Key Points
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Social Security is getting a generous cost-of-living adjustment in 2027.
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Beneficiaries will also be able to earn more money before having benefits withheld.
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A couple of Social Security changes that impact workers may be a source of stress.
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When you see “Social Security” in the news, the context isn’t always great. After all, the program is facing a major funding shortfall that could lead to future benefit cuts. So news in that context is typically negative.
In the context of 2027 program updates, though, there are several positive changes to expect from Social Security. But not every change is one to celebrate.
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Here are five ways Social Security is changing that you should know about either way.
1. Benefits are getting a 3.6% COLA
Social Security benefits are eligible for a cost-of-living adjustment, or COLA, each year. The purpose of COLAs is to help ensure that benefits can keep up with inflation.
This year, Social Security benefits rose 2.8%. Come January, benefits will be eligible for a 3.6% COLA. Following that raise, the average retirement benefit should increase from $2,095 to $2,170.
Of course, if there’s an increase in the cost of Medicare Part B in 2027, dual enrollees will see a smaller net COLA. But all told, next year’s boost is looking to be pretty generous.
2. The earnings test limit is rising
Social Security recipients who work while receiving benefits before reaching full retirement age are subject to an earnings test. Exceeding its limit means having benefits withheld temporarily.
In 2026, Social Security recipients who won’t reach full retirement age by Dec. 31 have $1 of Social Security withheld for each $2 above $24,480. In 2027, that limit is rising to $25,560, giving seniors more opportunity to earn income before their benefits are negatively affected.
Meanwhile, this year’s earnings test limit for people who will reach full retirement age by Dec. 31 is $65,160. Above that, $1 in Social Security is withheld per $3 of earnings. In 2027, that limit is rising to $67,920.
3. The maximum benefit is rising
If you’re a higher earner, you may be eligible for Social Security’s maximum monthly benefit. This year, the maximum benefit at full retirement age is $4,152. In 2027, it’s rising to $4,188.
However, it’s possible to get even more Social Security. Claimants who delay past full retirement age can boost their benefits by 8% a year up until age 70. So while $4,188 may be Social Security’s highest possible benefit at full retirement age in 2027, some seniors may be able to collect as much as $5,358 per month.
4. Higher earners will have to pay more Social Security tax
So far, we’ve discussed three positive changes to Social Security. But the news isn’t all good.
In 2027, Social Security’s wage cap will increase from $184,500 to $192,300. Higher earners will therefore face taxes on an additional $7,800 of wages. At the current 12.4% tax rate, that’s an extra $967.20 paid into Social Security.
That said, only self-employed people are looking at an additional $967.20 in Social Security taxes. Salaried workers split that bill with their employers, leaving them with an additional $483.60 in Social Security tax to pay.
5. It’s getting harder to earn work credits
To qualify for Social Security benefits in retirement, you need to earn a total of 40 work credits in your lifetime at a maximum of four credits each year. Credits are earned by paying taxes on a certain amount of wages.
Currently, the value of a single work credit is $1,890. In 2027, the earnings required for a single credit will rise to $1,970, making it harder to qualify for Social Security.
There’s clearly a lot happening with Social Security in the new year. And thankfully for retirees, many of these changes are good ones. Workers will have to be mindful of a higher wage cap and work credit earnings requirement. But no matter which camp you fall into, make sure to keep paying attention to Social Security updates so you’re squarely in the loop.
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