For millions of older adults, Social Security serves as a steady presence. Once you apply for benefits, you are assured a monthly payment for the duration of your life.
However, the program today differs significantly from its past iterations, with substantial changes over the last two decades. While the average worker now receives significantly more each month than in 2004, the program also faces significant challenges.
In 2004, the Social Security Administration’s historical data indicates that the typical retired worker received $955 monthly. By July 2024, this average benefit for retired workers had risen to $1,919 per month.
Other metrics, like the maximum benefit amount, have also evolved. Back in 2004, individuals who retired at their full retirement age could receive up to $1,825 monthly. Currently, the maximum benefit for those aged 67 is $3,911 per month.
At first glance, it appears that today’s retirees are in a much stronger financial position. Yet, although beneficiaries are receiving higher monthly payments, these benefits do not stretch as far as they once did.
Since 2010, Social Security has seen its purchasing power diminish by 20%, as reported in a 2024 study by The Senior Citizens League. Moreover, the annual cost-of-living adjustments (COLAs), intended to align benefits with inflation, have fallen short of the inflation rate in 8 of the last 15 years, according to the study.
Relying on Social Security for retirement is perfectly acceptable, but it’s prudent to manage your expectations. By understanding the limitations of your benefits (and recognizing that their purchasing power may continue to erode), you can take proactive measures to safeguard your retirement.
