessitating a proactive planning approach to address potential out-of-pocket expenses.
  • Social Security reforms could impact benefits received by future retirees, making it important to diversify income sources.
  • Inflation risks, although moderate currently, could increase in the future, affecting purchasing power and highlighting the need for investments that keep pace with or outpace inflation.

Insights Archive

Every daily edition, kept permanently.