Social Security benefits are an important income source for many retired workers. But do you know how much the typical senior will actually get this year?
It can be helpful to take a look at the average benefit so you can understand what Social Security will do for you when you reach your retirement years and start relying on these funds. You may end up surprised when you see the amount being paid out.
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Here's the average Social Security benefit in 2024
In 2024, the average monthly Social Security benefit for retired workers comes in at just $1,907.
This means a retiree who gets the average benefit would have just $22,884 per year in income to live on. This is a lot less than many people might expect their Social Security benefits to provide. And since the average salary for the typical worker is around $61,264.32 as of January 2024, it would also mean that most people take a huge income cut when they retire.
If you're shocked at how low the average benefit is, that may be because you're overestimating the role Social Security benefits are supposed to play in your retirement. These benefits were only ever meant to help you cover the bills -- not to be your sole source of support.
When Social Security was originally created, many people had pensions offered by employers that provided guaranteed income. And workers were expected to save for their own futures as well. Retirement benefits, pension benefits, and savings were supposed to be individual parts of a three-legged stool that offered comprehensive support throughout your later years.
Pensions are nothing but a fantasy for most private sector workers now, though, so savings have to fill that gap since Social Security won't. The average benefit is right about what it's supposed to be when you consider your retirement checks are intended to replace only around 40% of what you earned.
Be prepared with plenty of savings to add to your benefits
Knowing the average Social Security benefit can be vitally important if it gives you a wake-up call to start investing for your future. The reality is, whether your benefit is above average or below it, it will still replace only about 40% of your earnings (less if you are a high earner). And you'll need to replace around 80% for a comfortable retirement.
To ensure you have the funds you need, it's important to invest around 15% of your income in a 401(k) or other tax-advantaged retirement plan, like an individual retirement account (IRA). You don't need a lot of specialized investing knowledge to do this (e.g., you can buy exchange-traded funds that track the performance of the market). And you may be able to save on taxes and earn employer-matching contributions depending on your situation.
If you haven't already, you should start saving now and make certain you are on track for your savings to provide the missing 40% of your pre-retirement income that Social Security won't offer.
