My Plan Keeper My Plan Keeper Learn Hub
Grace AI

Financial Insights — Tuesday, January 20, 2026

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

Social Security · Retirement Planning

2026 Social Security COLA of 2.8% Provides Limited Relief for Near-Retirees

The 2026 Cost-of-Living Adjustment (COLA) for Social Security benefits increased by 2.8%, offering modest inflation protection for seniors. However, this increase may be insufficient for those planning to live solely on Social Security benefits, highlighting the importance of strategic claiming decisions for near-retirees.

Source: Council for Retirement Security ·

Grace AI Grace's Take

The recent 2.8% increase in Social Security benefits is a small boost to help with rising costs, but it might not be enough if you’re relying solely on those benefits in retirement. As you get closer to retiring, it’s important to consider when to start claiming Social Security to maximize your benefits, and remember to plan for other income sources to support your lifestyle. Don’t worry—with a thoughtful approach to your retirement strategy, you can still secure a comfortable future!

  • •2.8% COLA increase provides cushion against inflation but may be inadequate for benefit-dependent retirees
  • •Highlights critical need for diversified retirement income sources beyond Social Security
  • •Reinforces importance of strategic claiming timing to maximize lifetime benefits
Retirement Impact

For those 1-5 years from retirement, this modest COLA increase underscores the need to maximize Social Security benefits through delayed claiming. If you're heavily dependent on Social Security, consider working 2-3 additional years to increase your benefit base, as each year of delay increases benefits by approximately 8% until age 70.

Social Security · Employment · Retirement Planning

2026 Social Security Earnings Limit Increases to $24,480: Impact on Early Claimers Still Working

The 2026 Social Security earnings limit has increased to $24,480, affecting those who claim benefits before full retirement age while continuing to work. For every $2 earned above this limit, the SSA will deduct $1 from benefits, making this a critical consideration for near-retirees planning to work part-time in early retirement.

Source: AOL Finance ·

Grace AI Grace's Take

The limit on how much you can earn while receiving Social Security benefits early has gone up to $24,480 in 2026. If you're thinking of claiming benefits before your full retirement age and plan to work part-time, be aware that earning over this limit might reduce your benefits. It's crucial to time your Social Security claim wisely, especially if you're still working, as it can significantly affect your long-term income; don’t hesitate to reach out for guidance to help you navigate these decisions!

  • •Earnings limit increased from prior year, but still creates significant penalty for early claimers with employment income
  • •Those claiming at 62 while working face 30% permanent benefit reduction plus earnings-based penalties
  • •Strategic timing of claim date relative to work cessation can substantially impact lifetime benefits
Retirement Impact

If you're planning to claim Social Security before full retirement age (67 for those born 1960+) while working, earnings above $24,480 will trigger a $1-for-$2 benefit reduction. Consider delaying your claim until full retirement age or later to avoid this penalty, or plan to cease employment before claiming. This is especially important if you're considering a phased retirement approach.

Social Security · Retirement Planning

Strategic Social Security Claiming: Delaying Benefits Increases Monthly Income by 8% Annually

For near-retirees, delaying Social Security claims from full retirement age (67 for those born 1960+) until age 70 increases monthly benefits by approximately 8% per year. This strategy can significantly enhance lifetime retirement income, particularly for those with longer life expectancies or concerns about running out of money.

Source: AOL Finance ·

Grace AI Grace's Take

Delaying your Social Security benefits from the usual full retirement age of 67 until age 70 can boost your monthly income by about 8% for each year you wait. This is especially helpful if you’re concerned about having enough money throughout retirement, as it can lead to a more comfortable financial future. If you can hold off for a few more years before claiming, it could make a big difference in your overall retirement funding!

  • •Claiming at 62 results in 30% permanent benefit reduction for those born 1960 or later
  • •Each year of delay from full retirement age to 70 increases benefits by 8%
  • •Delayed claiming strategy maximizes lifetime benefits, particularly valuable for addressing 'running out of money' concerns
Retirement Impact

For someone born in 1960 or later with a full retirement age of 67, claiming at 70 instead of 62 increases monthly benefits by 76% (8% × 3 years × 3 years). If you're concerned about longevity risk and running out of money, this strategy creates a larger guaranteed income floor. Consider delaying if you have adequate savings to bridge the gap until 70, or if you have a family history of longevity.

Social Security · Employment · Retirement Planning

2026 Social Security Wage Base Increases to $184,500: Opportunity to Boost Future Benefits

The 2026 Social Security wage base has increased to $184,500, meaning income up to this amount is subject to Social Security taxes and can boost future retirement benefits. Near-retirees still working have an opportunity to maximize their earnings history in their final working years before claiming.

Source: AOL Finance ·

Grace AI Grace's Take

Starting in 2026, the maximum amount of income subject to Social Security taxes will rise to $184,500. If you're only a few years away from retiring, working more now can help increase your Social Security benefits by replacing lower earnings from earlier years. This is a great opportunity to enhance your financial future as you plan for retirement, so consider maximizing your earnings while you still can!

  • •Higher earnings in final working years can replace lower-earning years in the 35-year calculation
  • •SSA calculates benefits using highest 35 years of indexed earnings
  • •Strategic work decisions in 1-5 years before retirement can meaningfully increase lifetime benefits
Retirement Impact

If you're 1-5 years from retirement and have years with zero or low earnings in your 35-year history, continuing to work and earn up to $184,500 annually can replace those low-earning years and increase your Social Security benefit. This strategy is essential for maximizing long-term financial security in retirement.

Market Overview

Key Trends

  • Social Security claiming strategies increasingly critical for near-retirees
  • Rising healthcare costs necessitate advanced planning for pre-Medicare years
  • Market volatility continues to influence asset allocation decisions in retirement portfolios
  • Increased Social Security wage base allows for potential benefit enhancement

What This Means for You

  • Consider delaying Social Security claims until age 70 to maximize benefits, especially if worried about longevity risk.
  • Work to increase earnings up to the new wage base of $184,500 to enhance future Social Security benefits.
  • Explore options for healthcare coverage in the gap years before Medicare to mitigate rising out-of-pocket expenses.
  • De-risk your portfolio by gradually shifting to conservative investments like bonds and stable equity sectors.

Risk Factors to Watch

  • Potential reduction in Social Security benefits due to earnings penalties for early claimants still working.
  • Increased healthcare costs may exceed expectations, causing financial strain without proper planning.
  • Market volatility can significantly impact retirement savings and alter withdrawal strategies.
  • Social Security's modest COLA does not keep pace with inflation, amplifying financial pressure on fixed-income retirees.

Insights Archive

Every daily edition, kept permanently.