How Much Is the Average Social Security Check Right Now. For over eight decades, Social Security has been a crucial financial support for retired workers in the United States, helping lift an estimated 21.7 million people out of poverty annually. However, the surprising truth is that the average Social Security checks are more modest than many people might assume.
[irp]Monthly Social Security Benefits and their Modest Nature
While Social Security benefits are accessible to workers aged 62 and above with 40 lifetime work credits, the Social Security Administration (SSA) notes that these benefits are designed to replace only about 40% of a worker’s pre-retirement earnings on average. Despite this, 80% to 90% of current retirees consistently depend on their monthly payout to cover a portion of their expenses.
Current Average Social Security Checks
As of October 2023, the SSA reported that 66.93 million beneficiaries received approximately $114.4 billion in payments, resulting in an average Social Security check of $1,709.70 per month or $20,516.40 annually. However, the monthly amounts vary significantly depending on the qualification for benefits.
Variances in Social Security Checks by Qualification
For example, retired-worker beneficiaries, constituting nearly 50 million recipients, accounted for close to 75% of the payouts in October. On average, a retired worker received $1,843.96 monthly or $22,127.52 annually. Additionally, over 8.5 million people receiving disability insurance payments had an average monthly check of $1,489.47. Survivor beneficiaries, numbering around 5.8 million, received an average check of $1,454.66.
Anticipated Increase in Social Security Checks in 2024
Despite the current figures, Social Security checks are expected to see a significant boost in 2024 due to the annual cost-of-living adjustment (COLA). The nearly 67 million beneficiaries are projected to receive a 3.2% increase, with retired workers, workers with disabilities, and survivor beneficiaries anticipating respective monthly increases of $59, $48, and $47.
Declining Purchasing Power of Social Security Dollars
While the upcoming COLA may seem promising, a report from The Senior Citizens League reveals that Social Security’s COLAs have consistently lagged behind the inflation seniors face. Between January 2000 and February 2023, while COLAs increased benefits by 78%, the cost of goods and services for retirees rose by 141.4%, resulting in a 36% decline in the purchasing power of a Social Security dollar.
Persistent Issues with the CPI-W Index
This decline is attributed to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which does not accurately reflect the spending habits of seniors. As 86% of Social Security beneficiaries are aged 62 and above, who allocate a significant portion of their budget to shelter and medical care, the CPI-W’s failure to properly weigh these expenses contributes to the ongoing loss of purchasing power.
Caution Amidst Promising Increases
Although the 2024 COLA promises an above-average increase, beneficiaries are urged to approach this “raise” with caution. Despite short-term improvements, the persistent decline in purchasing power remains a substantial concern for Social Security recipients.
Considerations for Financial Planning
As Social Security checks are set for an above-average increase in 2024, beneficiaries should consider this information in their financial planning. While COLAs provide incremental adjustments, the broader economic context and the evolving cost of living must be taken into account for effective long-term planning.
[irp]Conclusion:
In the face of Social Security’s anticipated 2024 increase, recipients should approach the apparent boost with caution. Persistent declines in purchasing power signal ongoing challenges, urging beneficiaries to consider broader financial strategies for a secure retirement.
