Beneficiaries are experiencing a significant increase in their payments compared to the past, though the cost of living has also escalated dramatically.
Currently, the average monthly Social Security payment is approximately $1,976. This figure, however, is adjusted regularly to account for inflation through what is known as a cost-of-living adjustment (COLA).
This adjustment prompts an inquiry into the historical value of Social Security payments. For instance, in 1984, the average Social Security check was $460.57 per month.
This amount, when adjusted for inflation using U.S. Census Bureau data, would equate to approximately $1,436 in today’s currency. This suggests that, on average, Social Security beneficiaries have managed to “beat” inflation.
Nevertheless, the Senior Citizens League contends that since 2010, the typical Social Security beneficiary has experienced a loss of around $370 in monthly purchasing power. Although the Census Bureau’s numbers do not fully support such a pronounced decrease, the consumer price inflation (CPI) calculator indicates that the cost-of-living adjustments over the past 15 years have not completely matched general price increases. This is especially challenging for older Americans who may allocate more of their income to healthcare expenses than younger individuals do.
Predicting the average size of Social Security payments 40 years from now is challenging. These payments are expected to grow in line with inflation, although they may not fully keep pace with the rising costs of living.
It is important to note that Social Security was never designed to be the sole source of income during retirement. Therefore, regardless of the size of one’s Social Security benefits, it is advisable to build a personal retirement savings fund.
