Each year, the Social Security Administration reviews whether benefits should increase to keep pace with inflation. For 2027, Social Security and Supplemental Security Income (SSI) beneficiaries will receive a 3.6% cost-of-living adjustment (COLA). For many retirees, that increase will mean a modest boost to their monthly income.
However, the COLA is only one part of the picture. Medicare premiums, taxes, and other changes taking effect in 2027 may affect how much of that increase you actually keep. If you are going through a divorce, receiving or paying spousal support, or planning for your family’s future, it is also worth considering how these changes may affect your overall financial position.
What Does the 3.6% Increase Mean for Beneficiaries?
According to the Social Security Administration (SSA), the average retired worker’s monthly benefit is expected to increase by approximately $75, from $2,095 to $2,170. Over the course of a year, that works out to roughly $900 in additional benefits.
The increase will apply to nearly 72 million Social Security beneficiaries beginning with benefits payable in January 2027. About 7.3 million people who receive Supplemental Security Income (SSI) will also see a 3.6% increase, with updated payments beginning December 31, 2026.
The adjustment is intended to help beneficiaries maintain their purchasing power as everyday expenses continue to rise. However, the actual dollar increase you see will vary depending on your current benefit amount. Because the COLA is a percentage, a person with a higher monthly benefit will generally see a larger dollar increase than someone with a lower benefit.
How Is the COLA Determined?
The SSA looks at how much prices have increased for everyday goods and services, such as groceries, transportation, and housing. To do this, it uses a measure of inflation called the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The SSA compares the average CPI-W for July through September of the current year with the same period of the previous year.
For 2027, the increase in the CPI-W from the third quarter of 2025 through the third quarter of 2026 resulted in a 3.6% adjustment. While the increase is designed to help benefits keep pace with inflation, it may not fully cover rising expenses, especially in healthcare and other essential costs. Many retirees spend a larger share of their income on these costs than the average worker whose spending the CPI-W tracks.
How Could Medicare Affect Your Income?
Although the COLA will increase Social Security benefits, the amount you actually receive each month may be affected by Medicare premiums.
For many beneficiaries, Medicare Part B premiums are deducted directly from Social Security payments. If those premiums increase in 2027, they could offset a portion of the COLA. The SSA has said that information about 2027 Medicare premium amounts will be available through Medicare.gov and in your Social Security account.
As a result, it is worth reviewing your updated benefit statement and Medicare costs together to understand how much additional income you can expect. Your net benefit, rather than the headline COLA percentage, is the number that matters most when planning your monthly budget.
What Other Social Security Changes Are Coming in 2027?
The COLA is not the only Social Security change taking effect next year. The SSA also adjusts several other figures each year based on changes in national wages.
Maximum Taxable Earnings
For 2027, the maximum amount of annual earnings subject to Social Security taxes will increase from $184,500 to $192,300. If you are still working and earn more than $184,500, a larger portion of your income will be subject to Social Security payroll taxes next year.
Earnings Limits for Beneficiaries Who Are Still Working
The earnings limit only applies if you are receiving Social Security retirement or survivor benefits and have not yet reached full retirement age. For 2027, the limits are:
- If you are below full retirement age for the entire year, the limit is $25,560. The SSA will withhold $1 in benefits for every $2 you earn above this limit.
- If you reach full retirement age during 2027, the limit is $67,920 for earnings before the month you reach that age. The SSA will withhold $1 in benefits for every $3 you earn above this limit.
- Once you reach full retirement age, there is no earnings limit.
If you plan to keep working while collecting benefits, these limits may affect when you choose to start receiving Social Security.
What Steps Should You Consider?
The 2027 changes are a good opportunity to review your finances, especially if your household has recently changed or is about to. Steps you may want to consider include:
- Review your updated benefit amount. You can check your personalized COLA notice and benefit information through your my Social Security account. The SSA expects to post 2027 COLA notices to the account’s Message Center starting in late November for people enrolled in paperless notices, with paper notices mailed in December.
- Revisit your retirement budget. Consider how the increase may affect your monthly income alongside potential changes in Medicare premiums, taxes, and other living expenses.
- Review any support arrangements. If you receive or pay alimony or post-separation support, think about whether a change in Social Security income affects your budget or your ability to meet those obligations.
- Gather financial records if you are considering divorce. Your Social Security benefit statement, Medicare costs, and retirement account information can all help you and your attorney understand your financial picture.
- Consider your long-term needs. Changes in retirement income and expenses can be a good reminder to consider how you intend to provide for yourself and your loved ones in the years ahead.
Why Talk to a Family Law Attorney About Changes to Your Income?
Social Security benefits are governed by federal law, and the SSA makes the final decisions about eligibility and benefit amounts. However, your Social Security income may still play a role in family law matters in North Carolina.
If you are going through a divorce, Social Security benefits are not divided as marital property under North Carolina’s equitable distribution laws. Even so, your expected benefits may be relevant when negotiating the division of other assets, such as pensions. Income from Social Security may also be considered when a court evaluates alimony or child support.
An experienced attorney can help you understand how changes to your income may affect your divorce, property division, or existing support orders. Having that information can help you make more informed decisions about your financial future.
2027 Social Security COLA FAQs
When will the 2027 COLA show up in my payments?
The 3.6% increase applies to Social Security benefits payable in January 2027. SSI recipients will see increased payments beginning December 31, 2026.
Do I need to apply to receive the COLA?
No. The COLA is applied automatically to eligible Social Security and SSI benefits. You do not need to take any action to receive it.
Will the COLA apply to benefits I receive based on my ex-spouse’s record?
Generally, yes. Divorced-spouse and survivor benefits are Social Security benefits, so they are typically adjusted by the annual COLA along with other benefit types.
Can a Social Security increase change my alimony in North Carolina?
It may, but not automatically. In North Carolina, a party may ask the court to modify alimony by showing a change in circumstances. Whether a COLA is significant enough to support a modification depends on the facts of your case.
Is Social Security counted as income for child support in North Carolina?
Social Security benefits are generally treated as income under the North Carolina Child Support Guidelines. How those benefits affect a support calculation can depend on whose record they are paid on and who receives them.
Does North Carolina tax Social Security benefits?
No. North Carolina does not tax Social Security benefits. However, a portion of your benefits may still be subject to federal income tax depending on your total income.
Talk to a North Carolina Family Law Attorney About Your Financial Future
Changes to Social Security benefits, Medicare costs, and retirement income can affect more than your monthly budget. If you are going through a divorce, paying or receiving support, or considering how to provide for your family, these changes may be part of a larger financial plan.
When you are facing a major life change, it can feel like the world is on your shoulders. The experienced family law attorneys at Breeden Law Office can help you understand your options and plan for what comes next. An experienced North Carolina divorce attorney can review your situation and help you make informed decisions about your future.
If you have questions about how changes to your income may affect your divorce or support arrangement, reach out to us at (919) 661-4970 or through our online contact form.
