These 2027 Social Security Changes May Surprise Retirees

Social Security has been around for a long time. But that doesn’t mean the program’s rules never get an update.

Each year, adjustments are made to various aspects of Social Security due to inflation changes and wage growth. And so come 2027, several parts of the program could look different.

Here are three changes to Social Security retirees should expect in 2027.

1. A cost-of-living adjustment

Social Security benefits are eligible for a cost-of-living adjustment, or COLA, every year. The purpose of COLAs is to help benefits keep up with inflation.

This doesn’t mean benefits actually increase every single year. Rather, it’s that they’re eligible for an increase if inflation warrants it.

In 2026, Social Security benefits got a 2.8% COLA. Initial estimates call for a significantly larger raise in 2027, but we won’t know how large until the September inflation data comes out.

Social Security COLAs are based on third-quarter changes to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) year over year. We have data for July and August, but it’s obviously premature to calculate it for September.

The Senior Citizens League, an advocacy group, projects that the 2027 COLA will be 3.5% based on CPI-W data from July and August. Independent Social Security analyst Mary Johnson has the same estimate.

AARP’s forecast is slightly higher. The group thinks 2027’s COLA will come in at 3.6%.

For seniors enrolled in Social Security and Medicare, any increase in Part B costs will need to be factored into the COLA that comes through. Part B premiums are deducted from Social Security benefits. So if there’s a COLA that raises the average benefit by $75 but the cost of Part B increases by $10, the typical dual enrollee will only see their Social Security checks increase by $65.

2. A new earnings-test limit

Social Security’s earnings test applies to recipients who work while receiving benefits before full retirement age. In 2026, beneficiaries who won’t reach full retirement age at any point during the year have $1 in Social Security withheld for every $2 of earnings above $24,480; for those who will reach full retirement age by Dec. 31, $1 in Social Security is withheld per $3 of earnings above $65,160.

The earnings-test limit tends to rise from year to year to account for wage growth. That’s a good thing for Social Security recipients, since it means that in 2027, they should have the option to earn more money before risking having benefits withheld.

3. A higher wage cap

Social Security is primarily funded through payroll taxes. Workers pay into Social Security at a rate of 6.2%, as do their employees (though self-employed people pay the full 12.4% rate).

Each year, a limit known as the wage cap is established for taxing earnings to fund Social Security. The 2026 wage cap is $184,500. Next year, it’s likely to rise with wage growth.

At first, this might seem like a change that won’t have much of an impact on retirees. But they have more skin in the game than expected.

Social Security is facing the possibility of sweeping benefit cuts if Congress doesn’t implement reforms in the coming years. The more wages that are subject to Social Security taxes, the more stable the program’s finances become.

The anticipated wage cap increase in 2027 won’t be enough to prevent broad Social Security cuts on its own. However, some lawmakers have proposed raising or eliminating the wage cap to shore up Social Security’s finances.

Stay tuned for a big reveal

As of now, we don’t know what the 2027 COLA will be, what the earnings-test limit will entail, or what Social Security’s wage cap will look like. All we know is that these changes are expected in January.

The Social Security Administration should be able to share official COLA, earnings test, and wage cap numbers on Oct. 14. That’s the date September’s inflation report is expected to be released. In the meantime, retirees should put these changes on their radar so they know to watch for them.