After an 8.7% Social Security cost-of-living adjustment for 2023, next year’s increase may not be as large

An 8.7% Social Security cost-of-living adjustment for 2023 means beneficiaries received on average $140 per month more starting in January.

Now, new research from Bank of America Institute finds spending is growing faster among older generations that receive Social Security income.

For the week ended Feb. 18, individuals born in 1964 or before had household spending that increased between 4% and 6% year over year, versus 2% for all ages, according to Bank of America Institute.

The institute is a think tank within the bank that uses the firm’s internal proprietary data to evaluate consumer trends. Bank of America serves about 67 million clients, or about 1 in every 2 households, according to the firm.

Bank of America debit and credit card data showed older generations mostly spent at a similar pace to other generations for most of 2022. Since late November, however, spending growth for older generations exceeded the average, the research found.

Older generations may have raised their spending growth by up to 3 percentage points due to the Social Security cost-of-living adjustment, or COLA, according to Bank of America Institute.

The Social Security COLA for 2023 was the highest bump in monthly checks beneficiaries have received in four decades.

About 70 million beneficiaries receive Social Security or Supplemental Security Income payments. Recipients not only include retirees but also disabled individuals and beneficiaries’ family members.

While the Social Security COLA for this year may help ease beneficiaries’ budgets, next year’s increase may not be as large.

Here are three key things to know.

While Social Security benefits are adjusted for inflation, there is a lag for when those changes kick in.

While the 2022 COLA adjustment was 5.9%, government inflation data showed costs grew at a faster pace for much of last year. Now, the 8.7% COLA for 2023 is outpacing current inflation,…