In 1964, the typical Social Security benefit amount stood at this level, whereas its current value can be found below.
In 1964, the typical Social Security benefit amount stood at this level, whereas its current value can be found below.
Government aid through Social Security is a significant and far-reaching initiative, with the Social Security Administration (SSA) dispensing a staggering $1.5 trillion in benefits to around 70 million individuals in the U.S. this year.
These monetary handouts serve as a critical pillar for many Americans' retired lives. Interestingly, one out of every seven beneficiaries counts on these checks as their main source of income.
Back in the day
The first distribution – check number 00-000-001 – went to Ida M. Fuller in 1940, totalling $22.54. Over the years, these benefits have significantly risen in value, though the process for raising them was lengthy and dependent on Congress' approval. There were periods where increased benefits were not passed.
However, in the 70s, the modern cost-of-living adjustment (COLA) was introduced. Annually, benefits are amplified in line with inflation figures calculated by the Bureau of Labor Statistics. For 2023, the COLA is projected to be 2.5%.
The typical check in 1964
Six decades ago, the average monthly SSA benefit received by retired recipients was $77.57, and the average annual income pillared at close to $4,000. As a result, SSA benefits represented around a quarter of the typical worker's earnings.
The typical check today
In 2024, the anticipated average monthly SSA benefit for retired individuals is $1,918, while the average annual income is approximately $64,000. Consequently, SSA payouts now account for about 36% of an average worker's earnings. That's a noteworthy growth.
Nonetheless, research conducted by the Senior Citizens League (TSCL), an advocacy group, suggests that retirees have lost more than 30% of their actual purchasing power since 2000, despite the yearly COLA. This is attributable to the particular inflation data used by the SSA, which does not match the spending habits of typical retirees. Efforts have been made to revise this, yet progress has been slow.
It's hoped that Congress will take action to rectify this issue. If they don't, the true purchasing power may continue to decline.
Retiring individuals often rely on Social Security benefits as a primary source of finance in retirement, with one out of every seven beneficiaries depending entirely on these checks. Despite the COLA adjustments, the buying power of retirement money has decreased for many seniors over the past two decades, according to the Senior Citizens League.
As retirees plan for their financial future, it's crucial to consider the long-term impact of Social Security benefits and potential changes to the way inflation is calculated, to ensure they have sufficient funds in retirement.