News about retirees

The 2027 Social Security cost-of-living adjustment (COLA) is 3.6%, which the article calls fairly large by historical standards and the fifth-highest in 35 years. Average monthly benefits for retired workers were about $2,087.52 in August, roughly $25,050 a year, so the increase adds about $901.80 annually. The higher adjustment follows the Iran war, which pushed oil prices and inflation up and led the Federal Reserve to raise rates once, with another hike expected before year-end. The Senior Citizens League says 2026 benefits are worth only about $0.836 on the dollar compared with 2016, a 13.7% loss in purchasing power over a decade, and argues a CPI-E measure would better reflect seniors' costs. The article concludes that high COLAs may not fully solve affordability problems for retirees.

The article calculates how much capital a 63-year-old would need in an IRA rollover to generate $70,200 a year, a hypothetical $5,850 a month, without buying an annuity. Required amounts vary by yield, from $585,000 at 12% to $2,265,000 at 3.1%. Examples include about $1,293,000 for 30-year Treasuries at roughly 5.4%, $2,265,000 for SCHD at about 3.1%, about $975,000 for JEPI at 7.2%, and about $605,000 for QYLD at 11.6%, though the article warns that covered-call funds can shrink principal. Subtracting average Social Security income of $2,170 a month cuts the needed portfolio to as little as $368,000 at a 12% yield.

The 2027 Social Security cost-of-living adjustment (COLA) is 3.6%, well above expectations at the start of 2026, and would add about $901.80 a year to average retiree benefits of roughly $25,050. It is based on CPI-W data for July to September, and the article links the higher inflation to the Iran war, which pushed up oil prices and led the Federal Reserve to raise rates once, with another hike expected before year-end. The 3.6% figure is the fifth-highest COLA in 35 years, following 5.9% in 2021 and 8.7% in 2022. Still, the Senior Citizens League found benefits in 2026 were worth only about $0.836 on the dollar compared with 2016, a 13.7% loss in purchasing power that it partly attributes to the CPI-W formula. The article concludes that high COLAs have helped somewhat but likely will not solve retirees' affordability problems.

Roth conversions move pretax or nondeductible IRA money into a Roth IRA, which can potentially reduce lifetime taxes but can also raise income in the conversion year, so the strategy isn't right for everyone. As of March 31, Roth conversions were up 41% from the same period in 2025, according to Fidelity data covering 19.6 million IRA accounts. Advisors warn that extra income can phase out tax benefits such as education credits, the SALT deduction worth up to $40,400 for 2026, and the $6,000 senior deduction, and can also raise Medicare premiums. For ACA marketplace enrollees, income above 400% of the federal poverty line, about $63,000 for a single person or $129,000 for a family of four in 2026, can cost them the premium tax credit, so they should proceed with caution.

Covered call ETFs, which hold stocks and sell call options to generate regular income, have attracted investors seeking monthly cash flow, but they can create tax surprises. Their distributions may include ordinary dividends, capital gains and return of capital, and return of capital reduces cost basis, so tax is deferred until shares are sold, often leaving a higher capital gains tax bill later. Advisers quoted in the article warn that after-tax returns may fall short of expectations and that investors often discover the tax impact only at tax time, so holding these funds in tax-deferred accounts such as a traditional IRA is suggested. The article also points to the Morningstar Tax Cost Ratio, which measures how much taxes on distributions reduce a fund's annualized return.

Social Security benefits will rise 3.6% starting January 2027, based on the CPI-W index, which tracks prices for working households rather than retirees. The article argues this misses retirees' spending patterns: they spend less on food, housing and transportation but more on healthcare. Using the CPI-E index for people aged 62 and older, the 2024 raise would have been 4% instead of 3.2%, a $62 monthly increase instead of $50. The Senior Citizens League estimates beneficiaries have lost 13.7% of their buying power since 2016, and the shortfalls compound over time. Because Congress is unlikely to act quickly, retirees can offset the gap by generating more investment income or using higher-yielding savings accounts.

The Social Security Administration (SSA) announced on Oct. 14 a 3.6% cost-of-living adjustment (COLA) for 2027, the fifth highest in 35 years. Based on August 2026 benefit figures, the average beneficiary is projected to receive about $75 more per month in 2027, while average benefits for disabled workers and survivors are expected to rise by about $59. Medicare Part B premiums are expected to rise about 3.25% (about $6.60, to $209.50) in 2027 according to the 2026 Medicare Trustees Report, which would make 2027 the first year since 2023 that the COLA exceeds the premium increase, though the estimate is unconfirmed. Still, Social Security's reserves are projected to run out in the early 2030s without Congressional action: the OASI trust fund by late 2032, while the DI fund is projected to last through 2100.

Robert Kiyosaki, author of Rich Dad Poor Dad, said on the Minority Mindset podcast that U.S. baby boomers are 'being set up' for a massive stock market crash that could leave them homeless, though he offered no evidence for the prediction. The article notes U.S. stocks have surged during President Donald Trump's second term but have been volatile, including due to reciprocal tariffs in 2025 and the Iran War in 2026. In a Sept. 27 X post, Kiyosaki repeated his warning and pointed to a potential S&P 500 collapse, though many of his past warnings have not come true. The article argues older investors are especially vulnerable, since large losses are harder to recover from and retirees may have to sell assets after declines, a risk known as sequence of returns risk.

Social Security benefit payments will rise 3.6% in January, an adjustment based on the CPI-W index, which the article argues may not fit retirees well. Retirees are considerably older than the average American, spending less on food, housing and transportation but more on healthcare, so the CPI-E index for people aged 62 and over may better reflect their costs. Using CPI-E for 2024 would have produced a 4% raise instead of the 3.2% received, meaning $62 more per month instead of $50. The Senior Citizens League says beneficiaries have lost 13.7% of their buying power since 2016, and most proposed fixes require Congress. The article suggests retirees seek more investment income or higher-yielding savings accounts for idle cash.