Millions of Americans will see larger Social Security benefits in 2027. Retirees who keep working will also get more room to earn before Social Security holds back part of their payments.
The Social Security Administration announced on October 14 that benefits will rise 3.6% next year. The agency estimates the adjustment will add about $75 to the average monthly retirement benefit.
But the yearly update covers more than that increase. Here are the changes worth watching.
A higher earnings limit for working retirees
Retirement beneficiaries who stay below full retirement age throughout 2027 will face a higher annual earnings limit. It climbs to $25,560, up from $24,480 in 2026.
That gives affected beneficiaries an extra $1,080 in earnings before withholding starts, according to SSA’s 2027 fact sheet.
Once earnings pass the limit, Social Security withholds $1 in benefits for every $2 earned.
Take someone below full retirement age all year who earns $29,560 in 2027. That person would be $4,000 over the limit, and under the standard annual earnings test, $2,000 in benefits would be withheld.
People who reach full retirement age during 2027 get a higher threshold of $67,920. Social Security counts only the earnings made before the month they reach that age, and it withholds $1 for every $3 above the limit. Starting with the month someone reaches full retirement age, earnings no longer reduce their retirement benefits.
What actually counts toward the limit?
The earnings test looks at income from working.
According to SSA’s explanation of working while receiving benefits, counted earnings include wages and net self-employment profit. Bonuses, commissions and vacation pay count, too.
Pensions, investment income and interest generally do not count toward this particular limit.
There is one more important detail. At full retirement age, SSA recalculates benefits to credit people for the months when excess earnings reduced or withheld their payments. That credit comes through an adjustment to future benefits.
Special rules can also apply during the first year of retirement. Someone who stops working midway through the year should check those rules before assuming earlier wages will wipe out their remaining payments.
Bigger payments begin in January
The 3.6% cost-of-living adjustment takes effect with Social Security payments in January 2027. SSI recipients will get their increased January payment on December 31, 2026.
SSA estimates the average retired worker’s monthly benefit will go from $2,095 to $2,170. Individual increases will depend on each person’s benefit amount.
The maximum federal SSI payment will rise to $1,029 per month for an individual and $1,544 for an eligible couple.
Some workers will pay Social Security tax on more income
The maximum annual earnings subject to Social Security payroll tax will go from $184,500 to $192,300.
The employee Social Security tax rate stays at 6.2%. The change widens the amount of earnings that higher-paid workers pay that tax on.
Separately, the earnings needed to receive one Social Security work credit will rise from $1,890 to $1,970.
When to look for your personal notice
SSA says personalized COLA notices will be available through my Social Security accounts in late November.
People who need to create an account should do so and sign up for paperless notices by November 18 to view their notice online. Those who haven’t enrolled in paperless notices will get theirs by mail in December.
The notice will show the new benefit amount and deductions. That makes it the figure to check when planning a household budget — the average $75 increase won’t be everyone’s exact change in take-home benefits.
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