Strategic Withdrawals: Offsetting a Lower COLA Projection
When the government provides a smaller retirement benefits update, your personal investment portfolio must carry more weight. Navigating a lower COLA environment requires a dynamic approach to portfolio withdrawals rather than blindly adhering to static rules.
The traditional “4% rule” suggests withdrawing 4% of your portfolio in year one of retirement and adjusting that dollar amount annually for inflation. However, rigidly adjusting your portfolio withdrawals upward when your Social Security check isn’t keeping pace can accelerate the depletion of your assets, particularly if the stock market experiences a downturn simultaneously—a danger known as sequence of returns risk.
Instead of relying on rigid formulas, consider a “bucket strategy” to insulate your income from market volatility while bridging the COLA gap. By keeping one to two years of living expenses in highly liquid, principal-protected assets (like high-yield savings accounts or short-term Treasury bills), you ensure you never have to sell stocks at a loss just to pay for groceries when your Social Security check falls short.
Furthermore, maintaining a middle bucket of fixed-income instruments, such as Treasury Inflation-Protected Securities (TIPS) or high-quality corporate bonds, provides a reliable income stream that can dynamically flex when you need a little extra cash. You can find excellent educational resources on utilizing TIPS and understanding bond yields through the SEC’s Investor.gov portal.
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Rich get richer and the poor get poorer
I do t think we should pay taxes on our social security. We already payed taxes while we worked all those years. We can barely afford groceries and bill. Medicare part F is so high we’re paying over 659.00 a month for my husband and 397.00 for mine there goes our SSI check
How are suppose to buy food and our medicine. Everything keeps going up and there is not enough money left to pay rent, food, medicine. So poor gets poorer and there is no middle class only rich and richer. Soon there will be more homeless seniors on the streets cause we can’t afford the rent in increases. Thanks Mr Trump maybe your daddy can help us older people out. Hope one day you will be walking in our shoes. Trying to figure out to have some shelter or food to eat, or be sick or die
Why should someone who pays less get more? The more u pay……the more u get.
Seniors are a after thought. Food prices rising, utilities increasing and insurance is mandatory. Insurance is a poor example of what we all worked our life for. Nothing – mandatory pay into social security, along with Uncle Sam. Then Uncle Sam says nope, we will put you a allowance. Here’s your sign.
100% inflation 1%-2 cola past 3 yrs?
Inflation cooling, I don’t think so. May 4.2 and April 3.8, Fed’s probably going to have to increase the fed rate to slow down inflation. Correct me if I’m wrong.
By the time I am old enough to retire, there won’t be any Social Security left. Speaking of the left, we need to thank them for blowing all of this up for us and you know what, they’re not the ones losing any sleep over all of this! I totally agree, the rich get richer, forget the middle class, there isn’t one! All we can really do is pray, let the good Lord take over, he will provide.
Looks like Click Bait to me. You can “Search” COLA 2027, and even recent, hours old articles, say the exact opposite! Some state that the 2027 COLA could be the largest in years! Why do people post articles like this, that only contribute to fear and anxiety. Well, I think we all know why…. Advertisers. I’m sick of click bait. One doesn’t know what to believe anymore.
Looks like Click Bait to me. You can “Search” COLA 2027, and even recent, hours old articles, say the exact opposite! Some state that the 2027 COLA could be the largest in years! Why do people post articles like this, that only contribute to fear and anxiety. Well, I think we all know why…. Advertisers. I’m sick of click bait. One doesn’t know what to believe anymore.