The Social Security 2027 COLA could be just $57 a month. Here's how to finance your retirement

The official Social Security cost-of-living adjustment (COLA) for 2027 won’t be announced until mid-October, but experts have already started predicting how much benefits will increase next year.

Based on Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) data from March, the Senior Citizens League (TSCL) has forecast the 2027 COLA will be 2.8%. That would bump the average benefits check from $2,024.77 to $2,081.46, an increase of $56.69.

Looking at the same numbers, independent policy analyst Mary Johnson predicted a more generous adjustment of 3.2%, CNBC reported.

The COLA is intended to counter the rising cost of goods and services, but it doesn’t make a huge difference for most retirees, Stephanie Ford, senior vice president at Wealth Enhancement Group, told CNBC Select.

“It doesn’t necessarily improve their financial situation,” Ford said. “It’s more of an offset, especially when you consider that health care and housing costs are rising faster than the COLA itself.”

The key is to use Social Security as a supplement, not a replacement, for your paycheck. Here are key strategies to help you fund your post-work years.

Annuities can guarantee income in retirement

No matter how far you are from collecting Social Security, there’s one definite way to strengthen your financial foundation: Maximize contributions to your tax-advantaged retirement accounts.

For 2026, that’s up to $24,500 to a 401(k) and $7,500 to a traditional or Roth IRA. If you’re 50 or older, you can take advantage of catch-up contributions, which tack on another $7,500 to 401(k) limits and another $1,100 to most IRAs.

If you’re age 60 to 63 in 2026 and your plan allows it, you can contribute an extra $11,250 rather than the $8,000 standard catch-up amount.

Annuities – contracts with a life insurance company that can include fixed monthly payments – are one option for guaranteed regular income. In the second quarter of 2025, total U.S. annuity sales reached a record high of $119.2 billion, according to insurance trade association LIMRA.

Some annuities offer additional benefits, such as paying double if you need long-term care. And, as with Social Security payments, some annuities incorporate cost-of-living adjustments to offset inflation.

Open a high-yield savings account or CD. You’re not going to get rich putting all your money in a high-yield savings account or a CD, but you’re not going to lose any of it, either. If you’re at or near retirement age, that’s the main objective – to avoid the stress of a market downturn. With some CDs paying up to 4.10%, you can lock in a rate now before any Fed cuts reduce their earning potential.

Bonds can be relatively safe bets. Bonds offer regular interest payments and have historically offered lower risks than the stock market. Pay close attention to ratings, though. Bonds with AAA ratings indicate very low default risk, whereas bonds with subpar ratings (BBB or lower) carry higher default risk.

Update your portfolio. The closer you get to retirement, the more you’ll need to update your investments to adopt a lower-risk profile. While that does not mean abandoning the market entirely, it does require a heightened focus on dividend-paying stocks and conservative funds. 

“If you’re within five years of retirement, your priority should shift toward preserving capital,” Ford told CNBC Select. “That means reducing your exposure to equities and increasing your allocation to low-risk investments like bonds, CDs and Treasuries.”

If you’re more in the range of 15 years from retirement, she added, “you still have time on your side.”

As you prepare to hang up your working clothes, it’s important to think about where you’ll hang your hat. If you’re a homeowner, you’ve probably accumulated a sizable chunk of equity – particularly after the surge in housing prices over the past five years.

Should you tap your home equity? Rather than selling your house, you could turn your equity into cash. Homeowners 62 or older can consider a reverse mortgage. The upside is that you’ll have additional funds to live on, but you could be leaving your heirs with a financial mess to clean up. 

Can you downsize? Consider your long-term plans for where (and how) you want to live. That two-story house requires a lot of upkeep. Moving into a smaller condo would minimize maintenance while giving you access to cash. According to Clever Real Estate, 68% of Baby Boomers say they’d expect to make at least $100,000 in profit if they put their homes on the market.

In most cases, the longer you avoid collecting Social Security, the more you stand to gain. While the full retirement age for anyone born after 1960 is 67 years old, if you wait until you’re 70, you’ll qualify for 124% of your total retirement benefit. (That higher amount will include any future COLAs, as well.)

If you want (or need) to keep working, waiting until at least full retirement age to collect has its benefits. The earliest you can collect Social Security is 62, but in 2026, the income cap is $24,480 a year. After that, you’ll sacrifice $1 of your benefit check for every $2 you earn above the maximum.

Once you hit full retirement age, though, you can earn any amount and still receive your full Social Security benefits.

Meet our experts

At CNBC Select, we work with experts who have specialized knowledge and authority, grounded in relevant training and experience. For this story, we interviewed Stephanie Ford, a senior vice president and financial advisor at Wealth Enhancement Group, where she focuses on developing tax strategies and estate planning techniques for her clients.

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