Social Security Gets a Shakeup in 2027. Here’s What’s in Store

Social Security has been around for a very long time. In spite of that, the program's rules aren't automatically set in stone.

Each year, Social Security tends to undergo changes based on inflation and wage growth. And 2027 is no exception. Here are some ways Social Security is changing in the new year, and why retirees and workers alike have to pay attention.

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A 3.6% cost-of-living adjustment is coming

The purpose of Social Security cost-of-living adjustments, or COLAs, is to help benefits keep up with inflation. In 2026, Social Security benefits got a 2.8% COLA, which many seniors found insufficient.

Next year's raise will be more generous. Benefits will get a 3.6% COLA. Once it comes through, the average monthly Social Security check is expected to increase from $2,095 to $2,170.

Of course, it's important to keep expectations in check about that COLA. Social Security COLAs have long struggled to keep up with inflation because they're not calculated based on the costs seniors face. Rather, they're based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, which focuses on workers.

Furthermore, seniors who are enrolled in Medicare in addition to Social Security will have their Part B premiums paid directly from their benefits. Any increase in Part B costs will eat into the upcoming COLA.

A higher earnings test limit will apply

If you don't work while collecting Social Security, you may not be familiar with the program's earnings test. The earnings test sets a limit on income from a job before benefits can be withheld. And it only applies to Social Security recipients who have not reached full retirement age.

Currently, beneficiaries who won't reach full retirement age by Dec. 31 can have $1 in Social Security withheld per $2 of earnings above $24,480. In 2027, that limit increases to $25,560.

For beneficiaries who will reach full retirement age by Dec. 31, there's a risk of having $1 in Social Security withheld for every $3 of earnings above $65,160 this year. In 2027, that threshold increases to $67,920.

There will be a higher maximum benefit

Most Social Security recipients don't receive the program's maximum benefit. But high earners can qualify for a generous monthly paycheck.

The current maximum Social Security benefit at full retirement age is $4,152. In 2027, it's rising to $4,188.

However, that's just the highest possible benefit at full retirement age. Social Security rewards retirees who delay their claims beyond that point. Each year you wait, until age 70, gives your benefits an 8% boost, which means it's possible to get more than $4,188 per month in 2027.

The wage cap is rising

Up until now, we've discussed Social Security changes that will impact retirees. This change applies to workers. Social Security's wage cap is rising, so higher earners will have to pay taxes on more income to support the program in 2027.

The current Social Security wage cap is $184,500. In 2027, it's rising to $192,300. Higher earners will owe taxes on an additional $7,800 of wages. Many workers, however, get to split their Social Security tax bill evenly with their employers, which helps minimize the blow.

The value of work credits is increasing

Social Security benefits aren't given out automatically in retirement. Rather, they have to be earned. The way to get Social Security is to work and pay taxes on wages.

To become eligible for Social Security, you need to accumulate 40 work credits in your lifetime. You can collect a maximum of four credits per year.

Right now, the value of a single work credit is $1,890. In 2027, it's rising to $1,970, which means it will get a bit harder to qualify for Social Security.

Full-time workers don't necessarily have to worry about getting their four credits for the year. It's part-time and gig workers who need to pay attention.

Clearly, Social Security is undergoing significant changes in 2027. It's important to know what's in store whether you're working or retired and receiving benefits, so make sure to familiarize yourself with what's happening before the new year begins.

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