📅 2026 Update: Recent Changes in 457 Plans and Retirement Planning

Since the original article was published, key updates have occurred in retirement planning, particularly regarding Medicare, Medicaid, and Social Security. These changes are significant for individuals considering their financial future and retirement options. The earlier article continues further down the page, providing foundational information about 457 plans.

🏥 Medicare Part B Premiums

In 2025, Medicare Part B premiums increased by 5%. The standard monthly premium now stands at $174.70. This change impacts the cost of healthcare for retirees and those approaching retirement.

💵 Social Security Cost-of-Living Adjustment

For 2026, the Social Security Cost-of-Living Adjustment (COLA) is set at 3.2%. This adjustment results in an average monthly benefit increase of $50.40. This increase helps retirees maintain their purchasing power amid rising living costs.

👩‍⚕️ Medicaid Expansion

As of 2026, 39 states have expanded Medicaid under the Affordable Care Act. This expansion allows more low-income individuals to gain access to crucial healthcare services, making it easier for retirees and those with disabilities to secure necessary medical care.

🏠 Nursing Home Costs

The average daily cost for a semi-private room in a nursing home is now $290, totaling approximately $105,850 annually. These rising costs make it essential for retirees to consider their long-term care options and financial planning strategies.

📈 Retirement Plan Contribution Limits

For 2026, the contribution limit for 401(k) plans is $22,500, with an additional $7,500 catch-up contribution for individuals aged 50 and over. This change encourages older workers to save more for retirement.

📌 Key Points to Remember

  • Medicare Part B premiums increased to $174.70.
  • Social Security COLA for 2026 is 3.2%.
  • 39 states have expanded Medicaid.
  • Average nursing home costs are $290 per day.
  • 401(k) contribution limit is now $22,500, with a catch-up option.

💡 Tips for Understanding 457 Plans and Retirement Planning

Review your personal situation with your attorney to ensure the best strategies for your retirement planning.

📜 Understand 457 Plans

457 plans are retirement savings plans offered to state and local government employees. Contributions are tax-deferred, meaning you pay taxes on withdrawals, not on contributions.

🏥 Know Your Medicare Options

Medicare provides healthcare coverage for individuals aged 65 and older. Understanding the different parts of Medicare, including A, B, C, and D, is crucial for managing healthcare costs in retirement.

📊 Monitor Social Security Benefits

Keep track of your Social Security benefits and how they can impact your overall retirement income. It's important to understand the best time to claim benefits for optimal financial support.

🏡 Plan for Long-Term Care

Long-term care costs are rising. Consider how you will cover these expenses, whether through savings, insurance, or government assistance programs. Planning ahead is essential to avoid financial strain later.

📅 Stay Aware of Enrollment Periods

Medicare enrollment has specific periods. The initial enrollment period spans seven months around your 65th birthday. Missing these deadlines can lead to delays in coverage and penalties.

⚖️ Keep Updated on Estate Planning

Ensure you have essential documents like a will, durable power of attorney, and healthcare proxy. These documents help clarify your wishes regarding medical and financial decisions.

🏆 Free Options Ranked by User Reviews (2026)

No paid national services in retirement planning met the review threshold for this section. Instead, we highlight free government and nonprofit resources that can assist with retirement planning and related topics.

🥇 1. State Health Insurance Assistance Programs (SHIPs)

SHIPs provide free, unbiased counseling for Medicare and other health insurance options. They help individuals understand their choices and find the best coverage for their needs.

🥈 2. National Council on Aging (NCOA)

NCOA offers resources and assistance for seniors on various topics, including financial planning and benefits. Their tools help individuals navigate their retirement options effectively.

🥉 3. Social Security Administration

The Social Security Administration allows you to apply for benefits online or at local offices. They provide information on eligibility and benefits, ensuring you understand your rights.

4️⃣ Medicare.gov

The official Medicare website is a comprehensive resource for enrollment, plan comparisons, and coverage details. It helps users make informed decisions about their healthcare coverage.

5️⃣ Adult Protective Services (APS)

APS is a resource for reporting elder abuse and neglect. They provide support to individuals who may be at risk and help ensure their safety and well-being.

🔎 Before Paying for Help with Retirement Planning

  • 🏦 Confirm the credentials of any advisor.
  • 📄 Check for transparent fee structures.
  • 📅 Verify the advisor's experience with retirement planning.
  • 🔍 Research client reviews and testimonials.
  • ⚖️ Ensure they comply with legal and ethical standards.

❓ Frequently Asked Questions

❔ What are the eligibility requirements for Medicare?

Individuals aged 65 or older are eligible for Medicare. People under 65 with certain disabilities can also qualify.

🏷️ How do I apply for Medicaid?

Medicaid eligibility varies by state but generally includes low-income individuals, families, and those with disabilities. Applications can often be submitted online or through local offices.

📊 What is the average cost of long-term care?

As of 2026, the average daily cost for a semi-private room in a nursing home is $290, leading to an annual cost of about $105,850.

📅 When can I enroll in Medicare?

The Initial Enrollment Period for Medicare begins three months before the 65th birthday and ends three months after, totaling seven months.

💵 How does the Social Security COLA affect benefits?

The 3.2% COLA in 2026 results in an average monthly benefit increase of $50.40, helping retirees cope with inflation.

👩‍⚖️ Why is estate planning important?

Having a will, durable power of attorney, and healthcare proxy ensures your wishes are respected regarding medical and financial decisions during incapacity.

⚖️ Recent Cases Related to Retirement Planning

Recent court rulings have impacted various aspects of retirement planning, including disputes over Medicaid eligibility and the enforcement of retirement benefits. Understanding these rulings can help individuals navigate their rights and options better.

For more detailed information, you can browse more rulings on the news page.

End of October 2026 Update





A 457 deferred compensation plan is a retirement plan which allows government, and some non-government, employees to save money for retirement. The 457 plan must be offered by the employer as a retirement option in order to create an account. The Internal Revenue Service (IRS) does not consider the 457 deferred compensation plan to be a qualified retirement plan. A qualified retirement plan is any plan the meets the basic requirements under Section 401A of the Internal Revenue Code and the 401(k) plan 457 plans do not permit employers to make matching contributions as with a 401(k) plan.

This means that the amount of the retirement package received annually at retirement age is based solely upon the contributions made by the employee into the 457 account. Unlike a 401(k) retirement plan, an employee with a 457 deferred compensation plan can make withdrawals at any time and not be penalized for the withdrawn amount. The employee must still pay federal income taxes on that money withdrawn, but he or she will not have to pay an excise tax. An excise tax is a 10 percent penalty placed on the funds taken out of a 401(k) plan.

What Are 457 Plans

Most 457 deferred compensation plans allow employees to have the option to create 401(k) plans and 403(b) plans to help prepare for retirement. This means that the employee can make contributions up to the mandated limit as set by the IRS. For 2009 and 2010 the limit is $16,500, meaning an employee can make annual contributions of up to $16,500 in all three accounts without being penalized. However, non-government 457 plans do not permit 457 contributions to be transferred to many retirement plans, i.e. a 401(k) plan.

457 plans function as they do because of the changes made under the Non-governmental 457 plans are available to some non-profit organizations and educational institutions. The reason these non-government organizations are able to utilize 457 plans is because they cannot offer any other non-qualified deferred compensation plans for retirement. However, some of these organizations, depending on which 457 plan they offer may be subject to additional taxes.

One such tax is noted under Section 409A of the Internal Revenue Code which was passed in 2004. Also, the contributions placed in a 457 deferred compensation plan cannot be placed in a trust under the Internal Revenue Code because the funds set aside for retirement in this plan must remain in the ownership of the account holder.