Social Security & You: COLA will lift 2027 benefit checks

Every autumn, the Bureau of Labor Statistics publishes its closely watched report on how the Consumer Price Index has changed over the previous 12 months. The reason this fairly technical government report matters so much is simple: for decades, it has been the measure used to set the Social Security cost-of-living adjustment, or COLA, that beneficiaries receive the following year.

As readers may already know, Social Security and Supplemental Security Income checks for roughly 75 million people will rise by 3.6% in 2027.

I always brace myself when I write about COLAs, because I inevitably hear from readers who say the increase is too small.

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At the same time, some economists and policy analysts argue that Social Security COLAs are actually too high. That is one reason many long-term reform proposals call for reducing the annual inflation increase.

For now, though, the practical question is what the 2027 COLA means for beneficiaries. With the increase, the average monthly retirement benefit will be $2,170 in 2027, which is $75 more than the 2026 average. The maximum benefit for a worker reaching full retirement age in 2027 will be $4,188, up from $4,152 in 2026. That figure is only the cap for someone hitting full retirement age in 2027; many beneficiaries receive more because they worked beyond full retirement age or delayed claiming until age 70.

Another common question is whether people must file for Social Security before the end of 2026 in order to receive the COLA that will be paid in January 2027. The answer is no. The increase is built into the benefit formula, so anyone who claims later will still receive the 3.6% adjustment.

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Since this column also touches on Medicare, it is worth noting that the Medicare Part B premium, which is deducted from most Social Security checks, is expected to rise as well. The projected basic Part B premium is $209.50, up $6.60 from the 2026 rate. Higher-income beneficiaries will continue to pay more than the standard amount.

Social Security and Medicare are often discussed together, but they are separate programs run by different federal agencies and governed by different rules. Social Security COLAs are tied to the consumer price index, while Medicare Part B premiums are set by law at a level designed to cover 25% of program costs, with taxpayers covering the rest. Higher-income beneficiaries again pay more than the standard share.

Another index, known as the national wage index, affects several other Social Security figures, including the amount of earnings subject to payroll tax, the earnings required to earn a quarter of coverage, and the retirement earnings test limits.

The taxable earnings cap will rise from $184,500 in 2026 to $192,300 in 2027. That means Social Security payroll taxes will stop once earnings reach that amount. This remains one of the most controversial parts of the law. It is likely that any future Social Security overhaul will address the wage base.

Most workers need 40 credits, or quarters of coverage, to qualify for monthly benefits. In 2026, one credit was earned for every $1,890 in covered earnings, with a maximum of four credits per year. That meant $7,560 in earnings was enough to max out the year. In 2027, one credit will require $1,970 in earnings, and the annual total needed for all four credits will rise to $7,880.

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

There is also a higher earnings limit in the year a person reaches full retirement age, and it applies only until the month that person attains that age. That threshold increases from $65,160 to $67,920.

Other Social Security provisions also change with inflation. Disability beneficiaries who work can usually keep benefits as long as their earnings are not considered substantial. The law defines substantial work as monthly earnings of $1,690 or more in 2026, and that figure rises to $1,770 in 2027.

Finally, the basic federal SSI payment for one person will increase from $994 to $1,029. SSI is administered by the Social Security Administration, but it is a federal welfare program, not a Social Security benefit. It is paid from general tax revenue rather than Social Security payroll taxes.