3 Big Social Security Changes Coming in 2027 May Surprise Retirees
Key Points
Social Security benefits will receive a cost-of-living adjustment (COLA) in 2027. The Senior Citizens League estimates payments will increase 3.8%.
The Social Security earnings limits will increase in 2027, allowing beneficiaries under full retirement age to earn more income before benefits are withheld.
Social Security's maximum taxable earnings limit will increase in 2027, such that high-income workers will pay more taxes into the program.
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The Social Security Administration updates certain financial limits and formulas on an annual basis to keep benefit payments aligned with inflation and wages. Next year, Social Security benefits will receive a cost-of-living adjustment, the earnings limits will increase, and some workers will pay more taxes into the program.
The Social Security Administration announces similar changes every year, usually in mid-October. However, a recent survey from Nationwide Retirement Institute found that many Americans lack a basic understanding of those topics. Read on to learn about three changes coming to Social Security in 2027.
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1. Social Security benefits will get a cost-of-living adjustment (COLA) in 2027
Nationwide Retirement Institute reports that 68% of surveyed adults don't know that Social Security benefits are protected from inflation.
Social Security benefits lose purchasing power over time due to inflation, but beneficiaries receive annual cost-of-living adjustments (COLAs) designed to compensate them for that loss. COLAs are based on how much the CPI-W (a subset of the Consumer Price Index) changes in the third quarter (July to September) of each year.
For instance, CPI-W inflation measured 2.8% in the third quarter of 2025, so Social Security benefits increased 2.8% in 2026. But inflation is trending higher this year, due in large part to elevated energy prices tied to the Iran war, so the 2027 COLA is likely to be larger. The Senior Citizens League (TSCL) anticipates a 3.8% COLA, while independent policy analyst Mary Johnson expects a 3.7% COLA.
Importantly, the cost-of-living increase cannot be finalized until the Labor Department publishes September inflation data. That will happen on Oct. 14 at 8:30 a.m. ET. The Social Security Administration will issue a press release detailing the 2027 COLA (and other changes) shortly thereafter.
2. Social Security's earnings limits will increase in 2027
Nationwide Retirement Institute reports that 33% of surveyed adults don't know that some Social Security benefits are temporarily withheld for workers under full retirement age (FRA) whose earnings exceed certain limits.
In 2026, the lower limit is $24,480, and the higher limit is $65,160. The lower limit applies to workers who will not reach FRA this year; they will have $1 in benefits withheld for every $2 in earnings above $24,480. The upper limit applies to workers who will reach FRA this year; they will have $1 in benefits withheld for every $3 in earnings above $65,160.
The Social Security earnings limits generally increase each year to account for changes in the national average wage index, which tracks Americans' average annual earnings. The Social Security Board of Trustees expects the lower limit and upper limit to reach $25,200 and $67,200, respectively, in 2027. But the numbers will not be finalized until Oct. 14.
Importantly, the earnings limits do not apply to workers once they reach FRA. And any benefits withheld before that point are gradually repaid, such that affected beneficiaries recoup most or all of their benefits during an average lifespan.
3. Social Security's maximum taxable earnings limit will increase in 2027
Nationwide Retirement Institute reports that 73% of surveyed adults believe workers pay Social Security taxes on all of their income. That is actually false.
Social Security is primarily funded by a payroll tax, but the amount of income subject to that tax is capped by law. In 2026, the maximum taxable earnings limit is $184,500, which means any income above that level is not taxed. However, the maximum taxable earnings limit generally increases each year to account for changes in the national average wage index.
The Social Security Board of Trustees estimates the maximum taxable earnings limit will hit $190,200 in 2027. In that scenario, an additional $5,700 would be subject to Social Security's 6.2% payroll tax, meaning some workers would owe an additional $353.40 in taxes. But the exact figure will not be finalized until Oct. 14.
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