By Gregg Greenberg

Financial advisors say the real test is whether after-tax income and portfolio withdrawals can keep pace with clients’ rising costs

Financial advisors are using the run-up to the 2027 Social Security cost-of-living adjustment to push clients on a harder question than the size of next year’s raise. They want to know whether the rest of a client’s retirement income is built to keep up.

The Social Security Administration announced the 2027 COLA on Oct. 14, 2026. It will use inflation data from the third quarter of 2026, measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, and the increase will show up in payments starting in January 2027.

Forecasts point to a larger increase than last year’s. As of recent reporting, The Senior Citizens League estimated a 3.6% COLA for 2027, independent analyst Mary Johnson projected 3.4%, and AARP put the figure at 3.5%. The SSA announced a 2.8% increase for 2026 on Oct. 24, 2025, and that adjustment reached 75 million people. A 3.6% COLA would add roughly $75 to the $2,086 average monthly benefit as of July 2026.

For advisors, the announcement is less a finish line than a reason to schedule a review. Rising prices are not only a Social Security story: New York Fed research recently found that tariffs added 2.9 percentage points to goods inflation, pressure that lands on every source of a retiree’s income.

Why the COLA is a retirement income checkpoint

Jason Frain, head of retirement solutions at Transamerica, said knowing what Social Security will pay matters, but so does knowing where that benefit sits in a client’s overall strategy. He sees the annual COLA announcement as a natural prompt for advisors and clients to confirm that their plans still match their long-term goals.

“Advisors can use this time to review expected spending needs, cash reserves and the mix of income sources supporting retirement. With 401(k)’s and other retirement accounts serving as the second-largest source of retirement income for many retirees, advisors can also help clients evaluate withdrawal strategies and understand the potential tax implications associated with those decisions,” said Frain.

He noted that retirement can stretch across 20, 30 years or longer. That makes a plan that accounts for inflation, health care costs and market volatility essential.

“Regular reviews can help clients understand how Social Security, 401(k) accounts and other sources of retirement income work together to support long-term financial security. The earlier people begin planning, the more flexibility they have to make adjustments over time,” said Frain.

What does the COLA actually deliver after costs?

Jonathan Codispoti, president and founder of Legacy Wealth Strategies, plans to tell clients that the percentage matters less than what actually reaches their bank account. The question he wants answered is whether that increase keeps up with the expenses rising fastest in their own household.

“Looking at COLA in isolation is not a good idea without looking at taxes, Medicare premiums, healthcare expenses and lifestyle expenses. A retiree can have an increase in social security benefits but the expenses that matter most to them could be rising faster,” said Codispoti.

Medicare is the clearest example. The standard monthly Part B premium rose from $185.00 to $202.90 for 2026, and that premium is usually deducted directly from Social Security checks. The 2027 premium has not yet been set. It is typically announced in mid-November, and the standard Part B premium often rises by a higher percentage than the COLA. So, clients may not know their true net raise for several weeks after Oct. 14.

Which income sources are built to grow?

Codispoti sorts a client’s retirement income into three groups: guaranteed income, income that is fairly predictable and income that depends on markets. That framework lets him ask which pieces are actually designed to rise over time.

“If Social Security is one of the only income sources receiving an inflation adjustment, the client’s purchasing power may gradually become more dependent on portfolio withdrawals. That’s something advisors need to identify well before it becomes a problem,” said Codispoti.

That dependence matters because withdrawal capacity is limited. Morningstar’s latest research on retirement income indicates retirees can withdraw as much as 3.9% in 2026, though they may be able to withdraw more depending on their strategies.

Beyond Social Security, Codispoti said he would reexamine the client’s full income structure, from liquidity to bond holdings.

“Cash reserves are important in retirement. They allow flexibility. Fixed income deserves another look as well. Advisors should review yields, duration, maturity schedules and whether the bond allocation is still accomplishing what it was intended to accomplish. The fixed-income environment can change considerably over the course of a retirement,” he said.

He warned against treating a client’s income need as fixed.

“I think one of the biggest mistakes in retirement planning is treating retirement income as a static number. A client might say, ‘I need $10,000 a month,’ but the real planning question is: What does $10,000 a month need to become 10, 15 or 20 years from now for this client to maintain the same lifestyle?” Codispoti said.

Taxes finish the picture. Advisors refining how intelligent allocation can create better tax outcomes are working on the same problem from another angle.

“Advisors should also revisit the client’s tax strategy because it’s ultimately after-tax income – not gross income – that funds retirement,” Codispoti said.

For many practices, that makes the COLA meeting a broader planning session, and a reminder that the complexity isn’t in the portfolio but in the client’s life.