2026 Social Security Changes: Tax and Benefit Strategies for High-Net-Worth Individuals

Key Points 

• Maximum Taxable Earnings Rise to $184,500: Direct increase in Federal Insurance Contributions Act (FICA) payroll taxes for high earners.
• Medicare Income-Related Monthly Adjustment Amount (IRMAA) Base Threshold Rises to $109,000 (Single) and $218,000 (Joint): Strategic tax moves (like Roth conversions) should be timed two years in advance (2024 income for 2026 premiums) to control modified adjusted gross income (MAGI) and avoid surcharges.
• Cost-of-Living Adjustment (COLA) 2.8% Increase: Rising Medicare premiums partially offset the benefits from a COLA increase, requiring careful cash-flow forecasting. 
• One Big Beautiful Bill Act (OBBBA) $6,000/$12,000 Temporary Deduction: Provides a tactical, temporary opportunity to reduce taxable income, potentially keeping MAGI below IRMAA or other tax thresholds.
• Maximum Benefit at Full Retirement Age Rises to $4,152/month: Reinforces the value of working for 35 years at or above the wage cap and delaying claiming for maximum lifetime income. 

Retirees and pre-retirees often treat the annual updates to Social Security and Medicare as routine adjustments. However, the 2026 Social Security changes present strategic opportunities that directly impact the wealth management and tax planning of high-net-worth (HNW) individuals. 

Increased Social Security Wage Base Limit 

For high-income earners, a significant update in 2026 is the increase in the Social Security wage base limit, often referred to as the maximum taxable earnings. 

The $184,500 Taxable Maximum 

The maximum amount of earnings subject to the 6.2% Old-Age, Survivors, and Disability Insurance (OASDI) payroll tax will increase from $176,100 to $184,500 in 2026. 

• Impact on High Earners: Individuals with income at or above this new cap will pay the maximum FICA tax. This $8,400 increase in the taxable wage base translates to an additional $520.80 in Social Security tax paid by both the employee and the employer (or the full $1,041.60 for self-employed individuals).
• Planning Insight for HNW: For those with compensation significantly above this limit, the tax is capped, offering an "end date" to the payroll tax. Financial planning should account for this fixed cost when calculating after-tax income. However, for those whose income has historically floated near the previous $176,100 cap, this change represents an increase in current tax liability. 

Increased Medicare Premiums Need Strategic Tax Management 

For HNW retirees, Medicare costs often eclipse Social Security tax concerns. IRMAA imposes surcharges on Medicare Part B and Part D premiums for those with higher MAGI. Successfully navigating these thresholds is a core component of retirement income optimization. 

The IRMAA Threshold Increase 

In 2026, the MAGI thresholds that trigger the IRMAA surcharges will increase slightly. 

The standard Medicare Part B premium will also rise from $185/month to $202.90/month. 

• Crucial Two-Year Lookback: It is vital to remember that the 2026 IRMAA determination is based on the MAGI reported on your 2024 tax return. This two-year lookback requires proactive and precise financial planning.
• The Roth Conversion Strategy: HNW individuals should explore tax diversification strategies, such as executing Roth conversions in their pre-retirement or early retirement years. Since qualified Roth distributions do not count toward MAGI, they can be a useful tool for creating tax-free income streams that can be used to control future IRMAA liabilities. 

The OBBBA Deduction 

The new temporary deduction introduced by the OBBBA provides a tactical, albeit temporary, opportunity for eligible seniors (age 65+): 

• Deduction Amount: Up to $6,000 per individual, or $12,000 for eligible married couples.
• Income Limits (MAGI): The full benefit applies to single filers under $75,000 and joint filers under $150,000, with a phase-out ending at $175,000 (single) and $250,000 (joint).
• Planning Note: While this deduction is subject to income limits, it can be leveraged strategically to keep income below key IRS thresholds, potentially reducing the tax on Social Security benefits or potentially reducing IRMAA surcharges. 

The COLA and Earnings Test: Inflation and Work Incentives 

2026 COLA Increase 

The Social Security COLA of 2.8% will be applied to benefits starting in January 2026. This increase helps maintain purchasing power, but must be weighed against rising Medicare costs, particularly the higher Part B premium. 

• Net Impact Analysis: For many high-income retirees, the COLA is partially or fully absorbed by the $17.90/month increase in the standard Medicare Part B premium, making the net benefit increase lower than the headline percentage suggests. 

Updated Earnings Test Limits 

For beneficiaries who continue to work but have not yet reached their full retirement age (FRA), the earnings test limits are rising: 

• Under FRA All Year: The limit increases to $24,480 (benefits are reduced by $1 for every $2 earned over this limit).
• Reaching FRA in 2026: The limit increases to $65,160 (benefits are reduced by $1 for every $3 earned over this limit, but only in the months prior to reaching FRA).
• HNW Perspective: While the earnings test generally affects those who need to work, high earners often choose to work past FRA. For those individuals, the earnings test disappears entirely once FRA is reached, allowing them to earn unlimited income without any benefit reduction—a crucial detail for a high-net-worth Social Security claiming strategy. 

Claiming Strategies to Maximize Lifetime Wealth 

The goal for HNW clients is not simply to receive a benefit, but to maximize the inflation-adjusted benefit within their comprehensive wealth plan. 

The Power of Delayed Retirement Credits (DRCs) 

The maximum Social Security benefit for a worker retiring at FRA is projected to be around $4,152 per month in 2026. However, DRCs increase the benefit by 8% per year (compounded monthly) up to age 70. By leveraging DRCs, a high earner can secure a significantly larger lifetime benefit and ensure a higher survivor benefit for their spouse. 

• Longevity Hedge: For HNW clients, a delayed claim creates a powerful longevity hedge—an inflation-adjusted stream of income that is guaranteed for life. This reduces the pressure on their investment portfolio, which can support more secure retirement. 
• Spousal and Survivor Benefits: Delaying the claim of the higher-earning spouse also maximizes the potential survivor benefit for the lower-earning spouse. If the higher earner passes away first, the survivor may be able to switch to the larger of the two benefits, which can offer additional financial support. 

Integrate Social Security into the Holistic Financial Plan 

Effective wealth management in 2026 requires viewing Social Security as one piece of the retirement puzzle. 

1. Tax-Driven Claiming: Social Security benefits become taxable when provisional income exceeds certain thresholds. Drawing down tax-deferred accounts (like traditional 401(k)s/IRAs) can push provisional income up, triggering the tax on Social Security and potentially IRMAA surcharges. A coordinated approach using tax-free sources (Roth assets and cash value from life insurance) can lower provisional income, effectively maximizing the after-tax value of Social Security.
2. Asset Allocation: The inflation-adjusted nature of Social Security could potentially allow HNW individuals to take on a slightly more aggressive stance with their remaining liquid portfolio assets. 

The changes announced for 2026 Social Security and Medicare underscore a critical truth: optimizing these benefits is no longer a simple matter of choosing an age to claim. For HNW individuals, every update presents a nuanced challenge that requires coordinated financial planning  

Focus Partners Wealth specializes in developing Social Security claiming strategies, working in tandem with your tax professional to synchronize your retirement income sources, manage your MAGI, and support your long-term financial security. Contact us today to turn these complex changes into a competitive advantage for your wealth plan. 

This communication is for informational purposes only. All tax laws and regulations discussed are subject to change. The content does not purport to present a complete picture of Social Security, but Focus Partners believes the information is representative of issues and needs facing some clients. This should not be construed as specific investment, tax, or legal advice. Individuals should seek advice from their wealth advisor or other advisors before undertaking actions in response to the matters discussed. No client or prospective should assume the above information serves as the receipt of, or substitute for, personalized individual advice.  

This represents the opinions of Focus Partners, may contain forward-looking statements, and presents information that may change. Nothing contained in this presentation may be relied upon as a guarantee, promise, assurance, or representation as to the future. Investing involves risk, including, but not limited to, loss of principal. Numerous representatives of Focus Partners may provide investment philosophies, strategies, or market opinions that vary. The appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives.  

This is prepared using third party sources considered to be reliable; however, accuracy or completeness cannot be guaranteed. The information provided will not be updated any time after the date of publication. ©2026 Focus Partners Wealth, LLC and Focus Partners Advisor Solutions, LLC. All rights reserved. RO-26-5133608