Social Security's 3.6% raise for 2027: what it means in NJ
Checks grow in January, but Medicare, the earnings test and your claiming age all shape what you actually keep. Plus how New Jersey taxes retirement income.
Social Security checks will grow by 3.6% in January 2027. The Social Security Administration announced the cost-of-living adjustment (COLA) on October 14, 2026. For the average retired worker, that means about $75 more a month.
Before you plan how to spend it, there are a few things to know. Medicare will take its own increase out of your check. Working while collecting has limits. And New Jersey treats retirement income in its own way. Here is what the new numbers mean for you.
How much bigger will my check be?
Take your current monthly benefit and multiply by 1.036. A $1,500 check becomes about $1,554. A $2,500 check becomes about $2,590. The raise shows up in the payments you receive in January 2027.
| Average monthly benefit | Before the COLA | From January 2027 |
|---|---|---|
| All retired workers | $2,095 | $2,170 |
| Retired couple, both receiving benefits | $3,238 | $3,355 |
| Widow or widower living alone | $1,936 | $2,005 |
| All disabled workers | $1,642 | $1,701 |
Supplemental Security Income (SSI) rises too. The federal payment rises to $1,029 a month for an individual and $1,544 for a couple. The maximum benefit for someone retiring at full retirement age in 2027 is $4,188 a month.
Social Security usually sends COLA notices in December. If you have a my Social Security account at ssa.gov/myaccount, you can read yours online. It shows your new gross benefit and what is being taken out for Medicare.
How is the COLA set?
The COLA follows the Consumer Price Index for Urban Wage Earners and Clerical Workers. Social Security compares average prices in July, August and September with the same months a year earlier. The percentage change becomes next year's raise. That is why the number is announced every October.
Your own costs may rise faster or slower than that index. If your rent, property taxes or drug costs jumped this year, the COLA may not cover all of it. That is a good reason to check the state programs in our other benefits guides.
How does Medicare Part B affect my raise?
If you are on Medicare and collecting Social Security, your Part B premium comes straight out of your check. In 2026, the standard premium is $202.90 a month. When it goes up, it eats part of your COLA.
As of mid October, the government has not announced the 2027 Part B premium. The Centers for Medicare and Medicaid Services usually releases it later in the fall. The Medicare Trustees projected a standard premium of $209.50 for 2027. Treat that as an estimate until the official number comes out.
Say you get $2,000 a month before Medicare. A 3.6% COLA adds $72. If Part B rises to the projected $209.50, your premium goes up $6.60. Your deposit would grow by about $65.40 a month. If the final premium is different, your net raise changes with it.
Two other rules matter here. First, a "hold harmless" provision protects most people from seeing their net check go down because of a Part B increase. Second, people with higher incomes pay an extra amount on top of the standard premium, based on their tax return from two years earlier. If your income dropped because you retired or lost a spouse, you can ask Social Security to use the newer figure.
If paying Medicare premiums is a stretch, New Jersey's Medicare Savings Programs can cover Part B entirely for people with modest incomes. See our guide to prescription and bill help for the 2026 limits. Medicare open enrollment also runs October 15 to December 7, which is the time to review your drug plan or Medicare Advantage plan. Free counseling is available from SHIP at 1-800-792-8820.
Can I work and collect Social Security?
Yes, but if you are younger than full retirement age, Social Security may hold back some benefits. This is called the earnings test. It only counts wages and net self-employment income. Pensions, annuities, investment income and interest do not count.
| Your situation in 2027 | Earnings limit | What happens above it |
|---|---|---|
| Under full retirement age all year | $25,560 a year ($2,130 a month) | $1 withheld for every $2 over the limit |
| Reaching full retirement age in 2027 | $67,920 a year ($5,660 a month) | $1 withheld for every $3 over, counting only months before your birthday month |
| At or past full retirement age | No limit | Nothing is withheld |
Withheld money is not gone forever. Once you reach full retirement age, Social Security recalculates your benefit to credit you for the months it held back. If you plan to work, tell Social Security your expected earnings so it can adjust your payments and avoid an overpayment later.
When should I claim?
There is no single right age. It depends on your health, your savings, whether you are married and whether you are still working. These are the basic rules.
- Full retirement age is 67 for anyone born in 1960 or later.
- Claiming at 62 cuts your benefit by 30% for life if your full retirement age is 67. A $1,000 benefit becomes $700.
- Waiting past full retirement age adds 8% a year until age 70. After 70, there is no benefit to waiting.
- COLAs apply either way. Each year's raise is a percentage of whatever benefit you lock in, so a bigger starting check gets bigger raises in dollars.
Say one spouse earned much more over a career. If that higher earner waits until 70, the couple's survivor benefit is larger too. When one spouse dies, the survivor keeps the larger of the two checks. For couples in good health, delaying the higher benefit is often a form of life insurance for the person left behind.
Think about these questions before you file. How long did your parents live, and how is your own health? Do you have savings to cover the years before you claim? Are you still working, and would the earnings test hold back benefits? Does your spouse depend on your record for a survivor check?
Before you decide, log in to your my Social Security account and look at your estimates at 62, 67 and 70. You can also call Social Security at 1-800-772-1213 or make an appointment at a local office. A fee-only financial planner can help you see the whole picture.
Does New Jersey tax my Social Security?
No. New Jersey does not tax Social Security benefits at all. The state lists them as exempt income. Federal tax is a separate question, and some retirees owe federal tax on part of their benefits.
New Jersey also lets many retirees exclude pension, annuity and IRA withdrawals from state income tax. You or your spouse must be 62 or older, or disabled under Social Security rules, on the last day of the tax year.
| Total NJ income | Married filing jointly | Single or head of household | Married filing separately |
|---|---|---|---|
| $100,000 or less | Up to $100,000 | Up to $75,000 | Up to $50,000 |
| $100,001 to $125,000 | 50% of pension | 37.5% of pension | 25% of pension |
| $125,001 to $150,000 | 25% of pension | 18.75% of pension | 12.5% of pension |
| Over $150,000 | Not eligible | Not eligible | Not eligible |
If you do not use your full pension exclusion, you may be able to use the rest against other income through the Other Retirement Income Exclusion. To qualify, you must be 62 or older, have total income of $150,000 or less, and have $3,000 or less from wages and business income. The NJ-1040 instructions include a worksheet.
Say you are 66 and receive $30,000 a year in Social Security plus a $40,000 pension. New Jersey ignores the Social Security, so your total state income is $40,000. That is under $100,000, so you can exclude up to $75,000 of pension income. Your whole $40,000 pension is excluded, and you would owe no New Jersey income tax on it.
What should I do now?
- Open or check your my Social Security account. Watch for your COLA notice in December.
- Review your Medicare coverage by December 7. Plan costs and drug lists change every year.
- Check New Jersey help you may be missing. File the PAS-1 for property tax relief by November 2, 2026. Our property tax relief guide walks you through it.
- Update your budget. Use your net deposit, after Medicare, as your real raise.
- Ignore anyone who calls about your COLA. Social Security will not call, text or email to ask for your number or a payment. Read our guide to scams in New Jersey.
Common questions
When will I see the 3.6% increase?
In the payments you receive in January 2027. Social Security usually sends notices in December, and you can see yours in your my Social Security account.
Has the 2027 Medicare Part B premium been announced?
Not as of mid October 2026. It is expected later in the fall. The Medicare Trustees projected $209.50 a month, up from $202.90 in 2026.
Does New Jersey tax Social Security?
No. Social Security is exempt from New Jersey income tax. Many retirees 62 and older can also exclude pension and IRA income if total income is $150,000 or less.
If I earn too much and benefits are withheld, do I lose that money?
No. When you reach full retirement age, Social Security recalculates your benefit to credit the months it withheld.
- Social Security Administration: 2027 COLA fact sheet
- Social Security Administration: Receiving benefits while working
- Social Security Administration: Benefit reduction for early retirement
- Social Security Administration: Delayed retirement credits
- AARP: Medicare Part B premium 2027
- NJ Division of Taxation: Retirement income (pension exclusion)
- NJ Division of Taxation: Exempt income
- Medicare Interactive: The hold harmless provision
- Social Security Administration: Call us
This guide is for general information. Program rules and income limits change, so confirm with the official source before you apply.
