SOCIAL SECURITY – When It Comes to Social Security, What You Don’t Know Can Hurt You –
Posted on January 19, 2026
When It Comes to Social Security, What You Don’t Know Can Hurt You
Many people believe they should begin taking benefits as soon as possible. However, this approach could have a negative impact on your plans for retirement. Think of Social Security as you do other pieces of your retirement portfolio. For many Social Security is potentially their largest retirement income “asset.”
When and how to file for benefits can mean a significant difference in the Social Security income you receive over your lifetime. The average household (96%) loses about $111,000 in potential income by not making the optimal Social Security filing decision. * The right filing decision can result in having to draw down less from your other individual retirement assets. Deciding when to begin receiving Social Security benefits can feel overwhelming, but it doesn’t have to be.
Age 62 is the earliest age at which you can start receiving benefits based on your own earnings record. Claiming Social Security benefits before your FRA (full retirement age) results in a permanent reduction. Claiming at 62, for example, when your FRA is 67, reduces your benefit by 30%. Once applied, this reduction is permanent and will not be reversed, even when you reach your Full Retirement Age (FRA). Moreover, it can reduce the monthly Social Security benefit your surviving spouse receives.
Here is a chart by Age and Year of Birth that shows Full Retirement Age:
Age 70 is another important milestone for maximizing Social Security benefits. Delaying benefits until after your FRA, up to age 70, increases your monthly benefit. If you can afford to wait, there’s a substantial payoff. For every 12 months past your full retirement age (FRA) that you delay starting Social Security, your benefit automatically increases by 8%. This is due to the Delayed Retirement Credit (DRC). And this doesn’t include COLA (cost of living adjustment). So, if your FRA is 67 and you delay benefits until age 70, your monthly benefit will increase by 24%. Any cost-of-living increases that happen while your benefit is delayed will also increase the amount you receive.
Consider, for example, that your retirement age (FRA) is 67, and that your FRA benefit will be $4,018/month. Also, assume that you will collect checks until age 90, the annual cost-of-living adjustments will be 2.5%, and you earn 5% pre-tax on investments. To buy an annuity that would generate the same income you could receive from Social Security over this time frame, you’d need approximately $569,600 to replicate that stream of income. You would not treat that amount casually If you had that amount sitting in an account. Instead, you would think long and hard about what to do with it. Your decision about when to start receiving Social Security benefits deserves the same amount of careful consideration.
* 1- CBS/AP (2019). Almost all Americans take Social Security at the wrong time, study says. CBS/AP. Retrieved from https://www.cbsnews.com/news/study-says-retirees-lose-more-than-100k-by-claiming-social-security-at-the-wrong-time/
Karin M. Woofter, RSSA®, CLU® Emeritus, LUTCF
For more information and consultations, Karin Woofter can be reached at 907-201-3607, or Karin@mypominsurance.com
Social Security Announces 2.8 Percent Benefit Increase for 2026
Baltimore, MD – The Social Security Administration (SSA) announced today that Social Security benefits, including Old-Age, Survivors, and Disability Insurance (OASDI), and Supplemental Security Income (SSI) payments for 75 million Americans will increase 2.8 percent in 2026. On average, Social Security retirement benefits will increase by about $56 per month starting in January.
Over the last decade the cost-of-living adjustment (COLA) increase has averaged about 3.1 percent. The COLA was 2.5 percent in 2025.
Nearly 71 million Social Security beneficiaries will see a 2.8 percent COLA beginning in January 2026. Increased payments to nearly 7.5 million people receiving SSI will begin on December 31, 2025. (Note: Some people receive both Social Security benefits and SSI).
“Social Security is a promise kept, and the annual cost-of-living adjustment is one way we are working to make sure benefits reflect today’s economic realities and continue to provide a foundation of security,” said Social Security Administration Commissioner Frank J. Bisignano. “The cost-of-living adjustment is a vital part of how Social Security delivers on its mission.”
Other adjustments that take effect in January of each year are based on the increase in average wages. Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) is slated to increase to $184,500 from $176,100.
Social Security begins notifying people about their new benefit amount by mail starting in early December 2025.
Similar to last year, Social Security beneficiaries will receive a simplified, one-page COLA notice, which uses plain and personalized language, and provides exact dates and dollar amounts of an individual’s new benefit amount and any deductions.
Individuals who have mySocial Security accounts can view their COLA notices online, which is secure, easy, and faster than receiving a letter in the mail. Account holders can set up text or email alerts when they receive a new message, such as their COLA notice.
To receive a COLA notice online, individuals will need to create or sign in to their personal mySocial Security account and opt out of paper notices by November 19, 2025. Go Digital! Create an account today at www.ssa.gov/myaccount. An online mySocial Security account also gives individuals access to request a replacement Social Security card, view their claim status and benefits, and view their SSA-1099.
Information about Medicare changes for 2026 will be available at www.medicare.gov. For Medicare enrollees, the 2026 premium amount will be available via mySocial Security Message Center starting in late November. Individuals who have not opted to receive messages online will receive their COLA notice by mail in December.
The Social Security Act provides for how the COLA is calculated. The Social Security Act ties the annual COLA to the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) as determined by the Department of Labor’s Bureau of Labor Statistics.
