In 2023, the average Social Security benefit is increasing compared with the amount seniors received in 2022. In fact, the benefits increase is the largest in 40 years.
But whether you're currently receiving benefits or plan to start them soon, you may be shocked to find just how much the average monthly retirement check will pay out next year.
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This is the average monthly Social Security check in 2023
In 2023, the average monthly Social Security payment will be $1,827. This is a substantial increase from the average benefit of $1,681 in 2022. The benefits bump is a big one because inflation has been surging this year, and cost-of-living adjustments (COLAs) are built into the benefits program to help ensure seniors don't lose their buying power due to rising prices.
While a benefits increase is good news, the reality is that this average Social Security benefit doesn't provide a lot of income. In fact, a monthly payment of $1,827 means a senior who receives the average benefit would have to live on just $21,924 per year. That's going to be a challenge for most people -- especially given how expensive the cost of living has become, thanks to rising costs of gas, groceries, and energy.
Your own benefit might also be higher (or lower) than average, since your payments are based on how much you earned over your career, as well as when you claimed your first check. So you may end up with even less than this amount.
Why is the average Social Security benefit so low?
The low average monthly Social Security benefit may seem like a glitch. However, there's a reason why the typical senior ends up with such a small amount of money coming in from their retirement checks.
Social Security was designed to be one of three income sources for seniors after paychecks stop. The assumption was retirees would receive a pension from their employers, have savings, and use their Social Security checks to supplement that. This was dubbed the "three-legged stool" that would support retirees.
As a result, the Social Security benefits program uses a formula to ensure the typical senior receives benefits equal to around 40% of preretirement earnings. Most experts recommend replacing a minimum of around 70% to 80%. To get up to this recommended amount, retirees are expected to rely on these other income sources.
If you are aware of this in advance and plan for it, you should be in pretty good shape, since Social Security does increase to keep pace with inflation and is guaranteed to last for the entirety of your retirement. It really is a great source of guaranteed funds. The problem comes in, however, if you anticipate Social Security will do more than it's designed to do. If you assume Social Security is going to be your sole source of money, you're going to be in trouble.
Now that you know what the average Social Security benefit is, hopefully this gives you a better idea of the role your benefits will play in supporting you. You can assume you'll need other income sources regardless of whether your benefit is below or above this average and should start working ASAP on saving plenty of money to enjoy a comfortable retirement in your later years.
