This 2027 Social Security Rule Change Is a Small Victory for Some Working Beneficiaries

Social Security beneficiaries are getting a 3.6% cost-of-living adjustment (COLA) in 2027, which should add about $75 to the average monthly benefit. This extra money will help those who have been struggling with rising costs, but it may raise concerns for working beneficiaries who are at risk of losing some of their checks due to the earnings test.

Fortunately, earnings test limits are also increasing in 2027, which could give these seniors a little more breathing room in their budgets. Here's what you need to know if you're working and claiming Social Security checks at the same time.

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Social Security earnings test limits are increasing in 2027

The Social Security earnings test withholds money from your benefits if you earn too much from your job while claiming checks under your full retirement age (FRA). This is 67 for most workers today.

In 2026, you lose $1 for every $2 you earn over $24,480 if you remain under your FRA all year. Those who reach their FRA in 2026 only lose $1 for every $3 they earn over $65,160, and only if they earn this much before their birth month. For some high earners, these thresholds are low enough that they wind up forfeiting entire months of benefits.

Fortunately, money lost to the earnings test isn't permanently gone. Once you reach your FRA, the government gives you a one-time benefit boost to make up for what it withheld before. The more you lost in past years, the larger this increase will be. But that can still put you at a disadvantage in the short term, particularly if you were relying on your checks to cover a decent chunk of your expenses.

Things will get a little easier for these working seniors next year, as the earnings test limits are set to rise to $25,560 for those who remain under their FRA for all of 2027 and $67,920 for those who will reach their FRA next year. This may not prevent all losses due to the earnings test, but it means you'll be able to go longer before you run into this issue.

What to do if you expect to lose money to the Social Security earnings test in 2027

If you think the earnings test will be a problem for you next year, plan for this in advance. You may have to rely more on personal savings or income from your job during the months that your benefits are reduced or eliminated.

Those expecting to reach their FRA in 2027 will also need to prepare themselves for a significant benefit increase once the earnings test no longer applies to them. Contact the Social Security Administration to learn how this might affect your future checks. You may need to adjust your budget accordingly.

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