Millions of Americans depend on their Social Security checks each month to make ends meet. Thankfully, Social Security benefits now come with a built-in safeguard against inflation: the cost-of-living adjustment (COLA).
The COLA was first put in place in 1975 to help monthly checks keep up with rising prices for everything from housing to groceries. If we rewind 30 years to 1994, a time when movie-rental stores and floppy disks were in style, you'll see just how much inflation has chipped away at purchasing power. Today, Social Security checks may look bigger than they did back then but their buying power tells a different story.
How much has the average Social Security benefit changed in the last 30 years? Here's a look at the numbers.
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Back in December 1994, the average monthly benefit was just $697.34, adding up to about $8,368 for the year. Fast forward to November 2024, and the average retired worker is collecting $1,925.46 per month -- or a little over $23,100 annually. That's a big leap, representing an increase of 176% over the past three decades.
What's $697 worth today?
Social Security checks today are bigger, even when you factor in inflation. For example, $697 in monthly benefits from December 1994 would be worth about $1,469 in today's dollars, according to the Bureau of Labor Statistics' inflation calculator. That said, how far your benefits stretch depends on your expenses and whether the cost of those items has outpaced overall inflation.
Even so, many retirees still feel the pinch. In fact, 54% of retirees believe the 2025 2.5% COLA isn't enough to keep up with rising costs, according to a recent Motley Fool survey. If you're not retired yet, now's the time to explore other sources of income so you're not leaning too heavily on Social Security. The more you can plan ahead, the more flexibility you'll have in retirement.
