Social Security benefits forecast revised for 2023 as inflation eases

According to The Senior Citizens League, Social Security benefits are expected to increase significantly in 2023 but could be lower than previously forecast. (one)

Record Social Security benefits increase in 2023 could be lower than previously expected as inflation eases, according to a new forecast from the Senior Citizens League.

The consumer price index (CPI), a measure of inflation, rose 8.3% annually in August, a slight improvement from 8.5% in July, the Bureau of Labor Statistics (BLS) said. This was the second straight month of a fall in annual inflation.

The latest CPI data showed that the Social Security Cost of Living (COLA) adjustment could be 8.7% for 2023, according to The Senior Citizens League. That’s less than the group’s forecast last month, when it said benefits could rise by as much as 9.6% over the next year. But while that increase is smaller than previously projected, it will still be the largest increase most Social Security recipients alive today have ever received, the group said.

Last year, social security benefits increased by 5.9%. If benefits rise 8.7% in 2023, that would be the highest increase since 1981, when high inflation pushed COLA to 11.2%, according to the Social Security Administration (SSA).

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Average Social Security increase for seniors

An 8.7% COLA increase over the next year means the average Social Security recipient would receive $1,656 in monthly benefits and see an increase of $144.10 per month, according to The Senior Citizens League. To see what your exact increase would be, retirees can multiply their current check amounts by 0.087.

The SSA is expected to announce the increase in Social Security for 2023 in mid-October, following the release of September inflation data. The new benefit level will come into effect in January 2023.

“COLAs are designed to help maintain the purchasing power of Social Security benefits as rates rise,” the Senior Citizens League said in its forecast. “They are permanent increases that will gradually increase the overall Social Security income that individuals will receive over the course of their retirement. Without a COLA that adequately keeps up with inflation, less and less purchases of Social Security benefits occur over time, and that can create hardships as older Americans live longer in retirement.”

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More and more Americans are changing their spending habits as inflation rises

As inflation remains near its 40-year high, many Americans have begun to deal with it by changing their spending habits, according to a recent Morning Consult poll. Many consumers also said they’ve noticed the product size of their purchases shrinking, a phenomenon known as “shrinkflation.”

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According to the survey, 54% of Americans have seen, read or heard about shrinkage, and 64% are concerned about it. According to Morning Consult, about 48% of Americans said they purchased another brand when faced with shrinkage, and 49% said they chose a generic product instead.

Although inflation has improved over the past two months, it remains at levels not seen since the 1980s. The Federal Reserve has continued to raise interest rates to combat rising inflation, but there is debate over how these measures could potentially affect the US economy.

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