Social Security shake-up: Key 2027 changes explained

The Social Security Administration announced key changes set for 2027, introducing adjustments to cost-of-living raises, payroll tax caps, and retirement earnings test limits. According to Yahoo Finance, the 2027 Social Security COLA is 3.6 percent. Cleveland.com and AL.com reported that some beneficiaries will receive their 2027 COLA raises early. Meanwhile, Newsweek reported that the retirement earnings test limit for beneficiaries who remain below full retirement age throughout 2027 will rise to $25,560, up from $24,480 in 2026. For every $2 earned above this limit, the Social Security Administration withholds $1 in benefits. For individuals who reach full retirement age during 2027, a higher threshold of $67,920 applies to earnings received before the month they reach full retirement age, with $1 withheld for every $3 earned over that limit. Financial literacy instructor Alex Beene told Newsweek that the changes help support a program facing growing financial pressure. Additionally, Yahoo Finance reported that the maximum amount of earnings subject to Social Security payroll taxes will increase from $184,500 in 2026 to $192,300 in 2027. Workers earning $192,300 or more in 2027 will pay the maximum $11,922.60 in Social Security tax, while self-employed individuals will face a 12.4 percent tax rate resulting in $23,845.20, as noted by Yahoo Finance and Newsweek. Alex Beene told Newsweek that higher-income workers, including working seniors, will be mostly affected, with employees potentially paying nearly $500 additionally each year and self-employed individuals facing nearly $967 in additional taxes. TIKR.com reported that the Social Security Administration published its yearly notice in the Federal Register on Oct. 26, setting 2025's national average wage at $72,800.33 and establishing the 2027 bend points for the benefit formula. According to TIKR.com, a worker whose 35 best years match that average wage would receive $2,718.50 a month at full retirement age, while claiming at age 62 would result in a 30 percent reduction for life, leaving them with about $1,903 a month.