The Fed cut rates by 0.25% in December 2025 with a 9-3 vote split and signaled future cuts may pause. Early projections suggest the 2027 Social Security COLA could fall to 2.3% to 2.6% range, marking the smallest increase since 2020. Retirees may need to prepare for a lower COLA based on the Fed’s move.

The Fed’s rate cut may impact the Cost of Living Adjustment (COLA) for Social Security benefits in 2027, potentially resulting in a smaller increase than in previous years. A 2.3% COLA would be the lowest raise since 2021, signaling a shift for retirees accustomed to higher raises post-pandemic.

Lower inflation forecasts from the Fed could lead to a smaller Social Security COLA in 2027, ranging from 2.3% to 2.6%. Retirees may face a smaller raise than in recent years, prompting the need to adjust expectations and prepare for potential impact on buying power.

Despite potential lower COLAs, retirees may benefit from reduced overall inflation, protecting their buying power. While a small raise may come as a surprise, understanding the implications of the Fed’s decision can help retirees plan for potential changes in their income.

Read more at Yahoo Finance: The Fed’s December Rate Cut Means Social Security Retirees Could Be In for a COLA Surprise