If you receive Social Security or plan to claim benefits soon, the annual updates can affect your retirement income and decisions about working while collecting benefits.
In 2027, Social Security benefits will go up by 3.6% because of the annual cost-of-living adjustment (COLA). Some earnings limits and thresholds are also rising.
Here’s a look at the changes and what they could mean for your financial plan.
How Much Will Social Security Benefits Increase in 2027?
Social Security benefits paid in January 2027 will include a 3.6% COLA. The adjustment is intended to help benefits keep up with rising prices.
The Social Security Administration expects average monthly benefits to increase by approximately:
- Retired worker: From $2,095 to $2,170.
- Older couple, both receiving benefits: From $3,238 to $3,355.
- Older surviving spouse living alone: From $1,936 to $2,005.
- Disabled worker: From $1,642 to $1,701.
The exact dollar increase will vary based on the benefit you currently receive.
How Much Income Will Be Subject to Social Security Tax in 2027?
The maximum annual earnings subject to Social Security payroll tax will increase from $184,500 in 2026 to $192,300 in 2027.
For higher-income workers, that means more earnings will be subject to Social Security tax.
How Much Can You Earn While Collecting Social Security in 2027?
If you're collecting Social Security before full retirement age, there are limits on how much you can earn before some benefits may be withheld. Once you reach full retirement age, those limits no longer apply.
For 2027:
- If you won't reach full retirement age in 2027: You can earn $25,560, up from $24,480 in 2026. Social Security withholds $1 in benefits for every $2 earned above the limit.
- If you'll reach full retirement age during 2027: You can earn $67,920 before the month you reach full retirement age, up from $65,160 in 2026. Social Security withholds $1 in benefits for every $3 earned above the limit.
- Once you reach full retirement age: Your Social Security retirement benefits are no longer subject to the earnings test, regardless of how much you earn from work.
When you reach full retirement age, Social Security recalculates your benefit to account for months when benefits were withheld because of earnings.
What Is the Maximum Social Security Retirement Benefit for 2027?
For someone claiming Social Security at full retirement age, the maximum monthly benefit will increase from $4,152 in 2026 to $4,188 in 2027.
Most retirees receive less than the maximum because Social Security benefits depend on lifetime earnings and claiming age.
What Is Changing for Disability and SSI Benefits?
Several disability work thresholds and Supplemental Security Income (SSI) payment amounts are increasing in 2027:
- Substantial gainful activity threshold: $1,770 per month for non-blind individuals and $2,950 for blind individuals.
- Trial work period threshold: $1,270 per month.
- Maximum federal SSI payment: $1,029 per month for an eligible individual and $1,544 for an eligible couple.
Could the Social Security Increase Affect Your Taxes?
A higher benefit amount can increase your taxable income. Depending on your income and filing status, up to 85% of your Social Security benefits may be included in taxable income. However, this doesn't mean you pay an 85% tax rate on your benefits.
Will the 2027 Social Security COLA Affect Connecticut's Social Security Tax Exemption?
Connecticut's income thresholds for the full Social Security tax exemption were last changed in 2019 and do not automatically increase with Social Security's annual COLA.
Under current (2026) Connecticut rules, Social Security benefits are fully exempt from state income tax when federal adjusted gross income is:
- Less than $75,000 for single filers and married people filing separately.
- Less than $100,000 for married couples filing jointly, heads of household, and qualifying surviving spouses.
If your income is at or above those thresholds, you may still qualify for a partial exemption. Crossing a threshold does not make your entire benefit taxable in Connecticut.
While a 3.6% COLA alone may not push someone over a Connecticut income threshold, it can raise overall income when combined with IRA withdrawals, capital gains, pension income, or Roth conversions.
📌 Learn more: Does Connecticut Tax Social Security? What Retirees Should Know
How Can You Review Your Updated Social Security Payment?
Most beneficiaries will be able to see their COLA notice in their my Social Security account in late November 2026. Check your updated benefit amount when you get the notice.
The annual updates are also a good time to review your retirement income plan. Whether you're planning a large withdrawal, considering a Roth conversion, or deciding when to claim benefits, it's important to consider how those decisions affect both your income and your taxes.
If you'd like to discuss how Social Security fits into your retirement plan, you can schedule a complimentary introductory meeting with our team in Glastonbury or Wilton, Connecticut.
Have a quick question instead? Send us a note.
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Michael Nicoletti is a CERTIFIED FINANCIAL PLANNER® professional and works with clients throughout Connecticut and nationwide, offering financial planning and wealth management services. Based in Glastonbury and Wilton, CT, Michael helps families and individuals plan for their financial, insurance, investment, and retirement goals. Schedule a complimentary introductory meeting with Michael.
This information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. It is not a statement of all available data necessary for making an investment decision and does not constitute a recommendation. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Any opinions are those of the author, not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice.
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