If you were disappointed in your 2026 Social Security cost-of-living adjustment, or COLA, that's understandable. Earlier this year, benefits rose just 2.8%.

Granted, that boost was higher than the 2.5% COLA that came through the year before. But in 2022, 2023, and 2024, Social Security COLAs came to 5.9%, 8.7%, and 3.2%, respectively. So it's easy to see why this year's 2.8% raise just didn't cut it for many retirees.

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The good news is that current estimates are pointing to a larger Social Security COLA in 2027. But retirees shouldn't necessarily expect that raise to help them maintain their buying power.

The 2027 COLA could disappoint

Current projections are calling for a 2027 Social Security COLA in the 3.4% to 3.6% range. The COLA won't be made official until mid-October, since the Social Security Administration needs to wait on key inflation data from September to run that calculation.

Still, even the low end of that range would be a significant increase over this year's COLA. And many seniors may end up relatively happy with that raise -- at least at first.

But in reality, a 3.4% COLA is likely to fall short. So is a 4.4% COLA or an even larger one, for that matter. In fact, history tells us that pretty much any COLA that comes through in the new year is likely to be a letdown.

Social Security benefits keep losing buying power

The reason next year's COLA is likely to be a disappointment boils down to a flaw in the way those raises are calculated. Social Security COLAs are based on third-quarter changes to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). But the CPI-W focuses on the spending habits of working people -- not retirees on Social Security.

Due to this mismatch, the Senior Citizens League, an advocacy group, reports that Social Security benefits have lost 13.7% of their buying power over the past 10 years. And the reason is that those annual COLAs have not managed to keep up with real-world inflation.

What this also means is that next year's COLA is likely to let seniors down in the same regard. So if you're banking on a larger raise to improve your financial picture, you may need to come up with a different plan.

That plan could involve moving to an area of the U.S. where your Social Security benefits can go further. It could mean downsizing or getting a part-time job. But either way, you shouldn't expect too much out of next year's COLA, even if the number is significantly higher than the boost your benefits received earlier this year.

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Early retirement isn't an easy thing to pull off. But if you've built a lot of retirement savings, you may find that you're able to leave the workforce well ahead of your peers.

Now one thing you should know is that if you try to tap your IRA or 401(k) before age 59 1/2, you'll typically face an early withdrawal penalty of 10%. But there's an exception to that restriction.

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If you have a 401(k) and separate from your employer in the calendar year you turn 55 or later, you're typically allowed to take penalty-free withdrawals from that workplace plan only. This exemption does not apply to 401(k)s through former employers or IRAs.

As such, with enough savings, retiring at 55 may be doable. But if you're going to go that route, there's a big expense you'll need to plan for.

Don't let healthcare costs derail your early retirement plan

If you're used to getting health insurance through your employer, retiring at 55 might leave you paying for coverage on your own. That's because Medicare eligibility typically does not begin until age 65.

In other words, you could get stuck paying health insurance premiums for a whole decade if you leave your job at 55 and don't have a spouse with a workplace health plan you can join. And that cost could easily sink an otherwise solid retirement budget.

Now if you're wondering how much it costs to buy your own health coverage for 10 years, the answer is, there's no particularly easy way to tell. That's because insurance premiums can vary substantially based on factors such as your specific age, your prescription needs, your desire to retain access to specific in-network providers, and your geographic location.

But suffice it to say that if you end up having to cover the cost of health insurance premiums following an early retirement, that may end up being your single largest recurring expense (unless you happen to have an exorbitant mortgage to boot). So your best bet is to do your research before you leave your job at 55 and at least try to narrow a range of costs you might be looking at.

Also keep in mind that premiums and out-of-pocket costs often have an inverse relationship in the world of health insurance. The less you pay for one, the more you might pay for the other. So even if you're able to find a so-called low-cost plan, less expensive premiums may come at the expense of higher deductibles and copays.

Don't get caught off guard

A lot of people know to factor in Medicare costs once they retire. If you'll be leaving the labor force at 55, don't expect the cost of health insurance to mimic that of Medicare during that 10-year gap.

In reality, your costs could be a lot higher. The better you research and plan, the less surprised and stressed you're likely to be.

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If you're receiving Social Security benefits and you're struggling to keep up with rising costs this year, you may have a big question on your mind: How much will your benefits increase in 2027?

Earlier this year, Social Security beneficiaries received a 2.8% cost-of-living adjustment (COLA). A lot of people are hoping for a larger raise in the new year, and current estimates support that reality.

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But you can't bank on any given Social Security COLA until an official announcement comes through. So it's a good idea to know when that's slated to happen.

Mark Oct. 14 on your calendar

Social Security COLAs are based on data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the months of July, August, and September. We already know what July's data looks like, and August's reading is set to be released later this week.

September remains the big wild card. Current 2027 COLA projections range from 3.4% to 3.6%, a notable drop from earlier in the year, when Social Security analyst Mary Johnson put out a forecast as high as 4.7%.

If inflation picks up substantially in September, the 2027 COLA could wiggle closer to the 4.7% mark than what the latest estimates call for. If it remains consistent with July, that 3.4% to 3.6% range may end up being pretty spot-on. And if inflation cools this month, next year's COLA could come in lower than the bottom end of that range.

Either way, September's CPI-W data is needed to calculate the exact numbers, and it won't be released until Oct. 14. As such, that's the day to mark on your calendar, since the Social Security Administration (SSA) is typically able to announce a COLA the same day the CPI-W comes out.

You may not get the whole story on Oct. 14

Even though the official COLA announcement is slated for Oct. 14, one missing piece of the puzzle that might still be unknown at that point is the cost of Medicare Part B for 2027. While Part A, which covers hospital care, is free for most enrollees, there's a standard monthly Part B premium that enrollees have to pay that can change from year to year.

In 2026, the cost of Part B rose substantially. If there's another large increase, it could eat away at the upcoming COLA, since seniors who are enrolled in Social Security and Medicare at the same time pay for Part B directly out of their monthly benefits.

The frustrating thing is that Medicare may not announce an official Part B premium until November. So even once the COLA news comes out, dual enrollees may not have the full picture.

But on the plus side, in that situation, you at least won't be left guessing what the upcoming COLA will be. And you can begin to map out your budget and finances for the new year with that key information in your back pocket.

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You'll often hear that a stock market downturn is retirees' biggest threat. And the truth is that a prolonged bear market could hurt you financially in retirement if you aren't prepared.

The good news is that there are fairly easy steps you can take to avoid locking in portfolio losses during a bear market. The right asset allocation could offer protection, as could a solid cash cushion.

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If you keep enough cash on hand to cover one to three years' worth of living expenses, for example, that potentially gives you the option to leave your portfolio untouched until stock values rebound.

But while you may know ahead of time to plan for a bear market in retirement, there's another income drainer you should have on your radar: inflation. And if you don't come up with a strategy to beat it, your savings could get drained fairly quickly.

Why you need a plan to beat inflation in retirement

Bear markets tend to happen when economic activity slows, corporate profits drop, and investors get spooked. When stocks are overvalued for extended periods, that, too, can set the stage for a bear market.

Bear markets aren't always predictable, but there can sometimes be signs they're coming. Inflation, on the other hand, is usually more subtle.

Over time, the general cost of living is likely to increase. If your retirement savings can't keep up with inflation, you might slowly lose out on purchasing power from year to year. And the cumulative effect of inflation could be substantial, eventually causing you to run out of savings despite starting with a decent balance in your IRA or 401(k).

That's why you need a plan to beat inflation, just like you need a strategy for coping with market downturns.

How to protect your retirement savings

While inflation is a factor every retiree has to deal with, there are active steps you can take to get a leg up. First, make sure you're investing in assets that can beat inflation, like stocks.

It's generally a good idea to reduce portfolio risk in retirement, so an IRA or 401(k) that's 90% stocks isn't necessarily optimal. But too small an allocation could cause your savings to trail inflation. You may want to aim for a fairly even stock/bond split so that a portion of your portfolio outpaces rising costs while the remainder provides stability.

In addition, consider delaying your Social Security claim. For each year you hold off on taking benefits past full retirement age, which is 67 for anyone born in 1960 or later, your benefits grow 8%, up until age 70.

The reason a delayed claim works well as an inflation hedge is that Social Security benefits are subject to an automatic cost-of-living adjustment (COLA) each year. If you start with larger monthly checks due to delaying your claim, each COLA that arrives should put more money in your pocket.

And remember, Social Security is guaranteed to give you a monthly paycheck for life. Even with smart planning, your savings could eventually run out. So boosting those benefits is a great way to buy yourself more financial protection for the long haul.

Don't let inflation wreck your senior years

Bear markets tend to be in-your-face events. And while they're not always predictable, signs can emerge that a downturn might happen sooner rather than later.

Inflation may not seem like an equally large threat to your retirement finances at first. But the reality is that the risk is pretty high, especially if you end up living longer. So it's important to have a strategy for staying ahead of inflation to avoid a cash crunch and depleted nest egg down the line.

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As you approach retirement, you may have some important decisions to make. And one of the biggest choices centers on Social Security.

There is a range of ages at which you can sign up for Social Security. The earliest age to take benefits is 62. But if you want those monthly checks without a reduction, you'll have to wait until full retirement age to file for benefits, which is 67 if you were born in 1960 or later.

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You can also delay your Social Security claim past full retirement age. Each year you wait until your 70th birthday gives your monthly checks an 8% boost.

For a lot of people, the appeal of filing for Social Security at 62 is clear -- you can get your money sooner, even if it means smaller checks per month. And you should know that claiming Social Security at 62 is not necessarily a bad idea off the bat.

But before you file for benefits at 62, it's important to make sure you're making a smart decision based on your personal situation. To that end, here are three questions to ask yourself before moving forward.

1. How much annual income will I need in retirement?

Social Security may play a big role in your retirement income. So it's important to figure out what your costs will be before making a filing decision that directly affects how much the program will pay you each month.

Create a list of your anticipated expenses and build in some wiggle room for unplanned costs. Your car might need work at some point, and your home might need repairs. You might also simply want to take an extra trip here and there, so bake these into the retirement budget you set up.

2. How much non-Social Security income will I have at my disposal?

Once you've established your budget, you should know what your annual spending needs look like. From there, it doesn't necessarily matter how you meet them as long as the final number works out.

In other words, let's say you expect to need $90,000 a year in retirement. If you have a large IRA or 401(k) that can provide $70,000 a year, you may be able to afford a reduction to your Social Security benefits.

If that's not the case, then filing early could leave you short of your goals. So it's important to add up your non-Social Security income before taking benefits early.

3. Am I likely to live an average, shorter, or longer life?

One thing a lot of people don't realize about Social Security is that it's designed to pay you roughly the same lifetime benefit regardless of whether you file early, at full retirement age, or later. But that assumption only holds for people who live an average lifespan.

If you think you're likely to live a longer life, a delayed Social Security claim could put more money in your pocket, not just every month, but also on a lifetime basis. On the flip side, if you don't think you'll live that long, an early claim generally works out best mathematically.

Of course, you can't see into the future and predict how long you'll live. But you can use your current health status and family history as your personal guideline.

If your health isn't the best, it's a sign that filing for Social Security at 62 may not be such a poor choice. But if you're in fabulous health and have parents who are still alive at 90, that's a sign that waiting could be a better choice for you.

Claiming Social Security is a personal decision. And the filing age that's right for one person may be completely wrong for another. If you're contemplating an early claim at 62, consider these factors before making your choice so you don't regret it after the fact.

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For many older Americans, there's no more important announcement coming than an official Social Security cost-of-living adjustment, or COLA. Current projections put the 2027 COLA in the 3.4% to 3.6% range. But if inflation rises or cools substantially this month, the final number could look quite different.

The Social Security Administration should be gearing up to announce the 2027 COLA in mid-October. But that's not the only change to keep an ear out for. Here are three other big changes that should be revealed once the upcoming COLA becomes official.

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1. A new wage cap

Higher earners don't automatically pay Social Security taxes on all their income. Each year, a cap is established, and earnings beyond that threshold are exempt from Social Security taxes.

The current wage cap is $184,500, and it's likely to increase in 2027 in line with wage growth. As such, higher earners should expect to open up their wallets a bit more in the new year.

2. A new maximum monthly benefit

Because Social Security benefits are calculated based on earnings and there's a wage cap, there's also a maximum monthly benefit the program will pay in retirement. This year, the maximum monthly check for workers claiming benefits at full retirement age is $4,152. But that number is likely to increase in the new year.

Of course, some seniors are collecting more than $4,152 a month this year. That's because Social Security rewards recipients who delay their claims past full retirement age. People who do so can accumulate delayed retirement credits, which are worth 8% per year for each year a claim is delayed beyond full retirement age, up to age 70.

3. A new work credit value

It's not a given that everyone who works will qualify for Social Security. To get retirement benefits, workers must earn 40 work credits in their lifetime at a maximum of four credits each year.

Currently, a single work credit equals $1,890 in earnings. But the value of work credits is likely to increase in 2027. This means part-time earners will have to be mindful if the goal is to accumulate four credits in the new year.

That said, some retirees receive Social Security even without the required number of work credits. Those who are eligible for spousal benefits can collect Social Security even if they don't have 40 credits, or any credits for that matter.

But spousal benefits max out at 50% of a spouse's full retirement age benefit. So they're not nearly as helpful as benefits earned directly.

There's a lot of big news that's expected to come out of Social Security this October. Pay attention on Oct. 14, which is slated to be the day of the big reveal.

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When it comes to Social Security, there's a tricky decision to make. You could start collecting benefits as early as age 62. But if you don't wait for full retirement age, those monthly checks will be subject to a steep reduction. Full retirement age is 67 for anyone born in 1960 or later.

You can also delay Social Security past full retirement age for boosted checks. For each year you wait, your benefits increase 8% on a permanent basis.

Age 70 is when those delayed retirement credits stop accumulating. But all told, you could end up with a 24% boost to your monthly checks if your full retirement age is 67 and you hold off until 70.

That's not the only reason to delay your claim until 70, though. Here are a couple of less obvious but equally important reasons why filing for Social Security at 70 could be an extremely smart financial decision for your retirement.

1. You'll get better inflation protection

Social Security benefits are eligible for a cost-of-living adjustment, or COLA, each year. The purpose of COLA is to help benefits match inflation.

COLAs are given out on a percentage basis. This year, for example, all Social Security benefits were eligible for a 2.8% increase.

But the larger your monthly benefit is to begin with, the more money each COLA should put in your pocket. A 2.8% COLA applied to a $2,480 check, for example, is worth more than a 2.8% COLA applied to a $2,000 check.

Now there are other ways to beat inflation in retirement, such as choosing savvy investments. But if you want added protection, claiming Social Security at 70 is an option worth considering.

2. You can set your spouse up with larger survivor benefits

If you're the higher earner in your household and you end up passing away before your spouse, they'll typically be entitled to survivor benefits that are the equivalent of the monthly checks you're eligible for each month. For example, if your monthly benefit is $1,800, your spouse's survivor benefit should be the equivalent, not including any COLAs that come through.

If you file for Social Security at 70 and boost your benefits, you'll leave your spouse with more money to collect in retirement if they end up outliving you. That's important because if your spouse needs long-term care or other assistance and you're not around to provide it, a larger monthly benefit could make it easier for them to meet their needs.

Filing for Social Security at 70 isn't the right choice for everyone. But it's a strategy worth considering if you like the idea of larger benefits, more money when COLAs come through, and added long-term protection for a surviving spouse.

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Using a traditional IRA or 401(k) to save for retirement can make a lot of sense when you're in a higher tax bracket or need the up-front tax break on contributions these accounts offer. But there's a reckoning to be dealt with once retirement rolls around.

Funds in a non-Roth retirement account are subject to required minimum distributions, or RMDs. And if you were born before 1960, RMDs start at age 73.

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It's important to know your RMD deadlines so you don't miss them -- and get hit with a costly penalty as a result.

Make sure you take your money out on time

Keeping track of RMD deadlines is pretty simple: RMDs are due on Dec. 31 every year.

You're allowed to defer your first RMD to April 1 of the following year. Other than that, all RMDs have to be withdrawn by Dec. 31. If you're late, you risk a 25% penalty. So a missed $10,000 RMD, for example, will typically cost you $2,500 off the bat.

There's an easy strategy that could help you avoid those harsh penalties, though: automatic distributions.

Most institutions let you set up RMDs in advance so you don't have to worry about forgetting them. You can generally set up your account so your money comes out monthly, quarterly, or annually -- whatever schedule works best for you.

If you'd rather handle your RMDs manually, set a calendar reminder well ahead of the Dec. 31 deadline. December can be a busy time, and you don't want your RMDs to get lost in the holiday rush.

Also, don't assume that a same-day transaction is safe. If you log in to your account on Dec. 31 to take your withdrawal, the funds may not clear in time to meet the deadline.

It's OK to wait until the end of the year. But give yourself a few days of leeway, just in case.

There's a way to avoid RMDs

Of course, if you don't want to deal with the hassle of RMDs, one potential solution is to make a Roth conversion before retirement. This allows you to roll traditional retirement account funds into a Roth IRA.

Roth conversions are a taxable event, so if you decide to go this route, plan carefully. Moving a $500,000 traditional IRA into a Roth in the same tax year, for example, could leave you paying the IRS a boatload of money. But a conversion could be another way to make sure RMDs don't become a thorn in your side while you're trying to enjoy your retirement.

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There's a key number Social Security recipients have been tracking for months: the upcoming cost-of-living adjustment, or COLA. The purpose of COLAs is to help Social Security benefits keep pace with inflation over time. But they often fail to do so in practice.

There's a reason Social Security COLAs have long let seniors down -- and why the 2027 COLA may lead to a repeat dose of disappointment.

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The Social Security COLA formula is flawed

The Senior Citizens League, an advocacy group, reports that Social Security benefits have lost an astounding 13.7% of their buying power over the past 10 years. And the reason largely boils down to COLAs not keeping up with real-world cost increases.

When we dig into how COLAs are calculated, it's easy to see why.

Social Security COLAs are based on third-quarter changes each year to the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W. But the CPI-W is a poor measure for Social Security COLAs because it tracks the spending habits of younger, working-age employees rather than those of older, retired adults.

Most people who get Social Security are retired and aren't working (though it's possible to work while receiving those monthly checks). But older adults tend to spend more money on medical care than younger workers do.

Healthcare isn't a highly weighted cost in the CPI-W. But it also tends to outpace broad inflation. For this reason, the CPI-W often fails to capture the real cost increases seniors experience, causing Social Security benefits to lose buying power even during periods when COLAs are fairly generous.

Given this general flaw, there's a good chance the 2027 COLA won't really help seniors on Social Security keep up with rising costs. A generous raise might help a little. But unless there's a change to the COLA formula, seniors could continue to lose out.

Other COLA options exist, but lawmakers aren't budging

The CPI-W isn't the only option for calculating Social Security COLAs. For years, advocates have pushed to base those COLAs on the Consumer Price Index for the Elderly, or CPI-E.

The reason there's been pushback is likely twofold. First, the CPI-E is considered experimental, so the argument can be made that there's too much at stake to use it as the basis for COLAs.

The other issue is that Social Security is facing a major funding shortfall that could result in benefit cuts. If the COLA formula is adjusted to allow larger increases, it could further strain the program's finances.

As such, there's been hesitation to change how COLAs are calculated, which means seniors should keep their expectations in check regarding their upcoming raise.

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By the time you turn 40, you've hopefully made some progress on retirement savings. But you may be wondering if you're saving enough.

The reality is that comparing your retirement savings balance to the average person your age isn't the most useful exercise. That's because everyone's financial needs are different, And the balance you need to live comfortably during your senior years may be higher or lower than what the typical retiree requires.

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Still, it could help to do a basic comparison with the understanding that there's no single optimal savings target for 40-year-olds. And to that end, Fidelity reports that the average person aged 40 has a 401(k) balance of $120,100.

But if your balance is lower, that doesn't mean all is lost. And if your balance is higher, it doesn't mean you're all set.

There's time to boost your 401(k) balance if you aren't happy

If you have more than $120,100 saved for retirement by 40, don't assume your work is done. You may need to continue contributing to your savings to have enough money to cover your costs down the line.

On the flipside, if you aren't happy with the amount you have saved by age 40, there are steps you can take to boost your balance. And the first step you can take is doing a serious assessment of your spending.

If you're spending money on things you don't need, cutting those costs from your budget could instantly free up money for your IRA or 401(k). And remember, you may not need to eliminate every nonessential expenses so much as make adjustments.

For example, let's say you spend $150 a month on digital entertainment. If you can cancel two services and free up $50 a month, that's an extra $600 a year for you to invest.

From there, make sure your money is working for you. Age 40 isn't the time to be conservative with your investments. You may have another 25 years or more before you're tapping your savings for income. So if the bulk of your retirement account isn't in the stock market, you may want to rethink your strategy.

Finally, if you have a 401(k), make sure you're not giving up your workplace match. Forgoing even a portion of it is akin to saying no to free money.

Time is still on your side

A $120,100 retirement savings balance is certainly respectable by 40. But if you're not there yet, don't assume the worst.

Let's say you have half that much, but starting now, you begin contributing $400 a month to your 401(k) between paycheck deductions and your workplace match. If your investments give you an annual 8% return, which is a bit below the stock market's average, you could end up with around $762,000 in 25 years.

Even if your retirement savings balance is $0 at 40, there's still time to make up for it. And if you prioritize your IRA or 401(k) right away, you might accumulate quite a nice sum by the time your career comes to an end.

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Many seniors on Social Security were disappointed with this year's 2.8% cost-of-living adjustment (COLA). And it's natural to hope for a larger COLA in 2027.

But the 2027 COLA may end up disappointing Social Security recipients. Here's why, and what to do about it.

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The COLA may be smaller than initially expected

Earlier this year, COLA estimates were coming in at close to 5% following an uptick in inflation spurred by the conflict in the Middle East. But following July's Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which showed that inflation had recently cooled, prominent experts lowered their COLA forecasts.

The Senior Citizens League, an advocacy group, updated its COLA projection to 3.6%, down from 3.8% the previous month. And independent Social Security analyst Mary Johnson updated her COLA number to 3.4%, down from 3.7% just a month prior and 4.7% earlier in the year.

We don't have inflation data for August just yet. But if it shows a continued cooling, those COLA forecast numbers could nudge downward.

The COLA may not hold up no matter what

Even if next year's Social Security COLA comes in higher than expected, it might fail seniors because of a flaw in the way it's calculated. Simply put, the CPI-W does not specifically track the spending habits of retirees. Rather, its data covers households with wage earners whose spending tends to differ from seniors'.

This flawed formula has caused Social Security benefits to lose an estimated 13.7% of their buying power over the past 10 years, says the Senior Citizens League. And since the formula isn't changing for 2027, it's fair to assume that next year's COLA will have the same issues as previous ones.

How to make up for a COLA that doesn't do the job

If you're very reliant on Social Security for retirement income, you can't expect your 2027 COLA to improve your financial situation greatly -- even if it ends up coming in above the current estimates. So instead of banking on that raise to better your circumstances, take matters into your own hands.

Start by reducing small expenses like subscriptions you may not need. Then figure out if you're willing to shed larger costs in favor of smaller ones. Downsizing your home, for example, could free up a lot of money in your budget.

You can also look at your options for getting a part-time job. Thanks to the gig economy, you may be able to earn a nice amount of supplemental income without having to commit to a rigid schedule that doesn't work well for you.

No matter what the 2027 COLA amounts to, it may not be enough to help seniors keep up with rising costs and cover their essentials. It's best to prepare for that scenario and take steps to boost your income outside of that upcoming raise.

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If you're on Social Security, you may be itching to know what your 2027 cost-of-living adjustment, or COLA, will amount to. And the good news is that you don't have to wait too much longer to find out.

An official COLA should be announced on Oct. 14, which, at this point, isn't so far off. And once you have that number, you can start to narrow down a budget for 2027.

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If you've been following COLA news, you may be aware that current estimates are putting next year's Social Security raise a lot higher than this year's 2.8% increase. But whether that's a good thing is questionable.

A larger raise isn't automatically a win

Current estimates point to a 2027 Social Security COLA between 3.4% and 3.6%. Even the low end of that range would lead to a much larger boost than the 2.8% COLA that arrived this past January. Based on the average $2,086 benefit today, a 3.4% COLA adds about $71 to the typical monthly check.

But while you may be hoping for a generous Social Security COLA in 2027, the reality is that a giant boost might hurt you in the near term. That's because COLAs are pegged to third-quarter inflation.

For next year's COLA to be considerably higher than this year's, inflation will need to remain quite elevated this month. But that's not something to hope for.

After all, do you relish the idea of having to pay more for essentials like groceries? Would you rather spend extra money to fill up your car or replace clothing items? Probably not.

That's why Social Security COLAs are always a bit of a mixed bag. A giant raise typically sounds nice in theory. But in reality, any large COLA that comes through is spurred by an uptick in prices during the third quarter of the year, which means your current Social Security checks could get strained.

Understand the role of COLAs

It's natural to wish for a larger Social Security raise than a smaller one. But one thing you must understand is that the best COLAs can generally do is match inflation -- not beat it.

Social Security COLAs also aren't designed to help people's finances improve. If you're having a hard time making ends meet based on your current Social Security checks, even a generous raise in 2027 is unlikely to make a big dent. Getting a part-time job or reducing expenses to the greatest degree possible could be a lot more helpful to your situation.

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You have plenty of choices when it comes to claiming Social Security. And no single choice is universally perfect.

For some people, filing at full retirement age, which is 67 for people born in or after 1960, makes sense. For others, it could make sense to sign up early or accrue delayed retirement credits by waiting until 70 to file.

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The general guidance around claiming Social Security is that if you live an average lifespan, you're likely to break even in terms of lifetime income regardless of when you file.

The logic is that an early claim will reduce your benefits but give you more years of monthly checks. A delayed claim will give you a larger sum each month, but you'll collect fewer individual payments in your lifetime.

People in great health who expect to live well into their late 80s or beyond can often benefit from claiming Social Security on the later side. On the other hand, people with known health issues who do not expect a long lifespan are often told that signing up early could make the most financial sense.

If you claim Social Security at 62 but only live until 73, for example, you'll collect more lifetime income from the program compared to waiting until full retirement age or beyond.

But while that's a good rule of thumb to follow, there's also an exception. And it may apply to you if you're married.

Make sure you're taking care of your spouse's financial needs

If you're the higher earner in your household and your spouse outlives you, they'll be eligible for survivor benefits from Social Security. Those benefits will be the equivalent of what you collected each month. For this reason, it could pay to delay Social Security for larger checks even if you won't necessarily be the one to take advantage of that extra money.

If you file for Social Security at 70, for example, but pass away three years later, you won't get much lifetime income from the program yourself. But if your spouse is 67 at the time of your passing and they live until 95, they'll enjoy 28 years of larger monthly checks.

Those bigger checks could be a lifeline if you and your spouse don't have a lot of assets or savings. And even if you've saved decently, larger benefits could make it easier for your surviving spouse to manage in your absence.

Talk things through so you're on the same page as your spouse

When you're married, you need to constantly consider how your actions impact your spouse, whether it's failing to put your dishes in the sink, forgetting to renew a subscription, or making a financial choice that may not be optimal.

If you claim Social Security early because you don't expect a long lifespan, you could end up leaving your surviving spouse in a serious lurch if your benefit is considerably higher than theirs due to a more robust earnings history. So it's important to think about how your filing age might have an impact on your spouse's long-term financial stability.

At the same time, it's a good idea to talk to your spouse about when to claim Social Security so you're on the same page. If you have decent savings at the household level or a life insurance policy your spouse is the beneficiary of, then larger Social Security checks may not be so critical.

In that case, your spouse may actually encourage you to file for benefits early so you're able to enjoy that money while you're alive, even if their survivor benefit is lower as a result. But you won't know what your spouse is thinking unless you sit down to have that conversation.

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In the course of retirement planning, there are certain things you probably know to think about -- your annual budget, the cost of healthcare, and how to withdraw efficiently from your savings. But there's another important facet to focus on -- inflation.

Over time, living costs are likely to rise. And even modest increases during retirement could eat away at your savings. That's why it's crucial to have a plan to beat inflation. Here's what yours might look like.

Image source: Getty Images.

1. Continue to invest in stocks

Many people scale back on stocks as retirement draws near to reduce portfolio risk. But one thing you don't want to do is dump stocks completely.

You may not want to keep 80% of your portfolio in stocks. But a fairly even stock/bond split could offer the right combination of stability and continued growth, allowing your assets to outpace inflation and help you avoid losing buying power.

2. Don't overdo your cash cushion

Retirees are often advised to maintain a cash cushion. That way, if there's a stock market downturn, you can leave your investments alone and simply use your cash to cover expenses rather than lock in losses permanently.

But one thing you shouldn't do is go overboard on cash. It's a good idea to maintain a large enough cushion to cover one to three years' worth of expenses. And you can perhaps go a bit higher if you'll be keeping a large share of your portfolio in stocks.

But resist the urge to keep 10 years' worth of costs in cash. While it might seem like the safest bet, inflation could easily outpace the amount of interest your cash can earn. In other words, too much cash could cause you to fall behind.

3. Delay your Social Security claim

You get a choice as to when to claim Social Security. The earliest age to sign up is 62. And you'll get your monthly benefit without a reduction if you wait until full retirement age to file, which is 67 if you were born in 1960 or later.

But for each year you hold off on claiming Social Security past full retirement age, up until you turn 70, your benefits get a permanent 8% increase. That not only gives you more buying power from the start, but it also gives you more inflation protection.

Social Security benefits are eligible for a cost-of-living adjustment each year. The larger your monthly checks are at the start, the more money those raises are apt to put in your pocket as they arrive.

Inflation is something you can't avoid in retirement, but you can take steps to beat it. The more you plan in advance for rising costs, the less likely you may be to fall behind and struggle financially.

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For seniors on Social Security, there's perhaps no more important an announcement each year than news of an official cost-of-living adjustment, or COLA.

COLAs are meant to help benefits keep up with rising costs. And they're pegged to the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, which measures changes in the prices paid by workers for different goods and services.

Image source: Getty Images.

In 2026, Social Security benefits rose by 2.8%. And many seniors are hoping for a more generous COLA in 2027.

But will they get their way? Here's what we know already about the upcoming COLA, and here's the data that's still missing.

What we know so far

In July, the CPI-W rose 3.4% on an annual basis . Social Security COLAs are based on third-quarter readings from the CPI-W, so that piece of data gives us one-third of the information needed to calculate the 2027 raise.

Following July's CPI-W, the Senior Citizens League, an advocacy group, lowered its 2027 COLA projection from 3.8% to 3.6%. Cooling inflation was what caused the drop.

At the same time, independent Social Security analyst Mary Johnson lowered her 2027 COLA projection to 3.4%. At one point earlier in the year, Johnson's COLA number for 2027 was as high as 4.7%. Before July's CPI-W, her working estimate was 3.7%.

AARP also decided to weigh in with a COLA forecast after July's CPI-W was released. The group put that number at 3.5%, which is smack in the middle of the two estimates.

What we don't know yet

Since August and September CPI-W readings are needed to calculate next year's COLA, most of the puzzle is still missing. Even though the month of August is now behind us, it takes time for the Bureau of Labor Statistics to compile inflation data. August's CPI-W is expected to come out on Sept. 11.

And of course we don't know how inflation will trend in September since, well, none of us can predict the future. If tensions overseas worsen and oil prices creep upward, it could set the stage for a larger Social Security COLA in 2027. But if things hold steady, the estimates above ranging from 3.4% to 3.6% could be pretty on-target.

It's also possible that inflation will cool even more in September, and that August's CPI-W will show a notable decrease from July. If both things happen, seniors may be in for an even smaller COLA in 2027 than the low end of the range above. However, it's unlikely that the upcoming COLA won't surpass this year's 2.8% raise by at least a little bit.

When an official COLA gets announced

September's CPI-W is set to be released on Oct. 14, so following that, the Social Security Administration (SSA) should be in a position to announce an official 2027 COLA the same day. In fact, the CPI-W is usually released early, so the COLA announcement could come in time for your morning coffee.

Of course, it's worth noting that last year's COLA announcement was delayed because of the government shutdown that occurred at the time, which delayed last September's CPI-W. Hopefully, there won't be a repeat this time around.

In addition to sharing word of a COLA, the SSA is expected to announce some other key program updates on Oct. 14. These include:

• The program's maximum monthly benefit for 2027.
• The 2027 wage cap, which determines how much income is taxed to fund Social Security.
• The value of a single Social Security work credit, which retirees need 40 of to be eligible for benefits in retirement.

So all told, it's a pretty big day for Social Security, and for anyone who's tired of grappling with the mystery of what next year's COLA will be.

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My house has evolved quite a lot over the past 16 years or so since I moved in. The room off to the side of my living room used to be a playroom for my kids, which meant their toys not only filled every inch, but also had a magical way of migrating all the way to the other side of the house.

Now, that room is a quiet reading area with a piano, bookcase, and couch. My kids are at an age where they don't really have toys so much as stuff. And while electronics don't tend to take up as much space as blocks, dolls, and building sets, I'm grateful that I have enough room at home to spread out.

Image source: Getty Images.

But while it's nice having enough square footage for a gaggle of children and two large dogs, the reality is that I'm forcing myself not to get too attached to it. See, my husband and I have discussed our retirement plans at length and have come to the conclusion that downsizing makes the most sense for us.

There are a few driving forces behind the decision. And they may apply to you, too.

We want to use our savings in a meaningful way

Our first reason for downsizing is a common one. We don't want to pay to maintain a larger home, and we don't want to deal with higher utility bills. And don't even get me started on our property taxes, which are brutal.

Downsizing doesn't always translate to a lower tax property tax bill or insurance costs. If we move to a place like Florida, for example, our homeowners coverage might increase sharply.

But all told, we've done the research and expect that downsizing could allow us to stretch our retirement savings further. And I'd rather have more money to spend on hobbies and travel than repeatedly tap my IRA to cover a large property tax and electric bill.

We don't know how much appetite for maintenance we have

There are a lot of things to like about our current living space -- our spacious deck right off our kitchen, our fenced-in backyard with ample room for our dogs to run around, and our finished basement that offers extra hangout and storage place.

But maintaining our home is a lot of work. That deck of ours needs to be stained, sanded, and sealed frequently. Our backyard grass needs to be mowed. And our basement needs to be dusted and vacuumed.

My husband and I are realistic about the fact that there may come a point when we don't have the energy to keep up with all that work. If we downsize, we might have fewer floors to sweep, fewer bathrooms to clean, and fewer annoying household tasks overall. And we don't want to retire from our jobs only to spend hours each week dealing with upkeep at home.

Is downsizing right for you?

Downsizing isn't automatically the right choice for everyone. It could mean abandoning the neighborhood you know and love and having a harder time hosting your grown kids once they start families of their own.

If you have a generous retirement income between savings and Social Security that makes a larger home affordable, then by all means, stay put if you want to. But if don't want to allocate too large a portion of your budget to housing and you don't want the burden of maintaining a larger space, then it could pay to consider shedding square footage.

And while it may not be easy to leave the house you raised your family in, remember that you may end up creating a host of new memories in a home that's easier on your schedule and budget.

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There's a lot riding on your Social Security claiming decision. If you wait to file until you reach full retirement age, which is 67 if you were born in 1960 or later, you'll get to collect your monthly benefits in full. If you file early, which you can do starting at 62, your benefits will be reduced.

A lot of people rush to claim Social Security at 62, or at various points ahead of full retirement age, because they want the money sooner. That's understandable. But you may not realize how detrimental an early claim can be at the time.

Image source: Getty Images.

If you've just retired at 62, for example, and haven't really navigated life in the absence of a job-related paycheck, you might think you're OK to accept reduced benefits from Social Security only to realize you're going to be strapped for cash month after month.

The bad news is that the initial Social Security benefit you lock in at the time of your claim is typically what you'll get for life, not accounting for the program's annual cost-of-living adjustments. But one lesser-known provision could make it possible for you to score larger Social Security checks -- even if you've already been getting benefits for a while.

Are you able to undo your Social Security claim?

If you filed for Social Security ahead of full retirement age and now regret it, you're not necessarily stuck with reduced checks. Thanks to the program's little-known do-over option, you may be able to withdraw your application for benefits and file again at a later point in time.

To take advantage of this option, though, you need to withdraw your application within a year and also repay all of the Social Security benefits you received. And if you don't have the money to do that, you may not be able to exercise your do-over.

However, there may be creative ways to come up with that money, such as tapping home equity if that makes sense for your situation. So it pays to explore your options if you're unhappy with the benefit you're getting.

Put a lot of thought into your decision from the start

Even though all Social Security recipients get a do-over in their lifetime, it's not the easiest option to fall back on. There's a time limit and the constraint of potentially having to come up with a lot of money.

That's why it's so important to try to get your claiming decision right from the beginning. Since a do-over isn't easy to pull off, filing strategically could help you avoid getting stuck with monthly checks that are too small for comfort.

Before taking benefits, create a monthly budget that shows you exactly how much income you need. Then, assess your non-Social Security income streams, whether it's a pension, savings, or anticipated earnings from part-time work.

From there, you'll know how much money you need from Social Security to keep up with your costs. And once you have that information, you can create an account at SSA.gov and access your most recent Social Security earnings statement.

That statement should contain an estimate of your benefit at full retirement age and also show you how much of a reduction you might be looking at if you file early. If the smaller number doesn't work for your budget, you'll know you need to wait.

You should also know that while sitting tight until full retirement age arrives helps you avoid reduced monthly benefits, waiting beyond that point could work to your advantage. Each year you delay your claim past full retirement age boosts your benefits by 8% for life. And while that increase runs out once you turn 70, it's a great way to lock in added monthly income that could provide more financial stability for the duration of your retirement.

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For many older Americans, claiming Social Security can make it possible to stop working for good. Once those monthly benefits start coming in, they may be enough to cover your expenses coupled with distributions from a retirement account like an IRA or 401(k).

But if you don't have savings or non-Social Security income to fall back on, you may need to continue working to some degree even once those monthly checks start rolling in. And you may be wondering if you're allowed to do that.

Image source: Getty Images.

The answer is yes. You can absolutely work while collecting Social Security. But depending on your age, there may be an earnings limit you'll need to stick to if you want to avoid having benefits withheld.

What the rules entail

Full retirement age is when you're entitled to your monthly Social Security checks without a reduction. If you were born in 1960 or later, that age is 67.

You can file for benefits as early as age 62, albeit at a reduced rate. And you can also work while collecting Social Security at any age.

However, if you haven't reached full retirement age and you earn money from a job, you'll be subject to an earnings test whose limit changes annually. And exceeding that limit could mean having benefits withheld.

In 2026, you'll have $1 in Social Security withheld per $2 of earnings above $24,480, assuming you won't reach full retirement age by the end of the year. If you will, the earnings limit is much higher at $65,160. And beyond that limit, you'll have only $1 in Social Security withheld per $3 of income.

You should also know that withheld benefits are returned to you in the form of larger monthly checks once you reach full retirement age. Social Security's earnings test isn't meant to strip you of benefits permanently. But if your goal in working while on Social Security is to improve your cash flow, having benefits withheld could negate a lot of the upside.

Working while on Social Security could lead to larger checks

Although you'll need to be mindful of the annual earning limits if you work while receiving Social Security before full retirement age, continuing to earn money could actually boost your benefits down the line. That's because your monthly benefits are based on your 35 highest-paid years of wages.

Let's say you have only a 33-year work history at the time you claim Social Security. That means you'll have two zero-income years factored into your benefits formula.

Now, let's imagine you decide to work part-time while on Social Security, and for your first two years of collecting benefits, you earn $22,000 annually. Those wages should get factored into your benefits formula and replace the two $0s, resulting in larger checks once those earnings are accounted for.

Positive changes could be in store

All told, working while collecting Social Security has its advantages. It can be a good way to boost your retirement income and avoid financial stress. It could also be a way to get out of the house even if you're doing well financially. Just make sure you understand the rules of working while collecting benefits so you don't encounter any unpleasant surprises.

You should also know that the earnings limit tends to rise over time in line with wage growth, so the numbers here could change in your favor. An official earnings limit for 2027 should be announced on Oct. 14, along with other key changes to Social Security, like the upcoming cost-of-living adjustment. It pays to tune in if you're already working while collecting benefits or plan to start doing so next year.

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There's a reason so many financial experts warn against claiming Social Security at 62. Since it's the earliest age to take benefits, filing at 62 generally means locking in reduced monthly checks for life.

If your full retirement age is 67, which applies if you were born in 1960 or later, claiming Social Security at 62 means accepting benefits that are 30% lower. That could make it harder to pay your bills in retirement or have money for extras that make life more enjoyable.

Image source: Getty Images.

But that doesn't mean claiming Social Security at 62 is a poor choice in every scenario. In these situations, it's a decision that could work out well.

When you have plenty of savings

If you need Social Security to pay your mortgage, buy food, and cover utilities, reduced monthly checks could put you at risk of not being able to keep up with your basic expenses. But if you have a nice amount of savings and plan to use Social Security as bonus money for things like travel and hobbies, filing at 62 may not be a bad choice.

If you claim benefits at 62, you'll get an opportunity to use that money when you're younger. That could mean taking the world trips you've dreamed of before mobility issues creep in or enjoying local nightlife while you still have the energy to stay up late.

When you don't expect to live a long life

It's impossible to know exactly how long you'll live. But if you have health issues and don't anticipate living a very long life, claiming Social Security at 62 could result in more lifetime income despite reduced benefits every month.

One thing you'll need to factor into that decision is if you're married. If you are and you're the higher earner in your household, an early claim doesn't just reduce your monthly Social Security checks. It also reduces survivor benefits your spouse might be entitled to.

But if you don't have a spouse to worry about, whether because you're not married or because they're the one with higher lifetime earnings, filing for Social Security at 62 could be a smart move if you have reason to believe you won't live past your mid-70s.

It's important to understand the financial impact of claiming Social Security at 62 before finalizing that decision. But filing for benefits as early as possible isn't always an unwise move -- even if some of the experts out there like to caution against it. The key is to take your personal circumstances into account when making your choice.

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There's a reason people are often advised to save for retirement in a Roth retirement account. Roth IRAs and 401(k)s do not come with required minimum distributions, or RMDs. Rather, your money is yours to withdraw as you please.

But if you have your retirement savings in a traditional IRA or 401(k), RMDs will begin at age 73 or 75, depending on your birth year. And those mandatory withdrawals could end up being a source of financial stress.

Image source: Getty Images.

That's why it's important to manage RMDs carefully. Here are two key moves that could make RMDs easier on you financially and logistically.

1. Automate withdrawals

The reason RMDs exist is simple. The money that goes into your traditional IRA or 401(k) gets tax-deferred treatment. But the IRS eventually wants to tax that money, which is why you'll be forced to withdraw from your savings eventually.

One problem with RMDs is that failing to take them can result in a harsh 25% penalty. To avoid losing money due to missing the deadline, which is Dec. 31 each year, it's a good idea to put your RMDs on autopilot.

Most financial institutions let you take automatic RMDs on a schedule that works for you. You may opt for quarterly distributions or a single lump sum each year. But setting up those withdrawals in advance could spare you from being late when life gets in the way, thereby keeping those steep penalties from creeping up on you.

2. Look at QCDs

Another issue with RMDs is that they're taxable. If you have large withdrawals you're forced to take, you could end up in a higher tax bracket than you want to be in. You might also end up getting taxed on your Social Security benefits and being charged more for Medicare because of a higher income, even if you'd rather not tap your IRA or 401(k).

That's what makes qualified charitable distributions, or QCDs, so valuable. QCDs allow you to donate funds from an IRA directly to a registered charity.

They don't add to your taxable income, but they do allow you to fulfill your RMD-related obligation. If you don't need your RMDs to cover bills and you like the idea of donating them, QCDs could be a great solution.

While RMDs can be a pain to deal with in retirement, there are steps you can take to make them less annoying. Ensuring you don't miss the deadline and getting out of RMD taxes are two moves that could reduce your financial stress on the whole.

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If there's one program that's truly vital to retired Americans, it's Social Security. Those monthly benefits can be a lifeline, particularly for those without much savings.

Social Security is a complex program that's loaded with rules, and it's important to understand its ins and outs. Here are three Social Security rules some retirees may not know about -- but should.

Image source: Getty Images.

1. There's an earnings test for some recipients who work

It's possible to earn money from a job while collecting Social Security. Once you reach full retirement age, which is 67 if you were born in 1960 or later, you can earn any amount of money from a job without a negative effect on your monthly checks.

However, if you work and receive benefits prior to full retirement age, you'll be subject to an earnings test. Exceeding its limits generally means having benefits withheld temporarily.

In 2026, you'll have $1 in Social Security withheld per $2 of earnings above $24,480 if you won't reach full retirement age by the end of the year. That limit is likely to rise over time, and it's an important number to keep tabs on if you're earning a paycheck.

2. You can undo your claim if you file too early

Claiming Social Security ahead of full retirement age results in reduced monthly checks. But it's important to realize that you're not necessarily stuck with smaller checks due to filing early.

All Social Security claimants are allowed a do-over in their lifetime. If you file too early, you can withdraw your application for benefits within a year to get a second chance at filing at a later age.

The catch, though, is that to exercise your do-over, you need to repay the Social Security Administration all of the benefits you received. If you can pull that off, you can undo your claim, file again a few years down the line, and lock in much larger benefits.

3. You can't get delayed retirement credits for spousal benefits

When you're claiming Social Security on your own earnings record, you can score an 8% boost to your monthly benefits for each year you delay your filing past full retirement age, up until you turn 70. But that option doesn't exist for spousal benefits.

Spousal benefits max out at 50% of the amount your spouse is entitled to at full retirement age. If you delay a spousal benefit claim past your full retirement age, you won't get any more money, which means waiting doesn't make financial sense. If anything, it could cost you.

Reading up on Social Security's many rules may not sound like a fun weekend activity. But it's important to understand how the program works ahead of retirement, so you can make the most of it once you're eligible to start getting benefits.

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Retirement is a period of life that requires a lot of big decisions. Where will you live? How will you keep your portfolio invested? When will you start tapping your IRA or 401(k)?

Another big decision you'll need to make is figuring out when to claim Social Security. You're entitled to your benefits without a reduction at full retirement age, which is 67 if you were born in 1960 or later. While you can sign up for Social Security as early as age 62, for each month you file ahead of full retirement age, your benefits are permanently reduced.

Image source: Getty Images.

You can also boost your benefits by 8% a year if you delay your claim past full retirement age. That incentive holds until you turn 70, at which point waiting no longer pays off.

You may have an idea as to when you'd like to claim Social Security based on the rules above. But until you do one specific calculation, it's best to hold off on filing for benefits.

Know what your spending needs look like

Your spending needs in retirement may look a lot different than your spending needs while you're working. Come retirement, you may have a paid-off home, and you may be able to shift from a two-car household to a one-car one due to no longer having a job to go to.

On the other hand, other expenses of yours might rise. You may be planning to spend more on travel and hobbies in the absence of having to report to a job.

That's why it's important to do a personal income calculation to see your estimated annual expenses before claiming Social Security. Once you see how much money you'll need yearly to cover your expenses, you should have an easier time knowing whether to claim Social Security at full retirement age, early, or on time.

Of course, you'll also need to evaluate your non-Social Security income streams to arrive at that decision. Let's say you expect to need $100,000 a year to do all the things you want to do in retirement, and you anticipate getting $70,000 a year out of your savings.

If your full retirement age benefit is $2,500 a month, which amounts to $30,000 a year, you don't necessarily need to delay Social Security if filing later doesn't work for you. But in this case, an early claim could leave you short of your income goal. So it's important to have your annual budget mapped out before you make your claim official.

Don't rush into things

Social Security may be your only guaranteed income source in retirement. Even if you come in with savings, that money could run out at some point.

That's why it's so important to file for benefits carefully. A big part of that means taking your time to consider your different options.

It's also not a bad idea to talk through your choices with a financial advisor. They may be able to help guide you toward a decision that ultimately works out best.

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If you're having a hard time paying your bills in retirement, you're surely in good company. But that's a situation you shouldn't ignore.

It may be that you're hanging on now. But what if inflation continues to pick up and your Social Security benefits can't keep pace? And what if you're starting to whittle down the savings you accumulated?

Image source: Getty Images.

Rather than continue to struggle, here are three key questions to ask that could help you improve your financial situation.

1. Is getting a job feasible?

Many people associate retirement with not working. That's understandable. But the reality is that a part-time job could be your ticket to a better financial place.

And in case you're wondering, you are allowed to work while collecting Social Security. In fact, there's no negative impact at all if you've already reached your full retirement age.

Otherwise, there's an earnings limit to be mindful of, as exceeding it could result in temporary benefits withholding. But all told, a part-time job could boost your income and give you more breathing room. And if a traditional part-time job doesn't work for you, you can explore gig work instead.

2. Is it time to consider downsizing?

You may have sentimental or even logistical reasons for wanting to stay in the home where you raised your family. You might like your neighborhood and socialize frequently with the people who live around the corner.

But if you're hanging on to more space than you need and it's a struggle to keep up with maintenance, insurance, and property taxes, it may be time to consider shedding some square footage. A smaller living space could result in big savings and help you stretch your current retirement paycheck a lot more.

3. Is there a more affordable Medicare plan for me?

You may have picked a Medicare plan years ago based on your medications and health-related needs. But if any of those have changed, or if your plan has since changed, it's worth researching if there's a more affordable option for you.

Medicare open enrollment starts each year on Oct. 15 and runs through Dec. 7. During this time, you can swap a Medicare Advantage plan for another or switch Part D plans. You can also sign up for Medicare Advantage for the first time or dump Advantage and move over to original Medicare. If you compare your plan choices, you may find that you can get the coverage you need at a lower cost.

It's not a fun thing to be worried about retirement money. If it's getting harder to pay your expenses, these questions need to be addressed sooner rather than later.

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It's easy to see why so many seniors are tempted to file for Social Security at 62. Since it's the earliest age to claim benefits, filing at 62 means getting access to a guaranteed monthly paycheck sooner. That could make it possible to retire earlier or enjoy more financial wiggle room at a younger age.

But there's a serious drawback to claiming Social Security at 62. If your full retirement age is 67, which is the case if you were born in 1960 or later, filing five years early will reduce your monthly checks by about 30% for the rest of your life.

Image source: Getty Images.

Now you may be OK with that hit if it means getting your money earlier in life. But before you move forward with that decision, it's important to consider your spouse's needs.

An early Social Security claim could hurt your spouse

If you're the higher earner in your household, you should know that there's a lot riding on your Social Security claim. That's because if your spouse ends up outliving you, they'll typically be entitled to survivor benefits from Social Security. And the larger your monthly checks are, the more money your spouse should collect in your absence each month.

If you file for Social Security at 62 and shrink your benefits by 30%, you'll reduce your spouse's survivor benefits as well. Now with a massive IRA or 401(k) for them to live on, that reduction may not be so terrible. But if you expect Social Security to be your household's main source of retirement income, you may want to think twice before claiming at 62 -- especially if you think your spouse might outlive you by many years.

If you leave your spouse with less Social Security income, they may be forced to go back to work very late in life. Or they may have no choice but to reduce spending considerably, to the point where they have to skimp on things like groceries, heat, and medical care. That's probably not what you want.

Don't rush to claim Social Security at 62

In some cases, filing for Social Security at 62 can make sense despite the reduced monthly benefit it results in. But even if claiming benefits at 62 makes sense for you based on your personal financial situation, it's important to think about your spouse's needs before moving forward.

If you expect to pass away in your mid-70s due to health issues, for example, a claim at 62 might give you more Social Security in your lifetime despite reducing your checks every month. But if you expect your spouse to live until their 90s, that's a dangerous choice to make. So before you officially file a claim, look at the big picture, and make sure you're not setting your spouse up to struggle financially.

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If you're aiming to save $1 million by the time you retire, you're probably in good company. A lot of people tend to fixate on that specific number because, well, it sounds pretty darn great. To be fair, it is a lot of money, which means that if you hit that goal, you could end up in a great position to enjoy retirement to the fullest.

That doesn't mean your senior years are doomed if your retirement account balance never hits $1 million. You may be able to get by on much less, depending on what your needs look like.

Image source: Getty Images.

It's a matter of your personal spending

While a $1 million nest egg might seem like it would buy you your dream retirement, it's important to realize that many seniors today get by on much less. Fidelity, for example, puts the average 401(k) balance at $258,800 for people ages 65 to 69.

If you enter retirement with a paid-off home and vehicle, and you plan to spend your time doing household projects, gardening, socializing locally, and bonding with your grandchildren, then you may not need a $1 million IRA or 401(k) to afford your lifestyle.

Plus, you may end up relocating to a more affordable part of the country once you're no longer tethered to a job. If you have a lot of home equity to cash in, you could end up using that money to supplement your savings.

Also, don't forget about Social Security. Even if you only qualify for the average monthly benefit today, that should still put about $25,000 a year in your pocket, which reduces the amount you have to save.

Don't fixate on a specific number

It's easy to get caught up in aiming for a $1 million nest egg. But rather than doing that, a smarter way to go about things is to think about what you want retirement to look like and calculate your personal spending needs.

Let's say you're aiming to live in an area with low taxes (property and income), you're not carrying debt into retirement, and you want to fill your days with local activities. A $50,000 annual budget may more than suffice.

If you're able to get $25,000 of that from Social Security, you only need your savings to match that amount. Using the 4% rule, a $625,000 nest egg should allow you to comfortably withdraw $25,000 annually.

Of course, this doesn't mean you shouldn't try for $1 million in savings if you like the sound of that. The point, rather, is to not get hung up on that number to the point where you sacrifice too much today to save more than what you actually need.

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Social Security's cost-of-living adjustments, or COLAs, are extremely important to many retirees -- especially those who rely on Social Security for most or all of their monthly income. Those COLAs are what allow benefits to keep up with inflation, avoiding a scenario where seniors automatically fall behind year after year.

Back in January, Social Security benefits received a 2.8% COLA. And many retirees are no doubt hoping for a larger raise in 2027.

Image source: Getty Images.

Earlier this year, it seemed like 2027's COLA would be huge compared to this year's boost. But that COLA estimate has been falling.

That may seem like a bad thing. But here's why it actually isn't.

What 2027 COLA estimates look like today

Earlier this year, independent Social Security analyst Mary Johnson projected that 2027's COLA would amount to 4.7%. Johnson has since lowered her forecast significantly to 3.4%.

Meanwhile, the Senior Citizens League, an advocacy group, had a working projection of 3.8% for 2027's COLA in June and July. Earlier this month, that number was lowered to 3.6%.

If we average these projections, it looks like Social Security's upcoming COLA may fall solidly in the mid-3% range. That would still be an improvement over this year's 2.8% increase. But it doesn't have quite the same ring as a raise above 4%.

A smaller COLA isn't automatically bad news

If you've been tracking the 2027 COLA, these lower numbers may seem disappointing. But one thing to keep in mind is that a smaller COLA projection indicates that inflation is cooling.

Social Security COLAs are tied directly to third-quarter changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W. The reason 2027 COLA projections have fallen from the upper 4% range to the mid-3% range is slower price increases.

But that's a good thing. Cooling inflation means your current Social Security benefits can go further.

In fact, one thing to keep in mind about Social Security COLAs is that they're not meant to beat inflation. If you get a larger COLA one year, it typically means your living costs rose a lot the summer before. If you get a smaller COLA, it means prices stayed more stable.

All told, things should even out. So while you may be hoping next year's COLA ends up creeping back into the 4% range, that's not necessarily something to want. If that happens, it will come at the cost of higher expenses for the remainder of the third quarter of this year.

There's still time for the number to wiggle

Two more months of CPI-W data are needed to calculate a 2027 COLA. The Social Security Administration should be announcing an official number in mid-October.

But either way, it's important to recognize that declining COLA estimates have a hidden benefit -- slower near-term price increases. Once you realize that, you may be less upset if next year's COLA isn't as large as the experts initially said it would be.

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By age 35, you're hopefully in a more solid place financially than you were in your 20s. You might still have some lingering student loan or credit card debt, but you may also be earning higher wages due to having more career experience.

By 35, you should ideally have a decent chunk of money socked away in a retirement account. If so, you may be curious as to how your 401(k) stacks up.

Image source: Getty Images.

What the average 35-year-old has saved in a 401(k) today

The average 401(k) plan balance for 35-year-olds as of mid-2026 is $81,600, according to Fidelity. If your balance is similar, you should feel good about it.

Even if you don't add another dime to your 401(k), if you let an $81,600 balance grow at an annual rate of 8%, which is a bit below the stock market's average, in 30 more years, you could end up with $821,000. That would put you at 65, which is when Medicare eligibility begins.

Meanwhile, if you add $300 a month to your 401(k) during those 30 years, you could grow your account to over $1.2 million if you're starting with $81,600. That, combined with Social Security, could make for a pretty comfortable retirement.

What to do if you need to play catch-up

If you're 35 and your 401(k) balance is considerably lower than that of your peers, don't panic. At 35, you may still have decades ahead of you to build wealth. The key is to figure out why you're struggling to save now and take steps to remedy that situation as soon as possible.

One of the best things to do is examine your spending closely and look at a budget overhaul. If you're currently paying for three separate streaming services, for example, but you're not saving enough in your 401(k) to claim your full workplace match, cutting down to one service until your paycheck increases is a smart choice.

Similarly, if you're buying lunch most days during the week, brown-bagging it could potentially free up $100 per month or more for your 401(k). If boosting contributions allows you to snag more matching dollars, it's a double win.

All told, at 35, there's plenty of time to build retirement savings, so don't be too discouraged if your 401(k) balance is lower than the average. But do know that the sooner you start making changes that allow you to boost contributions, the more time you'll give that extra money to benefit from investment gains. That could be your ticket to the comfortable retirement you deserve.

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There's a reason working Americans are encouraged strongly to save for retirement: If you retire on Social Security alone, you may end up struggling to cover your costs.

But just how bad is it to retire on just Social Security? Here's what your income might look like.

Image source: Getty Images.

What the typical Social Security benefit amounts to today

Social Security's average retirement benefit as of July is around $2,086 per month. On an annual basis, that's about $25,000 a year.

If you're in line for a similar benefit, it may be feasible to retire on Social Security alone if you have very low expenses. But if that's not the case or your benefit is smaller, retiring on only those benefits could be financially disastrous.

One thing to remember about Social Security is that it's not supposed to replace your paycheck in full. If you earn an average wage, you can expect Social Security to take the place of roughly 40% of it.

That assumes benefits aren't cut, which isn't a given. Social Security is facing some serious financial difficulties. If Congress doesn't implement reforms, benefits could be reduced by up to 22% over the next decade, according to the program's most recent update from the Trustees.

If we apply a 22% cut, it takes the average monthly Social Security benefit down to roughly $1,627. On an annual basis, that's about $19,500.

For a single person, the poverty line in 2026 is $15,960. An annual income of $19,500 isn't much higher.

It's best to have other income to count on

While it's technically possible to retire on only Social Security, especially if you're in line for a larger benefit or can delay your benefit until age 70 for larger checks, it's not the best idea to plan on that. A better bet? Try to save something for retirement so you have supplemental income.

Contributing even $50 a month to an IRA or 401(k) could add up over time. And if you're nearing retirement and missed the opportunity to build savings, try supplementing your Social Security by working.

The key is to make sure you have enough income to cover your needs without constantly pinching pennies or, worse yet, going to extremes like skimping on meals and medication to make the math work.

Finally, recognize that Social Security does not have great inflation protection. The program's cost-of-living adjustments tend to erode seniors' buying power over time. So that's another reason to plan on some type of supplemental income, even if it's only a small amount.

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There's a reason workers are advised to save well for retirement. If you earn an average paycheck, Social Security might replace about 40% of it once you retire -- assuming that benefits aren't subject to cuts.

It's common for retirees to need about 70% to 80% of their former income to live comfortably, which is why Social Security often isn't enough. So if you want to avoid financial struggles, you may need to prioritize retirement savings.

Image source: Getty Images.

That doesn't have to mean parting with half your paycheck, though. In fact, you may be surprised at how far a $300 monthly contribution to an IRA or 401(k) might go.

A small amount of monthly savings could yield solid results

If you first start saving for retirement in your 40s or 50s, a $300 monthly IRA or 401(k) contribution may not result in the nest egg you're hoping for. But over 40 years, the math may be on your side.

Let's assume you start saving $300 a month for retirement at age 27. That means you're beginning to fund your nest egg early on in your career, but perhaps not the very moment you start collecting a full-time paycheck.

Let's also assume you invest your money heavily in stocks, and that your portfolio generates a yearly 8% return. That's a bit below the market's average.

If you continue saving that $300 a month through age 67 (which is Social Security's full retirement age) while enjoying an 8% return on your money year after year, you could end up with a balance of about $933,000. That's not a small amount of money by any means. And it could be a nice way to supplement your Social Security checks.

Make sure to give your money time to grow

Clearly, you don't have to part with tons of money every month to build a large nest egg. But if you want to keep contributions smaller, then you'll need to give yourself more time to accumulate wealth.

Let's imagine you only contribute $300 to your savings over a 20-year period. Even with that same 8% return, you're looking at a total of about $165,000 in that scenario.

That's not nothing. But it makes for a very different lifestyle than a $933,000 balance.

Of course, some people struggle to save earlier on in their careers due to heavy student loan debt, high expenses, and lower wages. The point, however, is that if you're able to start funding your nest egg early on, you might get away with contributing a pretty small amount of money each month over time while still building up a sizable balance.

Wait too long, and you may find that you either have to funnel loads of money into your savings each month to make progress, or you end up with a balance that doesn't support the secure retirement you're hoping for.

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One of the biggest myths about Social Security is that everyone is entitled to benefits once they reach a certain age. In reality, Social Security benefits are earned by paying taxes on wages.

Specifically, it takes 40 lifetime work credits to qualify for Social Security, and the value of a single credit changes each year. If you don't work for more than a few years, or you don't work at all and therefore don't end up paying into Social Security, you may not be eligible for benefits once you reach retirement age.

Image source: Getty Images.

Thankfully, though, there's another way to qualify for Social Security in that scenario -- spousal benefits. But the rules regarding spousal Social Security benefits can be complex.

Here's what you need to know about spousal benefits and how they differ from retirement benefits claimed on your own earnings record.

Spousal Social Security benefits: A lifeline for some retirees

It's not so uncommon to reach retirement age without much of a work history -- or any work history, for that matter. If you were a caregiver for many years, you may have simply dedicated your life to unpaid work.

The good news is that if you're married or a qualifying divorcee, you may be entitled to spousal benefits from Social Security. But there are a few key things you need to know.

First, if you're still married, you can't file for spousal Social Security benefits until your spouse signs up. If you're divorced, you generally don't have to wait for your ex-spouse to file to get benefits yourself.

Second, the maximum amount a spousal benefit can be worth is 50% of the amount your spouse is eligible for at their full retirement age. If your spouse's full retirement age benefit is $2,500, you can't collect more than $1,250 in Social Security spousal benefits yourself.

This is an important thing to note, because when you're claiming Social Security on your own earnings record, you can accumulate delayed retirement credits for waiting beyond full retirement age. Those credits are worth 8% a year, and you can accrue them until you turn 70.

With spousal benefits, those credits don't apply. As such, there's no sense in delaying a spousal benefit claim past your own full retirement age, since it won't result in larger monthly checks.

Make sure you know the rules

Even though a common path to Social Security is earning enough money and paying enough taxes to qualify, you may be eligible for benefits simply by being married (or having been married) to a qualifying recipient. But it's important to know how spousal Social Security benefits work and how they differ from traditional retirement benefits.

It's also important to make sure you and your spouse are in sync on your Social Security claiming strategy, even if the only benefits you're entitled to are spousal benefits. That way, you can work together to make the most of that crucial income stream.

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If you like the idea of tax-free retirement income and don't want to deal with the hassle of required minimum distributions (RMDs), a Roth conversion may be worth pursuing. With a Roth conversion, you convert a traditional retirement account balance to a Roth IRA. It's a strategy that works well for many retirees, but it's important to go about Roth conversions carefully -- and make sure they're right for you.

With that in mind, here are three questions to ask yourself before doing a Roth conversion.

Image source: Getty Images.

1. How much time do I have before RMDs start?

If you were born in 1960 or later, RMDs begin at age 75. Otherwise, you have to start RMDs at 73. If you know you're interested in a Roth conversion, make sure to figure out how many years you have until RMDs begin.

See, one thing to know about Roth conversions is that they're a taxable event. The amount you move into a Roth IRA will be taxed in the year you make the conversion. So it's often advantageous to spread Roth conversions out across as many years as possible.

Let's say you're about to retire at 67. If you were born in 1959, RMDs start at 73. That gives you a six-year window to spread out a conversion to minimize the annual tax hit.

2. What tax rate am I willing to convert at?

Your goal in making a Roth conversion should be to pay as little tax as possible on your retirement plan withdrawals. To that end, it's important to determine which tax rate makes sense to convert at.

Let's say you're single and expect an annual retirement income of $100,000 after accounting for RMDs. Based on today's rates, you fall into the 22% bracket. What that also means is that it probably doesn't make sense to convert at a higher rate than 22%.

Now, let's say you're 62 and are still working with a $100,000 salary. That almost fills up the 22% bracket.

If you convert another $50,000 to a Roth IRA while earning that salary, you'll push yourself into the 24% bracket. And if you're looking to convert $200,000 a year on top of your $100,000 salary, a lot of that conversion will be happening at a 32% tax rate.

To put all this another way, if you can't convert at a lower rate than what you'd potentially be looking at on RMDs, a Roth conversion may not pay unless you have strong legacy goals. That's because there can be significant benefits to leaving a Roth IRA to heirs rather than a traditional retirement account balance.

3. How charitable do I plan to be in retirement?

If charitable giving is a big part of your retirement plans, you may not want to convert too much of your savings to a Roth IRA. That's because traditional IRAs let you do qualified charitable distributions (QCDs), which allow you to satisfy RMDs without increasing your taxes.

With QCDs, you send money from your IRA to a charitable organization. There's no sense in converting funds you're looking to donate, since you'll simply incur an extra tax bill for no good reason.

While Roth conversions can be a great source of savings and flexibility, it's important to do them carefully. Run through these questions first so you can move forward with more confidence.

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You'll often hear that retiring on Social Security alone is no easy feat. Those benefits will generally only replace about 40% of your wages if you earn an average salary. And most retirees can't live comfortably on a 60% pay cut.

If you do end up retiring on just Social Security, you may find yourself hoping for large cost-of-living adjustments (COLAs) year after year. After all, larger COLAs mean more money in your pocket.

Image source: Getty Images.

But larger Social Security COLAs aren't actually the good thing you think they are. Here's why you may not want to wish for them.

The problem with giant COLAs

When you're working and get a huge raise, it's something to celebrate. But in the context of Social Security, large raises aren't automatically so wonderful.

The reason? Social Security COLAs are tied directly to inflation. The more living costs rise from one year to the next, the more Social Security benefits tend to go up.

But the important thing to understand is that any large COLA you get will come at the expense of higher price increases. So all told, you're generally not looking at a net financial gain when you receive a larger COLA.

Let's say your Social Security check goes up $60 a month, but groceries, gasoline, and utilities start costing $60 more per month as well. In that case, you're not gaining anything. At best, you're breaking even.

Also, Social Security COLAs are based on changes to the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W. But the CPI-W doesn't typically reflect the costs seniors on Social Security face. Rather, as the index's name implies, it's geared more toward working folks.

Because of this mismatch, Social Security benefits tend to lose out on buying power over time, even during periods when COLAs are larger. That's because the expenses Social Security recipients tend to spend a lot on, like healthcare, often outpace inflation.

Don't bank too heavily on COLAs

If you're on Social Security, it's easy to see why you'd hope for large COLAs year after year. But you may be better off hoping for moderate inflation and raises so your budget isn't too squeezed.

Of course, the optimal situation is to rely on Social Security for only a portion of your retirement income and supplement those benefits with IRA or 401(k) withdrawals, a pension, part-time work, or another source of income. But if Social Security constitutes most or all of your senior income, it's important to be realistic about what COLAs are designed to do -- and recognize that larger ones aren't always a blessing.

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Claiming Social Security benefits isn't so straightforward. That's because there are different filing ages you can choose from.

You can begin collecting Social Security once you turn 62. But if you were born in 1960 or later, you may want to wait until you turn 67 to file for benefits. Here's why.

Image source: Getty Images.

You won't have to worry about reduced monthly checks

The primary benefit of waiting until 67 to claim Social Security is that it's your full retirement age if you were born in 1960 or later. That means you'll get the monthly checks you're eligible for based on your earnings history without a reduction.

That's an important thing for a couple of reasons. First, Social Security is a guaranteed income source.

Your savings, for example, could run out over time if your investments don't perform well or the market crashes repeatedly while you're drawing from your portfolio. But Social Security is meant to pay you a monthly benefit for the rest of your life, no matter how long it is and how the market does.

To put it another way, the more Social Security you collect, the more peace of mind you might gain.

Also, Social Security benefits have built-in inflation protection. Each year, those benefits are eligible for a cost-of-living adjustment (COLA) that's designed to match price increases.

If you file for Social Security at 67, your monthly checks will be higher than if you claim at an earlier age. That means your COLAs should also be higher (not on a percentage basis, but on a dollar basis).

Earning money won't be a problem

Another good reason to claim Social Security at 67? Once you reach full retirement age, you can earn any amount of money while collecting benefits without having to worry about the program's earnings test.

If you're receiving Social Security prior to full retirement age, earning more than a certain amount of money could result in withheld benefits. But that earnings test doesn't apply to you once you've reached full retirement age. At that point, you could earn $300,000 a year and still get your complete Social Security check.

While filing for Social Security at 67 isn't automatically right for everyone, there are plenty of good reasons to go that route. So you may want to push yourself to hold off until full retirement age, especially if you're not super confident that your savings will last throughout retirement or you simply want more of a guaranteed paycheck to enjoy for life.-

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By the time many people reach age 70, they've already been collecting Social Security for years. But if you're nearing your 70th birthday or recently turned 70 and haven't started benefits yet, there's a key Social Security rule you need to know about.

There's no sense in delaying Social Security past age 70

The earliest age you can claim Social Security is 62. And you'll get your monthly benefits without a reduction at full retirement age, which is 67 for anyone born in 1960 or later.

Image source: Getty Images.

But each year you wait to file past full retirement age boosts your monthly checks by 8%. So it often pays to wait on Social Security, especially if you have reason to believe you'll live a longer life, such as being in great health and having a strong family history.

Those delayed retirement credits stop accruing at age 70, though. So if you're 70 already and you haven't signed up for Social Security yet, you should file for benefits immediately.

If you turned 70 a few months ago and haven't started benefits yet, don't panic. Social Security will generally pay up to six months of benefits retroactively, so you may not lose out on any income if you didn't sign up as soon as your 70th birthday arrived. But if that's the case, you certainly don't want to delay any longer, since it won't put any more money in your pocket.

You don't have to worry about working

You may have been holding off on claiming Social Security because you're still working. Even if you want to continue working, that's not something to worry about.

Social Security recipients are allowed to earn money from a job while collecting benefits. If you do so before reaching full retirement age, you'll be subject to an earnings test. And exceeding its limit could mean having benefits withheld.

However, at 70, you're well beyond full retirement age. This means you can earn any amount of money you want without a negative impact on your monthly Social Security checks.

That said, if you're collecting a boosted benefit along with a paycheck from a job, your total income may be high enough that you're subject to taxes on your Social Security payments. If you're on Medicare, a higher income could also result in surcharges on your premiums.

So if you're expecting your income to increase substantially after filing for Social Security, you may want to talk to a professional to discuss strategies for minimizing the tax hit.

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A lot of people earn their way into Social Security by working for many years and paying taxes on their wages. But even if you don't have enough of a work history to qualify for Social Security, you may be eligible for spousal benefits if you're married to someone who's eligible, or if you're a qualifying divorcee.

But as complicated as Social Security's rules are, the rules surrounding spousal benefits can be even trickier. So it's important to understand how they work. Here are two rules in particular that tend to catch people by surprise.

Image source: Getty Images.

1. You can't claim spousal benefits until your spouse does

Age 62 is generally the earliest age you can claim Social Security, whether you're signing up for spousal benefits or benefits based on your own earnings record. But if you're married, one thing to know is that you can't claim spousal benefits until your spouse starts receiving Social Security benefits.

The rules are different when you're divorced. In that case, you may not have to wait on your ex-spouse to file. But before you land on a specific filing age for spousal benefits, talk to your spouse if you're married and make sure you understand his or her filing plans.

2. You can't get delayed retirement credits for spousal benefits

When you're claiming Social Security based on your own earnings record, there's a big incentive to delay your claim past full retirement age, which is 67 for anyone born in 1960 or later. Each year you wait results in a permanent 8% boost to your monthly checks, up until age 70.

But the delayed retirement credits you can get for waiting don't apply to spousal benefits. They only apply to benefits you're claiming on your own wage history.

The maximum value of Social Security spousal benefits is 50% of your spouse's full retirement age benefit. And you can collect that amount if you wait until full retirement age to sign up. But there's no sense in delaying a spousal benefit claim past that point.

So let's say your spouse is eligible for $3,000 a month at full retirement age. At your full retirement age, you can collect $1,500 a month in Social Security. But if you wait a year to file for spousal benefits, that amount won't change.

Spousal benefits can be a lifetime for married couples in retirement, providing extra money to cover expenses. Make sure you understand how spousal benefits work so you're able to file at the right time and make the most of that income stream.

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There's a reason many seniors get excited about turning 62. Age 62 is the earliest age to claim retirement benefits from Social Security.

But before you gear up to file for benefits, it's important to understand the role Social Security is meant to play in your retirement. It's also crucial to recognize the financial impact of taking benefits as early as possible.

Image source: Getty Images.

What to expect out of Social Security

One big misconception about Social Security is that it's meant to replace your pre-retirement income in full. If you earn an average paycheck, you can expect Social Security to take the place of roughly 40% of it. And that assumes you don't shrink your benefits by filing early.

You're eligible for your Social Security benefits in retirement without a reduction if you wait until your full retirement age to file. If you were born in 1960 or later, that age is 67.

If you file for Social Security ay 62 instead, you'll reduce your benefits by about 30%. And that reduction will generally remain in effect for the rest of your life.

Not only might smaller monthly benefits make it harder to manage your expenses, but they also give you less inflation protection. Social Security benefits are eligible for a cost-of-living adjustment each year. But the smaller your monthly payments are to begin with, the less money each of those annual raises is apt to put in your pocket.

Be careful when filing for Social Security early

It's not automatically a bad idea to claim Social Security at 62. If you're unable to work or have another reason for needing the money right away, it could make sense to file at that point.

But you should know that if you don't have a lot of income outside of Social Security, claiming benefits at 62 could mean struggling to pay your bills throughout retirement. So it pays to consider waiting if you don't have savings, a pension, or something similar to fall back on.

Finally, do know that if you're married and are the higher earner in your household, claiming Social Security at 62 could hurt your spouse financially. If your spouse outlives you, they'll be entitled to survivor benefits from Social Security equal to the benefit you got to collect while you were alive. So if you shrink that benefit substantially by filing at 62, you'll leave your life partner with that much less money as well.

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For seniors on Social Security, the program's annual cost-of-living adjustments are extremely important. They're what allow benefits to keep pace with inflation as costs continue to rise.

In 2026, Social Security benefits received a 2.8% COLA. And many seniors are no doubt hoping for a larger raise in the new year.

Image source: Getty Images.

At one point, 2027 COLA estimates were coming in as high as 4.7%. But those estimates have since shifted downward. Here why -- and what it means for Social Security recipients.

What the latest COLA numbers look like

Based on inflation data from the month of July, independent Social Security analyst Mary Johnson lowered her 2027 COLA forecast to 3.4%. Johnson's forecast two months prior was 4.7%.

The Senior Citizens League, meanwhile, lowered its COLA forecast in August to 3.6%, down from the 3.8% projection it put out in both June and July.

The reason these numbers are shifting is simple -- inflation has been cooling. Drops in energy and gas prices pulled inflation numbers lower in July. And since Social Security COLAs are linked to inflation data directly -- specifically, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) -- it makes sense for COLA projections to get reduced as a result.

A smaller COLA isn't necessarily a terrible thing

Seeing COLA projections in the mid 3%-range might read like a blow to seniors who were initially hoping for a larger boost in the new year. But one thing to remember is that a smaller COLA is indicative of less rampant inflation.

To put it another way, a 4.7% COLA would come at the expense of higher prices in the near term. A smaller COLA could mean relief at the pump and supermarket for retirees who are trying to make ends meet this year.

Remember, Social Security COLAs are backward facing. Inflation has been outpacing the 2.8% COLA that came through at the start of the year. A 3.4% COLA in 2027 would mean inflation didn't outpace the current COLA by too much.

Of course, we won't have an official COLA until mid-October, since that number is based on third quarter CPI-W data. August and September readings are part of the equation, so July's cooler inflation report isn't the only determining factor.

But all told, it may be time for seniors to start gearing up for a more modest 2027 COLA than initially expected. And they should also realize that while a smaller raise might seem like bad news at first, there's a very clear silver lining.

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There's a reason some retirees are tempted to claim Social Security at 70, even though they can start collecting benefits as early as age 62.

Age 70 is generally considered the "latest" age to file for Social Security, even though you can technically delay your claim beyond that point. And it's the filing age that lets you maximize your benefits.

Image source: Getty Images.

You're eligible for your benefits without a reduction at full retirement age, which is 67 if you were born in 1960 or later. But for each year you delay Social Security past full retirement age, until you turn 70, those payments get an 8% boost that stays with you for life.

Despite that upside, filing for Social Security at 70 doesn't make sense for everyone. Here are two reasons not to make 70 your filing age.

1. You have health issues and don't expect to live all that long

Waiting until age 70 to claim Social Security means scoring larger checks. But it comes at the cost of many months of lost payments. For that to make financial sense, you need to live long enough to recoup those lost payments and come out ahead.

If you think you might live until your mid-80s or beyond, then claiming Social Security at 70 could pay off. But if you have health problems and don't expect to live past your late 70s, then filing for Social Security sooner could result in larger lifetime benefits. In fact, in that situation, it could even pay to take benefits before full retirement age, despite the reduced monthly checks.

2. You need the money sooner

While delaying Social Security until 70 gives you a larger guaranteed retirement paycheck for life, you need a way to cover your bills until your 70th birthday arrives. If you find yourself out of a job before 70 and don't have enough savings or other income streams to support yourself in the interim, then filing for Social Security earlier is smart.

Let's say you're laid off at age 65 and don't have savings. If your essential needs total $2,400 a month and your Social Security checks need to reach that amount, you should file right away.

Racking up $2,400 a month in debt, or nearly $29,000 a year, could cost you much more in interest over time than what you gain via boosted Social Security checks -- especially if you have to incur that debt for many years.

When delaying Social Security until 70 is feasible and makes sense from a life expectancy standpoint, it can be a savvy financial move. But in the situations above, you're generally better off claiming benefits sooner.

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I was talking to some friends the other day about juggling college and retirement savings, and one of them joked, "What retirement savings?" But as someone who writes about retirement for a living, I didn't find the joke all that funny.

The reality is that far too many people neglect their retirement savings and plan to fall back on Social Security instead. And while there's nothing wrong with factoring those benefits into a retirement income plan, they shouldn't be the focus of it.

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Why you can't rely too much on Social Security

One big misconception about Social Security is that it's meant to replace most or all of your pre-retirement paycheck. In reality, if you earn a pretty average wage, you can expect Social Security to replace about 40% of it.

Now, think about your current expenses. Some might drop in retirement. But do you really think you can afford a 60% pay cut? If the answer is no, then you'll need a more robust income plan -- one that doesn't mean getting most or all of your money from Social Security.

This is especially important today given that Social Security faces the possibility of benefit cuts, and soon. The program's Trustees recently reported that benefits could face a 22% reduction as early as 2032 if lawmakers don't intervene.

Congress has never allowed Social Security to cut benefits before, so there's a good chance a broad reduction will be preventable this time around, too. But that's not something any pre-retiree should bank on.

Make a solid effort to save

Trust me when I say I understand that saving for retirement isn't easy -- not when you're balancing other expenses and persistently rising costs. But if you don't try to save a decent chunk of money for retirement, you might end up cash-strapped down the line -- even if Social Security doesn't cut benefits at all.

If you haven't begun funding an IRA or 401(k), an easy way to get started is to contribute a small amount automatically each month. It can be as little as $25 or $50. The key is to get into the habit of saving and then increase contributions as you're able to.

In fact, if you're behind on savings and can only manage, say, $50 a month this year, pledge to bank your entire raise next year. And then repeat the following year.

There's absolutely nothing wrong with incorporating Social Security into your retirement income plan, because even if benefits are cut, you should still be able to receive the bulk of what you're entitled to. But making those benefits your sole or primary source of retirement income is a move you might sorely regret.

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If you're nearing retirement and find yourself sitting on a lot of money in a traditional IRA or 401(k), you may have a problem on your hands. Granted, some might say it's a good one to have. But a large traditional IRA or 401(k) balance means you may be looking at sizable required minimum distributions, or RMDs.

The problem is that RMDs can drive up your taxes and cause other consequences, too, such as having to pay more for Medicare. So it's important to be mindful of ways to minimize RMDs.

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One strategy is to do a Roth conversion before RMDs begin. But if you're going to go that route, there's one big mistake you'll want to make sure to avoid.

Don't convert your way into a massive tax bill

A Roth conversion could benefit you in a few ways. Not only can it help you minimize or avoid RMDs, but it can also give you access to savings you can withdraw from tax-free.

The problem with Roth conversions is that they're a taxable event. And if you cram a large conversion into a single tax year, or even a few years, you might end up paying more for that conversion than necessary.

Let's say you're single and are nearing retirement with a $100,000 salary that constitutes your only income. Based on your salary alone, you're in the 22% tax bracket this year.

Now, let's say you have a $750,000 balance to convert to a Roth IRA. If you convert one-third of that at the same time you're earning a $100,000 salary, your taxable income will be $350,000. That bumps you into the 35% tax bracket, which may be a higher rate of tax than what you'd pay on traditional IRA withdrawals or RMDs in retirement.

Make sure the math actually works

While Roth conversions can be a great thing that leads to more financial flexibility in retirement, they should also make sense mathematically. If you don't spread out your conversions, you could end up paying a higher rate of tax on the money you move over than what you'd pay in retirement.

In the situation above, spreading a $750,000 conversion across eight to 10 years could be a good solution. Even if you're converting $100,000 a year, that, coupled with a $100,000 salary, puts you in the 24% tax bracket based on current tax rates.

Of course, tax rates can wiggle over time. The point, however, is to be mindful of how you're converting and make sure you're not paying so much tax that you largely negate the benefit.

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At this point, many Social Security recipients are eager to know what next year's cost-of-living adjustment, or COLA, will amount to. And while they'll need to sit tight until October for word of an official COLA, there are estimates out there now on next year's raise.

Independent Social Security analyst Mary Johnson says that based on recent inflation readings, the 2027 COLA will be 3.4%. The Senior Citizens League, an advocacy group, is shooting a bit higher with its 3.6% estimate.

Image source: Getty Images.

Either way, it's likely that next year's COLA will come in higher than the 2.8% raise Social Security recipients got at the start of 2026. But whether that's a good thing is questionable.

Why a larger COLA isn't automatically good news

When you're working and you get a raise based on merit, a larger boost is better than a smaller one. But when you're on Social Security, a larger COLA isn't necessarily something to celebrate for one big reason -- it comes at the cost of higher price increases.

Social Security COLAs are tied to inflation directly. So when COLAs are more generous, it means prices are rising more quickly. A modest COLA, on the other hand, isn't necessarily bad news, since it means prices aren't increasing as rapidly.

In fact, it's important to recognize that Social Security COLAs are merely meant to help benefits match inflation. They're not designed to improve your financial situation. To do that, you'll need to take active steps like working part-time, choosing smart investments, or reducing spending.

Don't get hung up on any given number

Even though it's looking more likely that 2027's Social Security COLA will come in somewhere in the mid-3% range, that's not a certainty. If inflation cools between now and late September, next year's COLA could be smaller. If inflation picks up, the 2027 COLA could be higher.

The latter may be what more seniors want. But again, it's not necessarily something to wish for.

Remember, this year's 2.8% COLA is set in stone. If inflation remains elevated at a higher level than that, it could strain your finances in the near term if you don't have much income outside of Social Security.

A situation no one can fix

Either way, the 2027 COLA is shaping up to be a mixed bag for retirees. And because of the nature of COLAs, there's not much that can be done about that. If you're eager for a large raise, do realize that it may not do your finances much good, and that you're better off taking matters into your own hands.

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Saving for retirement in a traditional individual retirement account (IRA) or 401(k) is appealing because you get an up-front tax break on your money. But once you turn 73 or 75, depending on the year you were born, you'll be forced to take required minimum distributions, or RMDs, from a traditional retirement account.

RMDs can be a hassle if they're not planned for carefully. In fact, here are three of the worst RMD mistakes retirees risk making.

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1. Missing the deadline

The deadline for taking RMDs each year isn't some random date that's tough to remember. Rather, it's Dec. 31.

The problem, though, is that December can get busy. And if you're too wrapped up in holiday planning or other things to think about RMDs, you risk forgetting to take them in time.

A missed RMD could result in a 25% penalty on the sum you don't remove from your IRA or 401(k). For example, a $20,000 RMD you don't take by Dec. 31 could cost you $5,000.

To avoid that penalty, consider putting your RMDs on autopilot. Most financial institutions let you set up automatic RMDs on a schedule that works for you, whether it's quarterly withdrawals or annual distributions.

2. Deferring the first RMD

You're allowed to defer your first RMD to April 1 of the year following your 73rd or 75th birthday (whichever one you first become liable for RMDs). Doing so might seem like a good idea, since it means deferring a tax bill. But it's a move that might backfire.

If you defer that initial RMD, you'll have to take two RMDs the next year. If those withdrawals are substantial, you could end up in a very high tax bracket, causing those RMDs to cost you more. So, before you put off your initial RMD, you may want to talk to a tax professional or financial advisor about whether taking it on time makes more sense.

3. Forgetting about QCDs

The problem with RMDs is that they're a taxable event -- unless you donate the money to a charity directly via a qualified charitable distribution, or QCD. If you go that route, you can support a cause you care about by increasing your tax burden.

It pays to look at QCDs if you don't need to spend your RMD and are likely to be in a higher tax bracket once that mandatory withdrawal is taken. While you can do QCDs only from an IRA, you can simply roll 401(k) funds into an IRA to pull one off.

RMDs can be less painful financially when they're planned carefully. Be mindful of the annual deadline and use different strategies to minimize the tax hit RMDs can cause.

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The tricky thing about saving for retirement is that what looks like a lot of money on paper may not be a lot of money in practice. For example, $100,000 in savings is a lot of money. But in the context of what could be a 20-year retirement or longer, it's actually not a particularly large sum.

By the time you turn 60, you may have spent years funding a 401(k) plan for retirement. And you may be curious to know how your balance stacks up.

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If you're 60 with more than $257,400 saved for retirement, it means your 401(k) balance is larger than the typical person your age, at least based on Fidelity's data. But if your balance isn't that much larger, it doesn't necessarily mean your work is done.

Why you might need more savings than you think

It's easy to argue that $257,400 is a very respectable sum of money. But remember, you might need to stretch that sum over a few decades.

If you use the popular 4% rule to manage your savings, a $257,400 balance gives you an annual income of about $10,300 per year. That's not a huge sum of money, even when you factor in Social Security. (For context, the average benefit today would add about another $25,000 a year to your income, bringing your total to roughly $35,000.)

What this means is that if you have, say, a $275,000 retirement savings balance at 60, you may want to continue trying to sock money away for your senior years -- even if you've saved more than the average person your age.

How to boost retirement savings later in life

If your 401(k) balance is below $257,400, or it's a number you feel isn't adequate, the good news is that you may be able to eke out more savings before your time in the workforce comes to an end.

Start by assessing your spending. Are there subscriptions you can cancel or a cable package you can downgrade? Small changes can help.

Next, think about bigger changes. Have you toyed with downsizing? If you have equity in your home, selling a larger place and buying a smaller one could lower your housing costs while giving you a sum of money to add to your nest egg.

Finally, consider changing your retirement date. If your initial plan was to end your career at 62, which is the earliest age to start collecting Social Security benefits, you may want to consider waiting until 65, 67, or even longer, depending on your health and other circumstances.

Remember, too, that the longer you wait to start tapping your 401(k), or wherever you're housing your savings, the more that money can grow. So, if you aren't thrilled with the amount you've accumulated thus far, working longer and holding off on touching your money could be one of the most effective tools at your disposal.

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If your 67th birthday is getting close, it could signal a significant milestone in the context of Social Security. Age 67 is Social Security's full retirement age for anyone born in 1960 or later. So if you'll be turning 67 in 2027 or shortly thereafter, you may be gearing up to file for benefits.

But just because you're reaching 67 doesn't mean you should claim Social Security right away. There's a big upside to waiting you should know about.

Image source: Getty Images.

Age 67 isn't necessarily the end of the road

At full retirement age, you're eligible for your monthly Social Security benefit without a reduction. But you should know that for each year you delay your Social Security claim, your benefits get a permanent 8% increase.

Now, this incentive runs out once you turn 70. But if you hold off on claiming Social Security at 67 and instead wait three years, you could give your monthly checks a 24% boost.

Not only might waiting increase your own Social Security benefit, but if you're the higher-earning spouse in your household, it could also lead to a larger survivor benefit. That's something to strongly consider if your spouse is likely to outlive you.

At 67, you get more leeway

Not only can waiting until 67 to claim Social Security ensure that your benefits aren't reduced, but there's another perk. If you're planning to continue working in some capacity while collecting Social Security, you won't be subject to an earnings test if you file at 67.

That means you can earn any amount of money you want without having benefits withheld. For claimants who work prior to full retirement age, there are earnings limits to worry about every year.

Celebrate the big day, but don't rush into Social Security

All told, age 67 is a big one in the context of Social Security. But it doesn't mean that it's the best age to sign up for benefits.

If you don't have much retirement savings, delaying your claim past age 67 could result in boosted checks that make it easier to cover your costs in the long run. And if you have a spouse to protect financially, waiting could also be smart.

Finally, remember that Social Security benefits are eligible for a cost-of-living adjustment, or COLA, each year. The larger your monthly checks are to begin with, the more valuable those COLAs are likely to be, which is another reason to consider waiting even when you're eligible to collect your monthly benefits in full.

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If your retirement income plan depends heavily on Social Security, the latest news on the program's finances may be throwing you for a loop. The Social Security Board of Trustees recently reported that the program may have to cut benefits by 22% in just a few years if Congress doesn't manage to intervene.

Thankfully, lawmakers have always managed to prevent Social Security cuts in the past. And there's a good chance they'll end up staving off cuts this time around, too.

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But that's not a given. And it's important to brace for potential cuts in case they end up happening.

In light of potential cuts, you may be inclined to claim Social Security as early as possible. But that's a move that might end up hurting you.

Filing early isn't necessarily the solution

The earliest age you can claim Social Security is 62. But you won't get your monthly benefits without a reduction until full retirement age, which is 67 if you were born in 1960 or later.

You might think it's best to file for benefits as early as possible, given the possibility of Social Security cuts. But that will shrink your benefits even more.

Your monthly Social Security checks will be reduced by roughly 30% if you file at 62 rather than wait until 67. If there's a broad 22% cut after that, your net paycheck will be even smaller.

So if your plan is to get ahead of benefit cuts by filing for Social Security at 62, please do yourself a favor and rethink it. You might end up shrinking your monthly checks even more, making it harder to cover your costs.

Filing early can sometimes make sense

Of course, it's not a universally bad idea to claim Social Security at 62. If you don't expect to live a long life or have a pressing need for money, filing as soon as you're eligible could be a sensible move.

On the other hand, if you have loads of retirement savings and plan to use your Social Security benefits for nonessentials like vacations or entertainment, it may not be a bad idea to start getting that money while you're in better health to enjoy it.

The point should not be to claim Social Security early for the express purpose of squeezing out more money before benefits get slashed -- if they get slashed. Over time, you might end up with a lot less income if you go that route.

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Social Security's 2027 cost-of-living adjustment, or COLA, won't be announced until October 2026. And there's a reason for that.

Social Security COLAs are based on third-quarter readings from the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W. When there's a rise in the CPI-W from one year to the next, benefits become eligible for a boost. But since we won't have a complete set of third-quarter data until October, the Social Security Administration (SSA) won't be able to confirm an official COLA until then.

Image source: Getty Images.

Still, there are some early clues as to what next year's COLA might look like. Independent Social Security analyst Mary Johnson estimates that next year's COLA will be 3.4%. The Senior Citizens League, an advocacy group, meanwhile, thinks next year's COLA will be 3.6%.

Since these estimates are fairly similar, it's fair to assume that they may end up being pretty accurate if inflation doesn't shift heavily in August and September. And if that's the case, it could set the stage for a nice boost to the typical senior's monthly Social Security check.

How much might the typical Social Security benefit rise?

It's important to recognize that the projections above are just that -- projections. However, if inflation holds steady, either number could come to be.

Meanwhile, the average monthly Social Security benefit for retirees as of July 2026 is about $2,086. If we use Johnson's 3.4% COLA estimate, that means the average Social Security check could rise by about $71 in 2027. If we use the 3.6% from the Senior Citizens League, it boosts the average Social Security check by $75.

Either increase would be far more substantial than the typical increase in 2026, since benefits received only a 2.8% COLA this past January.

There's another piece of the puzzle missing

It's too soon to know how much the average Social Security benefit will increase in 2027 for two reasons. First, we don't have an official COLA. Second, even once that number comes in, seniors on Medicare will need to account for potential Part B premium hikes before calculating their net raises.

For people enrolled in Social Security and Medicare at the same time, Part B premiums are paid out of Social Security checks directly. So if there's a big increase in the cost of Part B, it could lead to a smaller raise.

This year, the cost of Medicare Part B rose $17.90 from 2025's cost. Now, let's say next year's COLA comes in at 3.6%, thereby boosting the typical Social Security benefit by $75. If the cost of Part B increases by $18, it'll whittle that $75 increase down to $57 for Medicare enrollees.

Stay tuned for more information

The SSA is expected to announce 2027's COLA officially on Oct. 14, provided there's no delay in September's CPI-W data (as there was last year due to the government shutdown). But even once a COLA is announced, it may be too soon to calculate the typical net benefit increase because we may not know yet how much Medicare Part B will cost.

Last year's Part B increase, for example, was not announced until mid-October. So it could be weeks after the COLA announcement until seniors are able to get the full picture.

For now, anyone looking to establish a budget for the new year should err on the side of caution. That means assuming 2027's Social Security COLA will end up on the lower side and that the cost of Part B will increase substantially.

Assuming the worst on both fronts could mean underestimating how much your benefits will rise. But if you're able to get by on that smaller number and your net COLA comes in higher, you'll be in that much better a position.

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So you worked hard, saved well, and have begun making plans to resign from your job and bring your career to a close. But what happens if the stock market tanks just as you're about to begin the final countdown toward retirement?

Retiring into a market crash can be risky. If you're forced to sell assets when their value has decreased substantially, there's a chance your portfolio might never fully recover. That could, over time, put you at risk of depleting your retirement savings.

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But a stock market crash doesn't automatically mean you'll need to postpone your retirement. With the right income plan, you may be able to forge forward despite unfavorable market conditions.

It's a matter of how your money is allocated

If you have the bulk of your money in the stock market, or all of it, then a poorly timed crash could derail your retirement plans. But if you have a decent cash cushion and margin of safety, you don't automatically have to put off retirement because of a market crash.

Let's say your spending needs amount to $100,000 a year, and you have a $2.5 million portfolio. That amounts to a 4% withdrawal rate, which experts have historically considered safe. However, if accessing that $100,000 means having to sell that many assets at a loss, you could put your portfolio at risk.

On the other hand, let's say you knew going into retirement that you'd need $100,000 a year to cover your expenses, and you allocated $300,000 of your $2.5 million to cash. In that case, you may not have to delay retirement even with the market being down. You could, in that situation, live off your cash reserves for three full years without having to sell a single investment at a loss.

In fact, this is why financial experts commonly recommend shifting into safer assets ahead of retirement and reducing stock market exposure. If, by the time you're about to retire, you have a few years' worth of living costs in cash coupled with a decent bond allocation, you may end up in a strong position to ride out stock market downturns.

Another thing to consider is that if you're able to claim Social Security, that reduces potential portfolio strain. If you're married and looking at $80,000 a year in benefits between you and your spouse, even if you don't have a particularly large cash allocation, you may still be safe to retire on schedule.

If you're looking at pulling $20,000 a year from your portfolio for a few years during a down market, for example, that's not nearly the same thing as withdrawing $100,000 per year. And you may have enough income in your portfolio from dividends to avoid having to unload assets when their value is down.

Of course, you do want to be careful with Social Security. Though you can claim benefits as early as age 62, those monthly checks will be reduced if you don't wait until full retirement age to file, which is 67 if you were born in 1960 or later. But if you're retiring in conjunction with reaching full retirement age, relying on Social Security could make a market downturn easier to cope with.

You can't control what the market does

A stock market crash right as you're about to retire might seem like terrible timing. And unfortunately, it's a situation you can't exactly control.

What you can control, though, is how you allocate your portfolio ahead of retirement. Maintaining the right cash reserves and bond allocation could make it possible to end your career on schedule even if market conditions are far from favorable. And using Social Security as a leverage point could also make it possible to stick to your plans in a situation like this.

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If you're on Social Security, there's a big number you're probably keeping an eye on -- the 2027 cost-of-living adjustment, or COLA.

Earlier this year, Social Security benefits got a 2.8% COLA. And many people are hoping next year's raise will be much more generous.

Image source: Getty Images.

So far, estimates are, in fact, pointing to a larger COLA in 2027. But it's not a given that next year's raise will be larger than 2026's. And it's important not to count on any specific COLA until the Social Security Administration makes one official.

Current estimates point higher, but things could change

The most recent Social Security COLA estimates indicate that next year's raise could be significantly higher than 2.8%.

The Senior Citizens League, an advocacy group, projects that next year's COLA will be 3.6%. Mary Johnson, an independent Social Security analyst, is calling for a 3.4% COLA in 2027.

Both the Senior Citizens League and Johnson lowered their COLA projections following a cooler inflation report in July. What this means, though, is that if inflation continues to slow down in August and September, it could set the stage for a smaller COLA in 2027.

Now, for next year's COLA to come in lower than 2026's, inflation would have to cool substantially. Given recent numbers, it's unlikely that 2027's COLA will be below 2.8% -- but it is possible.

Don't start making financial plans just yet

Social Security COLAs are based on inflation data from July, August, and September. Given that we only have one-third of that data already, it's soon to be making financial plans based on any specific raise.

If you create a 2027 budget around a 3.4% COLA, for example, and next year's raise ends up being just 3.1%, it could throw your numbers out of whack. So a better bet is to build a flexible budget until the SSA makes an official COLA announcement and that number is locked in.

That announcement is expected to happen on Oct. 14 unless something happens to delay September's inflation report. Last year, a government shutdown forced the SSA to postpone its COLA announcement, but hopefully the same thing won't happen this time around.

Once you see what the actual number looks like, you can apply that COLA to your specific benefit to see what sort of boost you may be looking at. Just keep in mind that if the cost of Medicare Part B goes up and you're enrolled in Medicare, you can expect less of a net COLA since that premium gets paid out of your monthly Social Security check.

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A lot of people pledge to save well for retirement only to have life get in the way. Stagnant wages, surprise expenses, and the ever-growing cost of raising children could all lead to a situation where retirement is near and you're unhappy with the amount you have saved.

But a lower IRA or 401(k) balance than you initially aimed for doesn't have to mean your retirement will be awful. It just means you may need to make some adjustments. Here's how to compensate if you're convinced you haven't saved enough for retirement.

Image source: Getty Images.

1. Delay your Social Security claim

The more money you get from Social Security, the easier it might be to make up for a smaller retirement plan balance. While you're eligible for your monthly benefits without a reduction once you reach full retirement age, which is 67 for anyone born in 1960 or later, delaying your claim beyond that point boosts your benefits by 8% per year you wait.

Now, once you turn 70, you can no longer accrue delayed retirement credits from Social Security. That means that if your full retirement age is 67, the maximum you can snag is a 24% increase. But that's still significant, and it's a great way to make up for a smaller IRA or 401(k).

2. Plan to work in some capacity

If you're convinced your savings won't provide enough retirement income, planning to work is a good fallback option. And you don't have to commit to a steady part-time job to make a difference in your financial situation.

You could choose to take a seasonal job that's lucrative, working two months out of the year and taking the other 10 months off. Or you could dabble in the gig economy and work during times when you're less busy.

3. Turn your home into an income source

You'll often hear that renting out a portion of your home is a great way to generate retirement income. But that also means having to share your home with someone else, which may not be ideal.

The good news? There are ways to monetize your home without taking in a permanent tenant.

If you're in an area that's close to jobs and parking is hard to find, you can rent out the spare spot in your driveway. And if you have a fantastic pool you don't use all that often, look into renting it out by the hour or afternoon.

It's not a good feeling to think that you're short on retirement savings. But you can take steps to boost your income. You may just need to get creative or, in the case of Social Security, exercise patience in taking benefits.

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