2.8% COLA increase, US Social Security rises in 2026, but Medicare costs climb too

For Americans — including Singaporeans with US retirement income, green card status, or US-based investments — Social Security and Medicare are shifting at the same time. Benefits are going up, yes. But healthcare costs are rising too, and for many retirees, the maths is tight.

Social Security gets a bump — but it’s modest

The Social Security Administration has confirmed a 2.8% Cost-of-Living Adjustment (COLA) for 2026. On paper, that sounds decent. In reality, it’s just enough to keep up with everyday inflation.

For the average retiree:

• Monthly benefit rises from about S$2,720 to S$2,795
• That’s an increase of roughly S$75 per month

For higher earners:

• Maximum benefit at full retirement age: S$5,600+ per month
• If benefits were delayed until age 70: up to S$7,100+ monthly

Helpful? Yes. Life-changing? Honestly speaking, no.

Higher wages mean higher taxes for workers

If you’re still working and paying into the system, there’s a catch.

In 2026, Social Security tax applies to income up to S$249,000, up from last year. Anyone earning above that cap won’t pay additional Social Security tax — but reaching it faster means less take-home pay earlier in the year.

Key Change (2026)	What It Means	Why It Matters
2.8% COLA increase	Average +S$75/month	Helps offset inflation
Higher wage tax cap	Taxed up to S$249,000 income	Bigger bite for high earners
Max benefit at 70	Up to S$7,100/month	Rewards delayed retirement
Medicare premium hike	+S$24/month	Cuts into COLA gains

Medicare costs rise — quietly but painfully

Here’s where many retirees feel squeezed.

The standard Medicare Part B premium increases to about S$275 per month, up from S$250 previously. Since this amount is automatically deducted from Social Security, most people won’t “feel” the loss — but their bank balance will.

The annual deductible also rises to around S$385.

For many retirees, almost one-third of their COLA increase disappears immediately due to higher healthcare deductions.

High-income retirees pay much more

Those with higher reported income face extra surcharges. Monthly premiums can reach:

• S$385 to S$930, depending on income level

This affects retirees with investment income, rental income, or overseas assets — including Singapore-based ones.

One real win: prescription drug costs are capped

Finally, some genuinely good news.

From 2026, out-of-pocket spending for Medicare Part D prescription drugs is capped at S$2,850 per year. No more runaway pharmacy bills.

This change protects retirees managing:

• Diabetes
• Heart disease
• Cancer
• Autoimmune conditions

For anyone on long-term medication, this is one of the most meaningful retirement reforms in years.

Savers get more room to grow in 2026

Still working? Planning ahead? This part matters.

The Internal Revenue Service has increased contribution limits across major retirement accounts.

Updated retirement contribution limits

• 401(k), 403(b), 457 plans: up to S$33,000
• IRA: up to S$10,100
• Catch-up (age 50+): extra S$1,500

“Super catch-up” for ages 60–63

This is big.

Workers aged 60 to 63 can contribute an additional S$15,200, bringing total annual 401(k) savings to nearly S$48,000 — if their plan allows it.

For Singaporeans earning US income late in their careers, this is a rare chance to turbocharge retirement savings.

Health Savings Accounts (HSAs) become even more useful

HSAs remain one of the most tax-efficient tools available.

For 2026:

• Individual limit: S$5,900
• Family limit: S$11,700
• Catch-up (55+): S$1,340

HSAs are powerful because:

• Contributions are tax-deductible
• Growth is tax-free
• Withdrawals for medical costs are tax-free

Used well, an HSA can double as a stealth retirement account.

Retirement age and tax tweaks to note

Full Retirement Age (FRA) is now 67 for anyone born 1960 or later.

• Claiming at 62 = up to 30% lower benefits
• Waiting until 70 = roughly 8% more per year

There’s also a new senior tax deduction worth about S$8,000 per person, though it phases out for higher-income retirees.

So… should you care if you’re in Singapore?

If you:

• Receive US Social Security
• Hold a US passport or green card
• Have US-based retirement accounts
• Plan to retire partly in Singapore

Then yes — these 2026 changes directly affect your cash flow.

Benefits are rising, but costs are rising too. No need to panic, but definitely no reason to ignore it.

Frequently Asked Questions

Will Social Security payments really increase in 2026?

Yes. Payments rise by 2.8% from January 2026, adding roughly S$75 per month for the average retiree.

How much more will Medicare cost each month?

Standard Medicare Part B premiums increase by about S$24 per month, with higher-income retirees paying significantly more.

Do these changes matter if I live in Singapore?

Absolutely. If you receive US benefits or hold US retirement accounts, these changes affect your income regardless of where you live.