Social Security COLAs Outpace 10-Year Treasury Yields

### Money Play - Fixed income investors may consider strategies to mitigate inflation risk, such as inflation-protected securities. ### Executive Thesis Social Security recipients benefit from automatic annual cost-of-living adjustments (COLAs), a mechanism absent in many private investment portfolios. This difference can lead to a widening income disparity over time, with Social Security income growing while fixed payouts from portfolios remain stagnant. ### The Print Automatic COLAs for Social Security beneficiaries have historically ranged from 0% to 8.7% annually over the past decade. The projected COLA for 2027 is currently tracking toward 3.1% based on Q3 inflation data. A $2,000 monthly Social Security benefit, assuming a consistent 2.5% COLA over ten years, could grow to approximately $30,700 annually. In contrast, a $500,000 portfolio invested in a 10-year Treasury yielding 4.70% would continue to generate around $23,500 in annual coupon income, unchanged by inflation. ### Market Reaction The S&P 500 saw a modest gain of 0.05%, while the Dow Jones Industrial Average fell 0.18%. The Nasdaq 100 rose 0.15%, and the Russell 2000 added 0.04%. International markets showed mixed performance, with the FTSE 100 down 0.21% and the Nikkei 225 declining 0.44%. ### What It Means for Policy & Positioning The comparison highlights a structural difference in income generation for retirees: one tied to inflation and the other fixed at purchase. This disparity underscores the challenges for individuals relying on fixed-income streams in an inflationary environment and may influence discussions around retirement income security and policy. ### Next Calendar Watch No specific upcoming dates for COLA announcements or related print data were provided.