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In 2027, Social Security recipients could receive their largest cost-of-living adjustment (COLA) in four years, giving retirees some rare financial breathing room after years of elevated prices.
Independent Social Security and Medicare analyst Mary Johnson now projects a 3.4% COLA (1). Although that’s down from her 3.7% estimate last month, it remains above both the 2.8% increase beneficiaries received in 2026 and the long-term average of 2.6%.
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For an average retired worker collecting approximately $2,085 a month (2) in July, a 3.4% adjustment would add about $71 to each check, or roughly $850 over a full year.
Other forecasters are even more optimistic. The Senior Citizens League projects a 3.6% increase (3), while AARP expects 3.5% (4).
None of those estimates is official yet. August and September inflation data will determine the final COLA, which the Social Security Administration is expected to announce in October.
Why 3.4% is still good news
Social Security bases its annual COLA on the average Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) reading from July through September, which is compared with the numbers from the same period one year earlier.
The CPI-W was up 3.4% annually in July, unchanged from June, according to the U.S. Bureau of Labor Statistics (5). That’s why Johnson lowered her forecast.
Slower inflation is welcome news, although prices remain elevated. Food costs rose 3% over the past year, shelter increased 3.2% and energy surged 14.7%. The Senior Citizens League estimates that Social Security benefits have lost approximately 13.7% of their buying power (3) since 2010.
Retirees could keep most of the projected raise after a potential Medicare increase. The standard Part B premium is currently $202.90 per month (6), but it’s projected to reach $209.50 (7) in 2027. If both estimates hold, roughly $64 of the $71 monthly COLA boost would remain after the additional Part B cost.
The final premium could still change, but a projected $850 annual boost could give retirees a valuable opportunity to strengthen their finances. Here’s how to take full advantage.
Protect your retirement savings from inflation
Because the larger COLA is tied to inflation, this could be a good time to review whether your retirement savings are sufficiently diversified against rising prices.
Gold can fluctuate in value and doesn’t produce interest or dividends. However, some investors use a modest allocation to precious metals to diversify beyond traditional stocks and bonds.
A gold IRA is one option for building up your retirement fund with an inflation-hedging asset.
Opening a gold IRA with Goldco lets you invest in gold and other precious metals in physical form while also providing the significant tax advantages of an IRA.
With a minimum purchase of $10,000, Goldco offers free shipping and access to a library of retirement resources. Plus, the company will match up to 10% of qualified purchases in free silver.
If you’re curious whether this is the right investment to diversify your portfolio, you can download your free gold and silver information guide today.
Read More: Millionaires under 43 hold only 25% of their wealth in stocks. Here’s where their money is actually going
Build a CD ladder
Money earmarked for near-term expenses can still earn a predictable return without stock market volatility. A certificate of deposit (CD) can be used this way, especially when it’s part of a strategy called CD laddering.
Building a CD ladder means dividing your money among several CDs with different maturity dates. For example, you could split your savings across three-, six-, nine- and 12-month CDs so that a portion becomes available every three months.
When each CD matures, you can use the cash for property taxes, insurance premiums or medical costs — or reinvest it in a new CD to keep the ladder going.
For those seeking predictable, reliable growth, a platform like CD Valet can help you find higher-yield options that work for you, whether you’re saving for something soon or building a cushion for the long haul.
CD Valet tracks over 40,000 verified rates from FDIC-insured banks and NCUA-insured credit unions nationwide. Unlike other websites, they show every publicly available rate, ensuring you have a comprehensive view of the market.
Plus, their CD rates are updated continuously, so you can shop, compare and open CDs with ease.
Keep an emergency fund within reach
For money that needs to remain immediately accessible, retirees could direct part of the larger check toward an emergency fund. That way, you have some cash set aside to cover a surprise medical bill, home repair or insurance deductible without forcing you to sell investments or carry expensive debt.
A high-yield account like a Wealthfront Cash Account can be a great place to grow your uninvested cash, offering both competitive interest rates and easy access to your money when you need it.
A Wealthfront Cash Account currently offers a base APY of 3.30% through program banks, and new clients can get an extra 0.75% boost during their first three months on up to $150,000 for a total variable APY of 4.05%.
That’s 10 times the national deposit savings rate, according to the FDIC’s July report.
Additionally, Wealthfront is offering new clients who enable direct deposit ($1,000/mo minimum) to their Cash Account and open and fund a new investment account an additional 0.25% APY increase with no expiration date or balance limit, meaning your APY could be as high as 4.30%.
With no minimum balances or account fees, as well as 24/7 withdrawals and free domestic wire transfers, your funds remain accessible at all times. Plus, you get access to up to $8M FDIC Insurance eligibility through program banks.
Make the raise part of your plan
An additional $850 a year could have a greater impact when it’s coordinated with your investments, withdrawals, taxes and other retirement income. For this reason, you might want to talk to a financial advisor, who can help crunch the numbers and build a plan that works around this new income.
But choosing an advisor can be an important long-term decision, one that could make or break your retirement. That’s why finding a reliable professional who understands your goals is crucial.
That’s where Advisor.com can come in. The platform connects you with an expert near you for free.
Advisor.com does the heavy lifting for you, vetting advisors based on track record, client ratios and regulatory background. What’s more, their network comprises fiduciaries, who are legally required to act in your best interests.
Just enter a few details about your finances and goals, and Advisor.com’s AI-powered matching tool will connect you with a qualified expert best suited for your needs based on your unique financial goals and preferences.
Finding the right advisor isn’t always easy — there’s no one-size-fits-all solution. That’s why Advisor.com lets you set up a free initial consultation, with no obligation to hire, to see if they’re the right fit for you.
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Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.
USA Today (1); Social Security Administration (2); Seniors League (3); AARP (4); Bureau of Labor Statistics (5); Centers for Medicare & Medicaid Services (6), (7)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
