Social Security retirement benefits have long been a financial lifeline for millions of retired Americans. As of November 2024, over 54.2 million Americans were receiving them, and many rely on them for a significant portion of their retirement income.
The amount of retirees' Social Security benefits varies widely, but having a sense of the average benefit can help you get a gist of the role it will play in your retirement finances.
Image source: Getty Images.
How has the average Social Security benefit changed over time?
A lot has changed for Social Security over the past 50 years, including the amount recipients receive. At the end of 1974, the average monthly Social Security benefit for retired workers was $188, or just over $2,256 annually.
As of November 2024, benefits for retired workers have grown substantially. The average monthly benefit reached $1,925, or roughly $23,100 per year, nearly matching an entire year's worth of benefits from 1974.
Why have Social Security benefits increased by so much?
From groceries to housing to gas, it's easy to see how much inflation has increased prices. In 1974, if you went into a grocery store with $100, you could probably leave with enough food to feed a family for a month. Today, it seems like you'd be lucky if that $100 partially filled your cart.
Social Security has an annual cost-of-living adjustment (COLA) to combat inflation. It looks at the percentage change in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from one year to the next and uses that increase to increase monthly benefits proportionally.
The Social Security COLA isn't foolproof, but it's a way to ensure that Social Security recipients don't lose a large portion of their purchasing power as prices continue to increase over the years.
