Social Security is one of the most important and wide-reaching government programs around. A total of $1.5 trillion in benefits from the Social Security Administration (SSA) will be paid out to about 70 million Americans this year.
These checks are the foundation of many Americans' retirements. In fact, 1 in 7 recipients relies almost exclusively on them to get buy.
The early days
The first payment -- check number 00-000-001 -- was made out to Ida M. Fuller in 1940 for $22.54. Thankfully for all of us, those benefits have increased quite a bit over the years. In the beginning, any increase had to go through Congress, and there were stretches of time when no such increase passed.
In the 70s, however, the modern cost-of-living adjustment (COLA) began. Each year, benefits are increased based on inflation numbers tabulated by the Bureau of Labor Statistics. Next year's COLA will be 2.5%.
The average check in 1964
Sixty years ago, the average monthly SSA benefit paid to retired recipients was $77.57, and the average annual salary in 1964 was just shy of $4,000. So SSA benefits paid about a quarter of what the average worker was making.
The average check today
In 2024, the average monthly SSA benefit for retirees is $1,918, and the average annual salary today is about $64,000, so SSA checks now account for about 36% of what the average worker is making. That's a decent bump.
Despite this apparent growth, research by the Senior Citizens League (TSCL), an advocacy group, estimates that seniors have lost more than 30% of their actual purchasing power since 2000, despite the annual COLA. This is because the data the SSA uses to track inflation is specific to workers who have different spending habits than retirees. Calls have been made to change this, but they haven't yet gotten much traction.
Hopefully, Congress will act to remedy this. If they don't, this buying power may continue to erode.
