Inflation Is Stressing Social Security Reserves

The key benefits program for seniors was in trouble before 2022. And now, it might break... You see, Social Security recipients get a boost in their monthly benefits to help fight inflation. The raise is known as the "cost-of-living adjustment" – or "COLA," for short. [Chaikin PowerFeed]( Inflation Is Stressing Social Security Reserves By Pete Carmasino, chief market strategist, Chaikin Analytics The key benefits program for seniors was in trouble before 2022. And now, it might break... You see, Social Security recipients get a boost in their monthly benefits to help fight inflation. The raise is known as the "cost-of-living adjustment" – or "COLA," for short. The Consumer Price Index for Urban Wage Earners and Clerical Workers ("CPI-W") drives the percentage of the COLA hike. And the U.S. Bureau of Labor Statistics calculates CPI-W data every month. Importantly, the report in mid-October will tell us the expected COLA for 2023. Due to our ongoing battle with inflation, current estimates for this increase range from 8% and 10%. That's significant... [As I explained back in February]( the reserve levels in the trust that backs these Social Security benefits were already running down before any big COLA increases. Last year's report from the Board of Trustees projected that reserves would run out by 2034. But the thing is... the coming COLA increase in 2023 will likely shorten the life of these reserves even further. And I'm not sure how the reserves can manage another large hike. Let's break it all down... Recommended Links: [Huge Recession Loophole (See These Charts)]( Amid today's market turmoil, THIS is one of the biggest and most bullish opportunities today: A red-hot sector with almost unlimited pricing power and a history of outperforming in recessions. It's also the sector where our good friend Dr. David Eifrig spent half his professional life. In other words, he's extremely qualified to spot world-class opportunities today. [Take a look at the evidence here](. [Oil's New Inflection Point (Prepare NOW)]( It's a new turning point for oil that could drastically alter our economy this year. Goldman Sachs says it's the crux of their next 2022 play... and numerous top hedge funds have just changed their oil positions. [Click here for full oil story](. The better-known CPI for July showed that inflation was up 8.5% over the past 12 months. It remains at levels not seen since the early 1980s. And the CPI-W data was actually worse. If you calculated the CPI-W year over year, you would get a 9.1% jump. It's clear that inflation is still out of control. And in turn, influential groups that track Social Security benefits are making educated guesses about the potential COLA raise for 2023... An analyst from popular retiree group AARP recently said, "We can expect a COLA in the 8% to 10% range. Another analyst from the Urban Institute suggested a "reasonable guess" of around 9%. And an advocacy group called the Senior Citizens League projected that the COLA increase could be as high as 9.6%. That would be the biggest increase since 1981 by a wide margin. In February, we noted that the 2022 COLA increase of 5.9% was already the highest in about 40 years. And I recently looked up all the COLA adjustments since 1975 to get an average of 3.7%. So in other words... if the COLA raise equals 9.6% in 2023, it would be 2.5 times the long-term average. And it could be even worse... The analysts from the Senior Citizens League noted that if inflation runs higher than the recent average, the COLA increase could be 10.1%. (On the flip side, if inflation runs lower than the recent average, the group said the COLA could be 9.3%. That's still high.) Folks, in the short term, the COLA increase might be great for people currently receiving Social Security benefits. It will help provide some relief in the ongoing battle with inflation. But if you're planning on these benefits to support you in your future retirement... you might want to think again. The Board of Trustees' 2021 annual report was grim. It projected benefit reductions by 2034. That was even before we knew 2022 COLA would receive a near-record-high adjustment. And now, we're likely headed for another significant increase in 2023. No matter where the exact numbers land during this round of COLA, it's clear that the adjustment will take a big toll on Social Security. We can't avoid that harsh reality. Your best bet is to take matters into your own hands... Start investing in equities today. As I said back in February, you can't count on Uncle Sam to fund your retirement. Instead, do it yourself by saving and investing before it's too late. Good investing, Pete Carmasino Market View Major Indexes and Notable Sectors # Hld: Bullish Neutral Bearish Dow 30 +0.24% 5 20 5 S&P 500 +0.31% 138 257 102 Nasdaq +0.29% 25 53 22 Small Caps +0.76% 488 938 422 Bonds -0.73% Energy +1.23% 12 8 0 — According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks are somewhat Bullish. Major indexes are mixed. * * * * Top Movers Gainers [rating] NCLH +8.40% [rating] ILMN +8.17% [rating] RCL +7.65% [rating] MOS +6.01% [rating] WBD +5.71% Losers [rating] AAP -9.62% [rating] NWL -3.42% [rating] AZO -2.60% [rating] LH -2.53% [rating] DOW -2.48% * * * * Earnings Report Reporting Today Rating Before Open After Close DG ULTA DLTR No earnings reporting today. Earnings Surprises [rating] SNOW Snowflake Inc. Q2 $0.01 Beat by $0.02 [rating] SPLK Splunk Inc. Q2 $0.09 Beat by $0.44 [rating] CRM Salesforce, Inc. Q2 $1.19 Beat by $0.16 [rating] NTAP NetApp, Inc. Q1 $1.20 Beat by $0.10 [rating] ADSK Autodesk, Inc. Q2 $1.65 Beat by $0.08 * * * * Sector Tracker Sector movement over the last 5 days Energy +7.47% Staples -1.18% Utilities -1.33% Materials -1.93% Industrials -2.28% Health Care -2.73% Financial -3.93% Discretionary -4.13% Information Technology -4.25% Real Estate -4.40% Communication -4.84% * * * * Industry Focus Homebuilders Services 8 19 8 Over the past 6 months, the Homebuilders subsector (XHB) has underperformed the S&P 500 by -2.89%. Its Power Bar ratio which measures future potential is Neutral, with an equal number of Bullish and Bearish stocks. It is currently ranked #11 of 21 subsectors. Indicative Stocks [rating] BLD TopBuild Corp. [rating] WHR Whirlpool Corporatio [rating] ALLE Allegion plc * * * * You have received this e-mail as part of your subscription to PowerFeed. If you no longer want to receive e-mails from PowerFeed, [click here](. You’re receiving this e-mail at {EMAIL}. 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