The cost-of-living adjustment for the Social Security Administration will be announced this week, and it could be good news for retirees who are facing higher prices.
The consumer price index data for September is expected to be released on Thursday.
The Senior Citizens League said last month that the cost of living could be 8.7% next year. This year's cost-of-living adjustment was the largest in 40 years.
Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League, said that the official change could be higher or lower.
Social Security is a key issue for one group of voters.
As new data is released, the group has been calculating how the COLA will change.
Based on June data, the Senior Citizens Leagues estimated that benefits would go up by 10.5%. The estimate was 9.6% the following month and 8.7% in August.
The estimates are based on the Consumer Price Index for Urban Wage Earners and Clerical Workers. Each year, the Social Security Administration uses that measurement to determine the cost of living adjustment.
Both Social Security and Supplemental Security Income benefits have an annual cost of living adjustment.
According to Johnson, the fact that the estimates have gone down in recent months doesn't mean that inflation for seniors is going down.
The first place that older consumers are going to feel inflation is food prices.
According to Johnson, beneficiaries are going to see more of the COLA increase in their monthly benefits.
The reason is that the standard monthly premium for Medicare Part B will go down by $5.20 next year to $164.90 from $170.10 in 2022.
Johnson said that beneficiaries will be able to keep most or all of their increases.
Some beneficiaries might have withholdings for taxes taken from their checks.
People will see their cost of living allowance in their Social Security check before they take deductions.
The consumer confidence and inflation data may be affected by the Federal Reserve's continued interest rate hikes.
The federal funds rate was raised by the Federal Reserve. The interest rate hike in July will likely affect the September data more.
Future COLAs might not be as big as anticipated.
Inflation could go down if there is a recession.
The 5.8% COLA was announced in 2008 and went into effect in 2009. Two years later there was no adjustment to benefits.
It could bring the insolvency date forward a year sooner.
If we go into a recession, we could be in for that.
The Committee for a Responsible Federal Budget said in June that a higher COLA in 2023 will put more pressure on Social Security's trust funds.
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, told CNBC.com that a much bigger COLA would cost the program tens of billions of dollars.
MacGuineas said that the insolvency date could be brought forward a year.
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