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Social Security and Medicare shake things up every year with changes that make the programs more confusing! Are you keeping up?

Navigating the constant updates can be overwhelming, and many people simply don’t know where to start — or what they are entitled to — as they near retirement. These people often look to their employer for guidance and information for transitioning to the next phase of life. To do this, employers must stay up on the latest Social Security and Medicare trends and changes. And, if you’re an employee, it’s important to have the right information to help you make the best decisions for your long-term financial security, healthcare coverage, and other retirement-related considerations.

Knowing what Social Security and Medicare provide in retirement and when to start benefits are key. Let’s start by examining some vital changes related to cost-of-living, taxable earnings, full retirement age, and Medicare premiums and deductibles.

Trend Spotlight: Increases All Over!

Cost-of-Living adjustment

On October 24, 2025, the Social Security Administration (SSA) announced all their 2026 figures. As it turns out, Social Security beneficiaries will receive a 2.8% cost-of-living adjustment (COLA) for monthly benefits payable in 2026! The COLA is based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Over the last decade, the COLA increase has averaged about 2.8% and was 2.5% for 2025. For the average retired worker, the increase is about $56 a month for a monthly benefit of $2,071.

Taxable earnings base increase

The Social Security taxable earnings base increases to $184,500 in 2026 from $176,100 in 2025. About 184 million working people are paying this combined 7.65% payroll tax, matched by their employers, to support these programs. 

Full retirement age limit

Starting in 2026, the full retirement age (FRA) is making its final scheduled increase to age 67 for people born in 1960 or later. The FRA gradually increased from age 65 to age 67 and was established by legislation passed in 1983. The FRA is the age a person first becomes entitled to full or unreduced retirement benefits. However, keep in mind that, for Social Security and Medicare purposes, the FRA is established on the day before an individual’s birthday. So, for example, someone born on January 1 is considered to have been born in the previous year. 

For more examples, reference the Social Security figures in the table below related to when different individuals reach FRA.

Medicare premiums and deductibles

On November 14, 2025, the Centers for Medicare and Medicaid Services (CMS), an agency under the U.S. Department of Health and Human Services (HHS), released the 2026 Medicare premiums and deductibles. Here are some highlights related to increases:

• The standard Part B monthly premium increases to $202.90 in 2026 for most current, new, and high-income Medicare beneficiaries, as well as for people whose Medicare premiums are paid by Medicaid. 
• Beneficiaries with high incomes pay additional income-related Part B premiums in the upcoming year.
• For Medicare Part D recipients, the total Part D monthly premium is about $34.50 in 2026, but this amount varies by plan. These premiums are adjusted every January, while drug plan enrollment is within three months of becoming eligible for Medicare. Individuals can change plans or enroll for the first time from October 15 to December 7, and coverage becomes effective on January 1. Also, note that high-income enrollees in Part D pay a premium surcharge, which operates very much like the Part B program. 
• New in 2026, yearly out-of-pocket costs for Part D are capped at $2,100. Once you reach this limit, you won’t have to pay a copayment or coinsurance for covered Part D drugs for the rest of the calendar year. After your out-of-pocket spending exceeds $2,100, you pay nothing. Low-income beneficiaries may be eligible for reduced cost sharing and more generous coverage by Medicare, including paying no more than $12.65 for brand and $5.10 for generic drugs. Another feature introduced last year is the option to manage your out-of-pocket costs for drugs covered by your plan by spreading your costs across the calendar year instead of paying them all at once at the pharmacy. For drugs not covered by your plan, you pay 100%.

Summary table: 2025 vs. 2026 Social Security and Medicare data

The following table provides even more in-depth comparisons between 2025 and 2026 Social Security and Medicare figures, including both increases and decreases.

Looking for more? Discover Mercer’s Social Security and Medicare products

The Social Security and Medicare information above only covers a small percentage of the information in Mercer’s retirement-related products. Now in its 54^th edition, the Mercer Guide to Social Security is one of the most popular and trusted Social Security and Medicare products on the market. This booklet gives an easy-to-understand explanation of retirement, survivor, and disability benefits, including over 25 real-life examples and solutions.

Meanwhile, Mercer’s Medicare booklet explains exactly what you need to know about Medicare in simple, practical terms. For more information or to order either booklet, please click here.

This data is designed to help you or your employees properly prepare for a well-deserved retirement. After all, there’s nothing better than peace of mind when it comes to your employees’ financial security and healthcare coverage.