Changes to Social Security can have a huge impact on your finances when you are retired. Most seniors rely on Social Security for at least some income, so when the rules shift for retirement benefits, older Americans need to plan for what comes next. That’s why it’s a good idea for seniors who are collecting Social Security to be aware sooner, rather than later, of some key changes to the benefits program coming in 2027.
Here are four big changes you can expect in the upcoming year, so you are ready when your benefits look different after the new year.
1. Retirees will get a Cost of Living Adjustment
The Social Security cost-of-living adjustment (COLA) is usually one of the changes most retirees are excited about. COLAs happen most years and cause retirement benefits to increase so they can keep pace with inflation. The COLA will be announced in October, but early projections by experts suggest retirees could see as much as a 4.2% benefits increase. This would be the biggest increase in years, and it would be the fourth-largest increase in 36 years.
A big COLA may feel exciting because it means more money coming in Social Security checks. Unfortunately, since the cost-of-living adjustment is directly tied to inflation, it’s not such great news for seniors. If retirees get a large raise, it’s because the prices of goods and services have risen substantially. Since seniors also rely on other income in retirement accounts, which aren’t automatically protected against inflation, surging prices could eat into their overall buying power.
Seniors should begin planning now for a large COLA, as well as for the potential big price surges that such a large raise would signify.
2. Seniors will be allowed to earn more money
Seniors are likely going to be allowed to earn more money in 2027 before their Social Security benefits are affected.
See, under the current rules, retirees who have already reached their full retirement age are allowed to work as much as they’d like, and there will be no impact on their monthly Social Security check. But those who are under their FRA lose a part of their benefits if they earn too much. The specific amounts vary depending on whether the working senior will reach FRA at some point during the year or not at all.
In 2026, those who will not reach FRA at all during the year can earn up to $24,480, and then they lose $1 in Social Security benefits for every $2 earned above that amount. Those who will reach FRA sometime during the year can earn as much as $65,160 before they temporarily forfeit $1 in benefits for every $3 above the limit. Benefits are recalculated at FRA, and retirees get credit for missed benefits, but this still impacts their finances in the interim by limiting their ability to both work and collect retirement income.
The good news is that the work limits change in most years. So, in 2027, retirees will have higher thresholds before they begin losing part of their benefits. Seniors can prepare for this by making plans to adjust their work schedules if they choose to do so.
3. Eligibility for Social Security benefits is going to require a higher income
There’s also a Social Security change coming that will affect current workers. It has to do with work credits.
Work credits are required to qualify for Social Security. You can earn up to four per year, and you need a total of 40 to become eligible for Social Security retirement benefits. In 2026, workers need to earn $1,890 to earn one work credit. Since this number is adjusted to account for inflation, however, it will be higher next year. Those who don’t earn a lot and who are just barely earning their four work credits may need to try to boost their income a little in 2027 to earn as many work credits as they can.
4. Medicare premiums could take a bigger bite out of Social Security checks
Finally, Medicare premiums are likely to increase again in 2027. Premiums went from $185 to $202.90 in 2026, which was nearly a 10% increase. With healthcare inflation continuing to be a stubborn issue that seniors must cope with, another big premium increase is possible next year.
Since many people have Medicare premiums taken directly from their checks, retirees have to plan for this. While payments can’t go down if Medicare premiums increase by more than the COLA, thanks to hold harmless provisions, it is possible for the premiums to take a big chunk of the benefit increase or even to eat up the entire raise.
A financial advisor can help you to plan and prepare for these coming changes so you’re ready when 2027 arrives.
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