Retirement in the U.S.: Social Security and Planning for 2026

Planning for retirement in the United States requires understanding a system with its own rules: a combination of public social insurance, employer-sponsored private plans, and individual investments. For Brazilian immigrants living in or planning to move to the country, the challenge is twofold. Beyond mastering how Social Security works, they must understand how their contribution history with Brazil’s INSS can factor in, and which long-term vehicles offset the limits of public benefits. This guide provides the updated overview for 2026.

What Is Social Security

Social Security is the federal retirement system administered by the Social Security Administration (SSA). It is funded by the FICA (Federal Insurance Contributions Act) tax, withheld from payroll at a rate of 6.2% for the employee and 6.2% for the employer, totaling 12.4% on covered earnings. In 2026, the contribution ceiling (Social Security wage base) was adjusted and remains above $175,000 annually. Earnings above that limit generate neither additional contributions nor additional benefits.

To qualify for retirement benefits, you must accumulate at least 40 credits. Each credit corresponds to a fraction of FICA-covered wages: in 2026, $1,810 in earnings equals one credit, with a maximum of four credits per year. In practice, that means ten years of covered work to reach basic eligibility.

Retirement Ages and the Impact of Your Choice

The full retirement age, known as Full Retirement Age (FRA), depends on your year of birth. Those born in 1960 or later face an FRA of 67. You may claim benefits starting at age 62, but with a permanent reduction of up to 30%. Delaying until age 70, on the other hand, earns delayed retirement credits of approximately 8% per year, significantly increasing the final monthly benefit.

The benefit calculation uses the AIME (Average Indexed Monthly Earnings) formula based on the 35 highest-earning years adjusted for inflation, applying bend points that make the system progressive. In 2026, the monthly maximum for someone retiring exactly at FRA is around $4,000, but the average benefit received by retirees is substantially lower, historically close to $1,900 per month.

The Brazil–U.S. Social Security Totalization Agreement

Brazilians who split their working life between the two countries have a valuable tool at their disposal: the U.S.–Brazil Social Security Totalization Agreement, in effect since October 1, 2018. The agreement allows the totalization of contribution periods: those who have not reached 40 U.S. credits can use their INSS contribution time to supplement eligibility, and vice versa. Each country, however, pays only the portion proportional to the time contributed to its own system.

The agreement also resolves the issue of dual social security taxation for workers temporarily assigned between the two countries, through the Certificate of Coverage. Requests are made to the INSS in Brazil or to the SSA in the United States, depending on the country of origin.

Annual Adjustments and Purchasing Power

Social Security applies an annual Cost-of-Living Adjustment (COLA) tied to the CPI-W inflation index. The adjustment for 2025 was 2.5%, lower than the post-pandemic increases (8.7% in 2023, 3.2% in 2024). The 2026 COLA, announced in October 2025, continued the trend toward moderation. These adjustments partially preserve purchasing power, but rarely keep pace with actual healthcare and housing inflation, two critical items in any retiree’s budget.

Why Public Benefits Alone Are Not Enough

Even when received at FRA, the benefit typically covers between 35% and 45% of pre-retirement income for those with average-wage careers. The SSA recommends planning so that Social Security represents one of several income sources, not the only one. The most common supplements in the U.S. are IRS-qualified plans:

• 401(k): employer-sponsored plan. The employee contribution limit in 2026 is $24,000, with an additional catch-up contribution of $8,000 for participants aged 50 or older. Employers frequently offer partial matching.
• Traditional and Roth IRA: individual accounts. The annual contribution limit in 2026 is $7,500 ($8,500 with catch-up). The Roth version allows tax-free withdrawals in retirement, but has income restrictions.
• HSA (Health Savings Account): when used strategically, it functions as a retirement vehicle with a triple tax advantage, provided the account holder is enrolled in an HDHP plan.

Immigration Status and Benefit Eligibility

The right to Social Security does not depend on U.S. citizenship, but rather on having contributed legally under a valid Social Security Number and having met the minimum credit requirement. Permanent residents can receive the benefit even while living outside the U.S., with some country-specific restrictions. For immigrants on temporary status, work time under an SSN counts toward credits, but continued receipt of benefits abroad depends on immigration status at the time of application.

Informal work without FICA withholding does not generate credits. Brazilians who worked off the books for years in the U.S., even while legally present, may reach retirement age without qualifying for American benefits, a situation in which the totalization agreement with Brazil can be decisive.

Practical Steps to Build Your Retirement Plan

1. Create a my Social Security account at ssa.gov to track your contribution history, accumulated credits, and estimated benefit at different ages.
2. Verify the accuracy of your reported earnings each year. Errors not corrected within three years may reduce future benefits.
3. Maximize your employer’s 401(k) match before any other allocation. It is guaranteed return on investment.
4. Evaluate the Roth vs. traditional combination considering your current marginal tax rate versus your expected rate in retirement.
5. Keep a record of your INSS contribution time in Brazil with a Certidão de Tempo de Contribuição (CTC), the document required to invoke the totalization agreement in the future.
6. Factor in the tax impact of Social Security: a portion of the benefit is taxable at the federal level above certain income thresholds, and some states also tax it.

Common Mistakes to Avoid

• Claiming benefits at 62 without calculating the break-even point. The 30% reduction is permanent and rarely pays off for those with average or above-average life expectancy.
• Underestimating healthcare costs. Medicare kicks in at age 65, but has premiums, deductibles, and coverage gaps that often prompt enrollment in Medigap or Medicare Advantage.
• Failing to report Brazilian work history. Without a formal totalization request to the INSS or SSA, those periods are not automatically counted.
• Concentrating all assets in U.S. investments without considering the currency and tax implications of a potential return to Brazil.
• Overlooking the Windfall Elimination Provision in specific cases involving pensions from non-FICA-covered employment. Although reformed by the Social Security Fairness Act signed in January 2025, the issue still requires individual analysis.

The Perspective of Mid-Career Arrivals

Immigrants who begin working in the U.S. at 40 or 50 face a particular set of challenges. Reaching 40 credits becomes achievable, but the AIME calculation over 35 years means that several years enter as zero, pulling the average down. In these cases, the strategy tends to rely heavily on private plans, allocations with a shorter risk window, and, where applicable, combining with Brazilian benefits through the totalization agreement. Working until age 70 also carries additional weight for those looking to offset the late start of their U.S. contributory career.

Victoria Harper

Editor-in-Chief

Meet the author

Leading journalism and editorial content at Visto n’ Visa, Victoria helps make immigration topics clear, trustworthy, and easy to understand. Her focus is on delivering useful, human, and relevant content for people exploring new paths abroad.