By Robert E. Quittner, Jr. CFP® & CMFC™
Investment Advisor Representative
[email protected]
As we proceed through the final quarter of the year, the government is beginning to release its annual adjustments to Social Security benefits, Medicare premiums, and various tax thresholds for 2027. While these announcements are important to retirement planning, one issue continues to hang over the discussion: the long-term financial stability of Social Security.
According to the 2026 Social Security Trustees Report, the trust fund supporting retirement and survivor benefits is projected to be depleted in 2032. This is old news and not a surprise to most people.
That doesn’t mean Social Security will disappear. Payroll taxes would continue funding benefits, but incoming revenue would cover only approximately 78% of scheduled payments unless Congress takes action.
Congress has known for decades that Social Security faces a serious funding problem. In fact, the government first identified a long-term funding shortfall in 1973. Major reforms were enacted in 1983, but by 1988 the program was once again facing a projected long-term deficit. Nearly 40 years later, Congress has yet to agree on another comprehensive solution. Almost every meaningful fix requires someone to pay more, receive less, work longer, or some combination of the three. Republicans and Democrats have very different ideas about how to fix the problem, and neither party is particularly eager to make the difficult decisions necessary to resolve it.
OK, back to the 2027 updates.
On October 14, the Social Security Administration announced several adjustments for 2027, including a 3.6% cost-of-living increase (COLA). For the average retiree, that translates into approximately $75 more per month, or $900 annually.
Conversely, for individuals still working, Social Security taxes may also increase. The maximum amount of earnings subject to Social Security taxes will rise from $184,500 in 2026 to $192,300 in 2027. That’s a 4.23% increase, exposing an additional $7,800 of earnings to Social Security taxes.
For employees earning above both annual wage caps, that translates into an additional $483.60 in annual Social Security taxes, with employers paying an equivalent amount. For employees earning below the new wage cap, the Social Security tax rate remains unchanged at 6.2%.
Interestingly, the 4.23% wage cap increase is lower than each of the previous four annual increases.
| Year | Wage Cap | Annual Increase |
| 2023 | $160,200 | 8.98% |
| 2024 | $168,600 | 5.24% |
| 2025 | $176,100 | 4.45% |
| 2026 | $184,500 | 4.77% |
| 2027 | $192,300 | 4.23% |
For those approaching or already in retirement, Social Security remains an important component of a comprehensive retirement income plan. While we hope that Congress will eventually address the program’s funding challenges, predicting exactly how or when is impossible.
From a retirement income planning perspective, we believe it’s important to recognize these uncertainties rather than simply assume Social Security will remain unchanged. That doesn’t mean planning for the worst-case scenario, but it does mean having a realistic strategy that can adjust as circumstances change.
The goal isn’t to predict what Congress will do. It’s to build a retirement income strategy that can adapt regardless of what happens.
Enjoy the fall weekend!
Rob