The 2027 Social Security wage base is $192,300, up from $184,500, and the annual earnings test exempt amount for beneficiaries under full retirement age rises to $25,560. For federal clients, the earnings test matters even before they claim Social Security. OPM applies the same exempt amount to the FERS annuity supplement, so FERS retirees under 62 who go back to work need to know the new limit.
The Social Security Administration published the full set of 2027 parameters in the Federal Register on October 26, 2026. Most advisors check the COLA and the taxable maximum. With FERS clients, the earnings test deserves just as much attention.
The 2027 Social Security Wage Base and Other Key Numbers
These figures come from SSA's Federal Register notice of the 2027 cost-of-living increase and other determinations, published by the government's official journal, and SSA's October 14, 2026 announcement.
Selected 2027 Social Security parameters
$192,300
Taxable maximum (was $184,500)
3.6%
COLA, payable January 2027
$1,970
Earnings for one quarter of coverage (was $1,890)
| Parameter | 2027 |
|---|---|
| Earnings test, under full retirement age all year | $25,560 per year ($2,130 per month) |
| Earnings test, year full retirement age is reached | $67,920 per year ($5,660 per month) |
| PIA formula bend points | $1,340 and $8,077 |
| Substantial gainful activity, non-blind | $1,770 per month |
| Substantial gainful activity, blind | $2,950 per month |
| National average wage index (2025) | $72,800.33 |
The 2026 earnings test limits were $2,040 a month and $5,430 a month, so both thresholds rise for 2027.
What the Wage Base Means for Federal Employees
FERS employees pay Social Security tax and earn Social Security credits, just like private-sector workers. The taxable maximum caps the earnings subject to the Social Security payroll tax each year. It also caps the earnings that count toward benefits.
For most federal employees, the higher base won't change their paycheck, because their salary is already below it. It matters for:
- High earners. Some senior federal employees, along with federal households with significant side or spousal income, have total earnings near or above the base. Earnings above $192,300 aren't taxed for Social Security in 2027, and they don't raise future benefits.
- Clients with self-employment. Retirees who start consulting businesses pay self-employment tax on net earnings up to the same base.
- Benefit projections. The PIA bend points of $1,340 and $8,077 apply to workers who first become eligible for benefits in 2027, which generally means clients turning 62 in 2027. SSA's formula pays 90% of average indexed monthly earnings up to the first bend point, 32% between the two, and 15% above the second.
The Earnings Test Works Differently for Federal Clients
Under Social Security, a beneficiary who claims before full retirement age and keeps working can have benefits withheld if earnings exceed the exempt amount. For 2027:
- Under full retirement age all year: SSA withholds $1 for every $2 of earnings above $25,560.
- In the year full retirement age is reached: SSA withholds $1 for every $3 above $67,920, counting only earnings in the months before full retirement age.
Withholding isn't necessarily lost for good. SSA says that when a beneficiary reaches full retirement age, it recalculates the benefit to give credit for months when benefits were reduced or withheld because of excess earnings. Still, clients who don't expect the withholding are often surprised.
Here's the federal twist. FERS clients can retire with an immediate annuity years before they can claim Social Security, and many receive the FERS annuity supplement until 62. The supplement approximates the Social Security benefit earned through federal service, and it has its own earnings test.
The FERS Supplement Earnings Test
OPM explains the rule in its annual changes guidance and in Benefits Administration Letter 25-103 on the annuity supplement:
- The limit comes from SSA. FERS annuitants receiving the supplement are subject to an earnings test using the exempt amount Social Security sets each year. OPM cited $24,480 for 2026, which matches SSA's 2026 annual exempt amount for beneficiaries under full retirement age. SSA's corresponding 2027 amount is $25,560.
- The reduction is $1 for every $2. If a FERS annuitant earns more than the limit, OPM reduces the annuity supplement by $1 for every $2 earned above it.
- Only the supplement is reduced. The basic FERS annuity isn't affected by the earnings test.
- It starts at the minimum retirement age. OPM says annuitants who have reached their MRA and receive the supplement must report earned income above the limit.
- The reduction lags a year. According to the CSRS and FERS Handbook, a reduction in a given year is based on excess earnings in the previous year. A client who earns too much in 2027 would see a reduction starting in 2028, provided the supplement is still payable.
OPM counts wages, including salary from federal reemployment, and net self-employment earnings as earned income. It doesn't count pension and annuity payments, Social Security benefits, interest, dividends, capital gains on personal property, or most rental income.
There's an important exception. Retirees under the special provisions for law enforcement officers, firefighters, air traffic controllers and military reserve technicians aren't subject to the earnings limit before their MRA. Once they reach their MRA, the limit applies to them too.
Why This Matters for Planning
The supplement earnings test is one of the most common surprises in early federal retirement. A client retires at 57, takes a well-paid second career, and a year later learns the supplement has been reduced or eliminated. That's a planning gap a good advisor can close.
A few conversations to have with FERS clients thinking about working after retirement:
- Estimate post-retirement wages before the retirement date. Compare expected earned income with the current exempt amount, so the client understands how much of the supplement may be reduced.
- Look at the type of income. OPM's definition of earnings is specific, so the type of income matters along with the amount.
- Coordinate with Social Security claiming. The supplement stops at 62. If the client claims Social Security before full retirement age and keeps working, the Social Security earnings test then applies on its own terms.
- Watch the reporting requirement. OPM surveys supplement recipients who have reached their MRA, and they must report earnings accurately.
None of this is a reason to tell a client not to work. Work can be the right choice for income, purpose and health coverage. The point is that the decision should be made with the actual numbers in front of the client.
It also helps to revisit the estimate every year. The exempt amount is set annually, and a client's earnings can change from one year to the next. Because the reduction is based on the prior year's earnings, a raise or a new job in one year can show up as a smaller supplement the following year. A quick annual check keeps the client from being surprised.
How This Fits the Bigger Federal Picture
The 2027 Social Security numbers also connect to the other year-end changes federal clients are hearing about. Social Security benefits rise 3.6% while FERS annuities rise 2.6%, and FEHB premiums are rising during the same Open Season. Advisors who can explain all of these changes together become the go-to resource for federal households.
For more on the size of the federal market and why these clients need specialized help, see the retirement wave. If you're ready to build federal expertise, review why advisors choose FedEd and the upcoming FedEd Academy™ classes.
The new limits are $192,300 for the wage base and $25,560 for the earnings test. For FERS clients who retire before 62 and keep working, the second number is the one to watch, because it affects the supplement long before they file for Social Security.
Frequently asked questions
What is the 2027 Social Security wage base?
The Social Security Administration set the 2027 contribution and benefit base, also called the taxable maximum, at $192,300, up from $184,500 in 2026. Earnings above that amount are not subject to the Social Security payroll tax and do not count toward benefits.
What are the 2027 Social Security earnings test limits?
For beneficiaries under full retirement age for all of 2027, the exempt amount is $25,560 a year ($2,130 a month), and SSA withholds $1 for every $2 above it. In the year a beneficiary reaches full retirement age, the exempt amount is $67,920 a year ($5,660 a month) for the months before full retirement age, and SSA withholds $1 for every $3 above it.
Does the earnings test apply to the FERS annuity supplement?
Yes. OPM states that FERS annuitants receiving the annuity supplement are subject to an earnings test tied to the Social Security exempt amount. Once the retiree reaches the minimum retirement age, the supplement is reduced $1 for every $2 of earned income above the limit.
Who is exempt from the FERS supplement earnings test?
OPM says the earnings limit does not apply to retirees under the special provisions for law enforcement officers, firefighters, air traffic controllers and military reserve technicians until they reach their minimum retirement age.
What is the 2027 Social Security COLA?
Social Security benefits increase 3.6%, effective for December 2026 and payable in January 2027.
