The 2027 cost-of-living adjustment, or COLA, increase isn’t coming until October 2026, when Social Security finally announces it. But looking at the inflation numbers right now, we can already see where things are heading.
Back on February 10th, The Senior Citizens League put out their analysis. They said early projections were sitting between 2% and 3%, but after the spikes in March and April, they bumped it up to 3.9%.
That 3.9% works out to about $80 more per month on the average check of $2,070. So instead of $2,070, it’d be closer to $2,150. Not bad, but it’s still nine months away.
Retirement Savings: The Safer Yield You’re Missing
Here’s what a lot of people are missing: safe accounts have been paying more than that 3.9% since last November. Right now you can find high-yield savings accounts offering between 4% and 5% APY. They’re FDIC insured up to the usual $250,000.
Susan Roberts, an analyst at the San Francisco Fed, mentioned in her January report that rates should hold steady through the first half of the year. That gives people some breathing room.
As of February, the best rates experts pointed at were Varo at 4.80%, Vio Bank at 4.65%, CIT at 4.50%, and Bread Savings at 4.40%. All beating the expected COLA.
You can also get around 4.75% on some 12-month CDs, but remember the catch — if you pull the money early, you’ll lose three to six months of interest. That’s not ideal if you’re living mostly on Social Security.
| Bank | APY Rate |
|---|---|
| Varo | 4.80% |
| Vio Bank | 4.65% |
| CIT Bank | 4.50% |
| Bread Savings | 4.40% |
The Ladder That Unlocks More
What I’ve been telling my clients for years is to use a CD ladder. Simple example: take $10,000 and split it into four pieces of $2,500. Put them in a 3-month, 6-month, 9-month, and 12-month CD. When the shortest one matures, roll it into a new 12-month. Do the same as the others come due. After a year, you’ve got money freeing up every three months without locking everything away for too long.
Treasury Bills are yielding between 3.6% and 4.5% right now, depending on the term. And the I Bonds issued in February are paying 4.26%, tied directly to inflation. You can buy up to $10,000 per person per year.
A guy from the Treasury said during a hearing that I Bonds are still one of the best ways for retirees to stay ahead of these inflation jumps.
If you need the money to be available right away, money market funds are paying around 3.5% to 4.2%. Just keep in mind they’re not FDIC insured, even though they’ve been very stable.
Who should do what:
- If Social Security is basically your only income and you worry about surprise medical bills, keep it simple. Open a high-yield savings account at a bank that has a branch close by and keep three months of expenses there.
- If you have a little extra coming in from a pension or part-time work, put maybe 30% of your cash into a CD ladder and leave the rest in the high-yield savings.
- If you’re mostly thinking about leaving money to your kids or grandkids, max out the $10,000 in I Bonds and put the rest in longer 18-month CDs if the rate makes sense.
One thing a lot of retirees forget about taxes: the interest from these accounts gets taxed as regular income. And if your total income (including half your Social Security) goes over $25,000 single or $32,000 married, a big chunk of your Social Security can become taxable.
A final thing to have in mind, since you made it to this point: this piece is just for information. It’s not personalized advice. Rates change all the time, and your situation is different from the next person’s. Talk to a real advisor before moving any money, which is the best thing to do.
