4 Numbers Social Security Retirees Must Know

If you are retired and relying on Social Security, understanding how your benefits are calculated and what decisions affect them is essential. The wrong assumptions can permanently reduce the monthly income you depend on.

There are four key numbers every retiree should know to make informed choices and avoid costly mistakes. Here’s what they are.

Your monthly benefit amount

Start by knowing how much your monthly benefit is, or how much it will be once you claim.

Your monthly benefit is based on your average wages in the 35 years your earnings were highest, after adjusting for wage growth. Specifically, you receive benefits equal to a percentage of your average indexed monthly earnings (AIME). As of June 2026, the average monthly Social Security check across all beneficiaries was $1,938, while the average for retired workers specifically was $2,084.

That figure may be lower than many people expect. Social Security is designed to replace only about 40% of pre-retirement income, so most retirees need supplemental savings or other income to make up the difference. You can verify the amount you will receive, or are already receiving, through your my Social Security account at ssa.gov. That account also lets you compare how claiming at different ages changes your monthly payment. Claiming before your full retirement age permanently reduces your check, while delaying beyond it increases it.

Your annual COLA

Knowing the size of your cost-of-living adjustment (COLA) matters because it determines how your benefits change each year and whether your purchasing power holds up against inflation. For 2026, the Social Security Administration announced a 2.8% COLA for Social Security and Supplemental Security Income payments, adding about $56 per month on average for retired workers.

COLAs are announced each October and calculated from year-over-year changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Medicare Part B premiums rose by $17.90 in 2026, meaning beneficiaries enrolled in Medicare saw that amount subtracted from their COLA gain before they received any net increase.

The broader concern is that COLAs are not keeping pace with what retirees actually spend. According to the Senior Citizens League’s 2026 Loss of Buying Power study, Social Security benefits in 2026 are worth only about 83.6 cents on the dollar compared to their 2016 value, a loss of approximately 13.7% in buying power. Stretching the lens further, the nonpartisan Senior Citizens League estimates that between 2010 and 2024, Social Security benefits lost 20% of their buying power. The core problem is that the CPI-W tracks spending patterns of working-age people, not retirees who face disproportionately high costs in healthcare and housing.

Looking ahead, TSCL projects the 2027 COLA at approximately 3.6%, up from the 2.8% adjustment implemented in 2026. Still, retirees should track their COLA each year and budget accordingly rather than assume the increase covers their actual cost increases.

The amount you can earn by working while collecting benefits

If you are under your full retirement age and plan to work while collecting Social Security, you need to understand the Retirement Earnings Test (RET) and the specific limits it sets.

For 2026, the Social Security Administration withholds $1 in benefits for every $2 earned above $24,480 annually for workers who are under full retirement age for the entire year. In the year you reach full retirement age, the test is more generous: you forfeit $1 in benefits for every $3 earned above $65,160, an increase of $3,000 from the 2025 limit.

The good news is that withheld benefits are not gone permanently. The SSA recalculates your benefit once you reach full retirement age and credits you back for the months benefits were withheld, raising your monthly payment going forward. Even so, the cash-flow impact can be significant in the short term, since Social Security does not always spread that withholding smoothly across the year and in some cases withholds full monthly checks until the amount owed has been recovered. Plan your earnings carefully to avoid an unexpected gap in your monthly income.

The thresholds when you owe taxes

Finally, be aware of the income thresholds at which federal taxes apply to your Social Security benefits. The calculation is based on provisional income: half of your Social Security benefit, plus all taxable income, plus certain tax-exempt income such as municipal bond interest. Once provisional income reaches $25,000 for a single filer or $32,000 for married joint filers, a portion of your Social Security becomes taxable at the federal level.

One detail that surprises many retirees: these thresholds have never been adjusted for inflation since they were set in the early 1980s. That means a growing share of recipients cross them each year simply because their nominal benefits have risen with COLAs, even when their real purchasing power has not. Knowing where you stand helps you plan for quarterly estimated tax payments or withholding so there are no surprises at filing time.

Understanding these four numbers gives you a realistic picture of how much retirement income you have coming in, what it can actually buy, and what the rules are around earning or taxes. If you are retired or approaching retirement, reviewing each of them every year is time well spent.

Editor’s note: This update added the confirmed 2026 COLA rate of 2.8% and the $17.90 Medicare Part B premium impact on that adjustment, the average retired worker benefit of $2,084 per month as of June 2026, the Senior Citizens League’s finding that benefits have lost 20% of buying power since 2010, TSCL’s projected 2027 COLA of 3.6%, and context that the Social Security tax thresholds of $25,000 and $32,000 have never been adjusted for inflation since the 1980s.

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