3.6%. That is the raise Social Security announced on Wednesday for 2027. According to Social Security's announcement, it reaches nearly 72 million beneficiaries starting in January, and the average retirement benefit goes up by about $75 a month. That is good news, and it is real money. It is also the number at the top of the page, not the one in your bank account.
How big is the 2027 Social Security raise?
The cost-of-living adjustment for 2027 is 3.6%, beginning with benefits paid in January 2027. Social Security's 2027 fact sheet estimates the average retired worker's monthly benefit goes from $2,095 to $2,170, and the average for a retired couple both receiving benefits goes from $3,238 to $3,355. The maximum benefit for someone retiring at full retirement age rises to $4,188 a month.
If you have a personal my Social Security account, you can see your own COLA notice online starting in late November, which Social Security says is up to three weeks before the paper notice arrives.
Will the whole raise show up in your deposit?
Not necessarily, and the reasons are mostly on the Medicare side.
The Part B premium usually comes out first. Medicare says most people have their Part B premium deducted automatically from their Social Security payment. The standard premium in 2026 is $202.90 a month. The 2027 premium has not been announced yet. Last year's came out in mid-November, so the number that decides how much of your raise you keep is still a few weeks away.
Income-based surcharges come out too. Higher-income households pay extra for Part B and for drug coverage, and that extra also comes out of the Social Security check. For 2027, those surcharges will generally be based on your 2025 tax return. We covered how the drug-coverage surcharge works in this week's piece on $0 plans.
And taxes, if you have them withheld. Social Security lets you withhold federal tax from your payment at 7%, 10%, 12%, or 22%. A bigger benefit means a bigger withholding at the same percentage.
How much of your Social Security is taxed?
For many retirees with other income, up to 85%. According to IRS Publication 915, up to 85% of your benefits can be taxable if half of your benefits plus all your other income is more than $34,000, or $44,000 if you are married filing jointly. Below those lines, up to 50% can be taxable once that same total passes $25,000, or $32,000 on a joint return.
Those lines are low compared with the income of a household that has saved well for retirement, so a raise in your benefit usually means a raise in your taxable income too. That is worth knowing before you decide how much of the raise to spend.
What else changed for 2027?
A few numbers matter if you or your spouse are still working, all from the same fact sheet:
- Earnings limit before full retirement age: $25,560 a year. Social Security withholds $1 of benefits for every $2 earned above it.
- Earnings limit in the year you reach full retirement age: $67,920, counting only earnings in the months before you reach full retirement age. Above it, $1 is withheld for every $3 earned.
- From the month you reach full retirement age: no earnings limit at all.
- Maximum earnings subject to Social Security tax: $192,300.
What should a household do with this?
Treat it as a quick check on your income plan, not a reason to change it. Four steps cover most of it:
- Watch for your COLA notice in late November and write down the new gross benefit.
- Wait for the 2027 Part B premium and your surcharge letter, if you get one, before you set next year's budget. The net number is the one you will live on.
- Check your tax withholding. If your benefit and other income both went up, the percentage you picked a few years ago may not fit anymore.
- Look at the rest of your 2026 income before December 31. Withdrawals and Roth conversions this year shape your 2028 Medicare surcharges, and so does how you give to charity. A gift sent straight from an IRA is one way to give without adding to that number.
A raise is a good problem to have. The families who get the most out of it are the ones who know, before January, which part of it is theirs to spend. If you would like a second set of eyes on your 2027 income plan, American Retirement Advisors is at 602-281-3898.
Or come see it in person. Fiscal Fridays, our live educational show in Scottsdale, is Friday, October 23, at 10:30 AM Arizona time, where our advisors take on real family situations on a thirty-second clock, then stay for questions from the room. Save your seat here.
Fiscal Fridays is an educational show. Educational content, not tax or legal advice. Not affiliated with or endorsed by the federal government or the federal Medicare program.
Disclaimer: The information in this article is for educational purposes only and does not constitute tax, legal, or investment advice. Tax laws change frequently, and individual circumstances vary. American Retirement Advisors does not provide tax or legal services. Before making any tax-related decisions, consult a qualified CPA, tax attorney, or financial planner who can evaluate your specific situation.