Social Security COLA in 2027: Monthly benefit payments to rise 3.6%

Many economists and social planners argue that Social Security COLAs are too large.

Each year, the Bureau of Labor Statistics publishes a closely watched report showing how the Consumer Price Index has changed over the previous 12 months. The technical name is the Consumer Price Index for Urban Wage Earners and Clerical Workers. For the past half-century, that report has been the basis for the cost-of-living adjustment, or COLA, that Social Security recipients receive the following year.

Because this column is written ahead of publication, the increase is already familiar to many readers. As reported, benefits for the roughly 75 million Social Security and Supplemental Security Income recipients will rise 3.6% in 2027.

I always hesitate to write about COLAs because every time I do, I receive a wave of messages from readers saying the increase is too small.

Yet there is another side to the argument: many economists and social planners believe Social Security COLAs are too generous. That is one reason long-term Social Security reform plans often call for smaller cost-of-living increases.

For now, though, the important point is the 2027 COLA. With that increase, the average monthly retirement benefit will reach $2,170, up $75 from 2026. The maximum Social Security benefit for a worker reaching full retirement age in 2027 will be $4,188, compared with $4,152 in 2026. That figure is only the maximum for someone turning full retirement age in 2027; it does not represent the highest payment anyone can receive. Many beneficiaries collect more than that, often because they worked past full retirement age or delayed claiming until age 70.

One question readers often ask is whether they must claim Social Security in the prior year in order to receive the COLA beginning in January 2027. The answer is no. The increase is built into the benefit formula, so anyone who files later will still receive the 3.6% boost when benefits begin.

Although this is a Social Security column, the Medicare Part B premium also matters because it is deducted from many benefit checks. At the time of writing, the basic 2027 Part B premium had not yet been announced, but it is projected at $209.50, or $6.60 more than the 2026 rate. As has been true for more than two decades, higher-income beneficiaries will pay more than the standard premium.

It is worth noting that Social Security and Medicare are separate programs run by separate federal agencies under separate rules. Social Security COLAs are tied to the consumer price index, while the Medicare Part B premium is set by law at a level that covers 25% of program costs. Taxpayers cover the remaining 75%, aside from higher-income enrollees who pay more.

Another measure, called the national wage index, determines increases to other parts of Social Security law that affect both beneficiaries and taxpayers. That includes the amount of earnings subject to Social Security tax, the income needed to earn a work credit, and the earnings limits for people who work while receiving benefits.

The Social Security taxable wage cap will rise from $184,500 in 2026 to $192,300 in 2027. In practical terms, workers will stop paying Social Security payroll taxes on earnings above that amount once they cross the threshold. The cap has long been controversial, and any future Social Security reform package will likely include a higher limit.

Most people need 40 work credits, sometimes called quarters of coverage, to qualify for monthly Social Security benefits. In 2026, one credit was earned for every $1,890 of taxable earnings, up to a maximum of four credits per year. That means a worker needed to earn $7,560 to receive the full four credits. In 2027, the one-credit amount rises to $1,970, so $7,880 in earnings will be needed to earn all four credits.

People who receive retirement or survivor benefits before reaching full retirement age and continue working are subject to earnings limits. That limit was $24,480 in 2026 and will be $25,560 in 2027. For every $2 earned above the limit, $1 is withheld from benefits.

There is also a higher limit in the year a person reaches full retirement age, applying from the start of the year until the month that person reaches that age. After that, the earnings penalty ends. That threshold increases from $65,160 in 2026 to $67,920 in 2027.

Some other Social Security rules also rise with inflation. For disability beneficiaries who continue working, the level considered substantial gainful activity will increase from $1,690 a month in 2026 to $1,770 a month in 2027.

Finally, the basic federal Supplemental Security Income payment for one person will rise from $994 in 2026 to $1,029 in 2027. SSI is administered by the Social Security Administration, but it is not a Social Security benefit. It is financed from general federal revenues rather than Social Security taxes.

If you have a Social Security question, Tom Margenau has two books with answers. One is called Social Security — Simple and Smart: 10 Easy-to-Understand Fact Sheets That Will Answer All Your Questions About Social Security. The other is Social Security: 100 Myths and 100 Facts. You can find the books at amazon.com or other book outlets. Or you can send him an email at [email protected]. To learn more about Tom Margenau and read past columns and other features, visit creators.com.