Changes to Social Security in 2027: What You Need to Know

Millions of Americans will experience changes to Social Security in the coming year. Beyond increased monthly retirement benefits, more wages will be subject to Social Security taxes. The Social Security Administration has announced that benefits will rise by 3.6 percent in 2027 due to the annual cost-of-living adjustment (COLA). The maximum earnings subject to Social Security payroll taxes will increase from $184,500 in 2026 to $192,300 in 2027. Additionally, other thresholds within Social Security will rise, including the amount beneficiaries below full retirement age can earn before some benefits are temporarily withheld.

Why These Changes Matter

Social Security’s yearly adjustments impact both retirees’ household budgets and the contributions working Americans make to the program. The 3.6 percent COLA affects Social Security and Supplemental Security Income (SSI) benefits, benefiting nearly 72 million Social Security beneficiaries beginning January. Around 7.3 million SSI recipients will see increased payments starting December 31, 2026.

The most significant change for current retirees is the 3.6 percent COLA. The adjustment is based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). According to the Social Security Administration, the CPI-W rose by 3.6 percent from the third quarter of 2025 through the third quarter of 2026. For retired workers, the estimated average monthly Social Security benefit will increase from $2,095 to $2,170, an additional $75 per month.

“Rising Medicare premiums, health care expenses, and everyday living costs could quickly take up much of that increase, leaving many seniors wondering why their financial outlook isn’t improving despite receiving more money,” said Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, to Newsweek.

Higher Payroll Taxes for High Earners

Higher earners could see an increase in Social Security payroll taxes as more of their wages fall under the taxable maximum. The maximum earnings subject to Social Security payroll tax will rise to $192,300 in 2027, up from $184,500 in 2026. Employees pay a 6.2 percent Social Security tax on earnings up to that limit, with employers contributing another 6.2 percent. This is part of the combined 7.65 percent Social Security and Medicare payroll tax employees pay. For employees earning $192,300 or more in Social Security-covered wages, this could mean a Social Security payroll tax of up to $11,922.60 in 2027, compared with $11,439 in 2026.

Updates for Early Retirees

Another change will affect Americans who claim retirement benefits before reaching full retirement age but continue working. In 2027, Social Security beneficiaries under full retirement age for the entire year can earn $25,560 before the retirement earnings test begins to withhold some benefits, up from $24,480 in 2026. The SSA withholds $1 in benefits for every $2 earned above this threshold.

“That’s welcome breathing room, but earn too much and benefits can still be withheld. Social Security recalculates those benefits at full retirement age, but a bigger check years from now doesn’t help pay today’s bills,” said Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, to Newsweek.

For individuals who reach full retirement age during 2027, the limit increases to $67,920, up from $65,160 in 2026. The SSA withholds $1 for every $3 earned above that limit, counting only earnings from the months before reaching full retirement age. Beginning with the month a beneficiary reaches full retirement age, the earnings limit no longer applies.

Upcoming Considerations

Higher Social Security benefits will start being distributed in January 2027, while SSI recipients will see increased payments on December 31, 2026. However, questions about how Medicare premiums will affect retirees remain.

“Until 2027 Part B premiums are finalized, many retirees won’t know exactly how much of their COLA they’ll actually take home,” Ryan said. “These are annual adjustments, not a solution to Social Security’s much bigger funding problem.”