Breaking News: 2027 Social Security COLA is announced; it’s big but is it enough?
Checking the annual Social Security update has become a high-stakes fall tradition, right up there with buying overpriced pumpkin lattes and rooting for your football team. If you’re collecting Social Security, the biggest question on your mind is probably “What’s my 2027 raise going to look like?” The 2027 Social Security Cost-of-Living Adjustment (COLA) is officially 3.6%, which should help seniors enjoy a bit more buying power. This is the fifth-largest COLA in the past 35 years, tied with 2012. Whether that COLA holds up to inflation in the new year, though, is anyone’s guess.
Today’s news comes out the same day that the Consumer Price Index increased 0.6 percent in September, the U.S. Bureau of Labor Statistics reported today. That means over the last 12 months inflation was up 3.7%. Gas prices soared, contributing to the inflation number. But the COLA isn’t the only Social Security change happening next year. Here’s an overview of what’s different about Social Security once the new year kicks off.
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1. A 3.6% cost-of-living adjustment
Social Security benefits are eligible for an annual cost-of-living adjustment, or COLA, so they’re able to keep up with inflation. This year’s (2026) 2.8% was a big letdown for many seniors. And inflation has certainly rendered it pretty ineffective since prices started climbing in the wake of the Middle East conflict. Also, if you’re on Medicare, don’t start counting your raise just yet. Medicare enrollees pay for Part B out of their Social Security benefits directly. If there’s a big Part B premium hike in 2027 like there was this year, your COLA could get whittled down.
2. A new earnings threshold before benefits are withheld
Collecting Social Security benefits doesn’t mean you’re not allowed to work. Once you reach full retirement age, you can earn any amount without having benefits withheld.
If you work while receiving Social Security prior to full retirement age, the earnings test applies. This year’s threshold is $24,480 for people who won’t reach full retirement age by Dec. 31. Earning more results in $1 in withheld benefits per $2 of earnings.
If you’ll reach full retirement age by the end of the year, the earnings test limit is $65,160 for 2026. Earning more costs you $1 in Social Security per $3 of earnings temporarily. But the good news is that you won’t have to worry about the earnings test in 2027 if you choose to work.
If you’re still subject to Social Security’s earnings test after December 31, you get more leeway in 2027 to earn money from a job before benefits are withheld.
If you won’t reach full retirement age by the end of 2027, you’ll have $1 in Social Security withheld per $2 in earnings above $25,560. If you will reach full retirement age by the end of 2027, you’ll have $1 in Social Security withheld per $3 of earnings above $67,920.
3. A new maximum monthly benefit
Because Social Security benefits get a COLA each year, the maximum monthly benefit payable at full retirement age tends to increase. In 2027, the maximum benefit at full retirement age will be $4,188, up from $4,152 at the start of 2026.
If you’re reaching full retirement age in 2027 but don’t need Social Security right away, maybe don’t file. Each year you wait beyond that point, until you turn 70, gives your benefits a permanent 8% increase.
4. A new wage cap for Social Security taxes
Social Security relies on payroll taxes to keep up with scheduled benefits. Each year, there’s a cap placed on the amount of earnings that are taxed to fund the program. This year’s wage cap sits at $184,500. Next year, the wage cap rises to $192,300, so higher earners will have to open their wallets even more. So will the companies that employ them, since the burden of Social Security taxes is split equally between employers and employees.
If you’re self-employed, sorry. Any increase you’re subject to is yours to cover as both employer and employee.
5. A new work credit requirement
The way to qualify for Social Security is to pay taxes on wages, which result in work credits. You need a total of 40 of these credits to get Social Security in retirement, and you can only earn up to four credits per year.
This year, the value of a single work credit is $1,890. Next year, a work credit will require $1,970 of earnings.
The difference may be negligible if you work full-time and earn at least a median salary. It’s people who work very part-time who typically need to pay close attention to how much earnings it takes to get Social Security work credits.
It pays to stay in the loop
And there you have it. Social Security is clearly going to look different in 2027, and it’s best to be prepared for that.
And don’t assume program changes don’t apply to you if you aren’t retired. The wage cap and work credit requirements, for example, apply to working folks specifically.
So while you’d perhaps rather spend your October days basking in the glory of cool weather and changing leaves, it’s important to know what’s happening with Social Security. Familiarizing yourself with these changes gives you a jump start on being financially ready for the new year.
