In brief
Social Security and SSI benefits receive a 3.6% cost-of-living adjustment for 2027.
The estimated average retired-worker benefit rises from $2,095 to $2,170 a month.
The Social Security taxable earnings maximum increases from $184,500 to $192,300.
Two updates, not just a bigger check
Social Security's 2027 adjustment has two audiences inside an accounting firm: the retirement-planning team and the payroll team. Beneficiaries get a 3.6% cost-of-living increase. Employers also face a higher wage base for the Social Security portion of payroll taxes.
The SSA's 2027 fact sheet puts the estimated average monthly benefit for retired workers at $2,170, up from $2,095 before the adjustment. That $75 increase is an average, not a personalized benefit quote. An individual client's notice remains the better input for a cash-flow forecast.
The payroll number to update
The maximum earnings subject to Social Security tax rises to $192,300 for 2027, from $184,500 in 2026. The Social Security tax rate remains 6.2% for employees; the higher cap, rather than a rate increase, is the change to carry into payroll planning.
Medicare has no corresponding earnings cap. Mixing up the two systems is an easy way to produce a misleading estimate for a highly paid employee. Payroll teams should verify the new annual limits in their software and test the first payroll calculations before treating the year-end rollover as finished.
Retirement planning needs the actual notice
Higher gross benefits do not tell a client exactly how much additional cash will reach the bank. Deductions and the household's other income still matter. Use the personalized COLA notice to distinguish the new benefit amount from the net deposit, then revisit the client's broader tax projection.
There is also a change for beneficiaries who work before full retirement age. The SSA fact sheet raises the annual earnings-test exemption for those below full retirement age to $25,560. That is an earnings-test limit, not a federal income-tax exclusion.
For firms, the efficient move is to update one shared 2027 assumptions sheet and have retirement and payroll staff use it. A benefits headline should not leave the payroll cap untouched in another team's spreadsheet.
