Social Security has seen a lot of changes in the first three months of 2025, and if you're claiming benefits, you probably have too. Some of these, like the cost-of-living adjustment (COLA), were probably welcome, while others might have you worried about the program's future.
We'll likely see even more changes this year, with Social Security less than a decade from insolvency and President Donald Trump committed to making big moves while in office. There's one milestone in particular that I bet we'll reach this year, or by January 2026 at the latest.
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The average Social Security check is close to passing a significant number
The average Social Security benefit climbs over time due to several factors, including:
- Wage growth: Social Security benefits are based on your average monthly income during your 35 highest-earning years, with those earnings indexed to reflect wage growth over time. This is known as your average indexed monthly earnings (AIME). When wages climb, the average Social Security benefit follows.
- Annual increases to the taxable wage base: The government limits how much of a person's income is subject to Social Security payroll taxes. This taxable wage base increases annually, causing a greater percentage of high earners' lifetime income to be factored into their benefit calculation. This contributes to a rise in the maximum Social Security benefit and the average benefit.
- Changes to the benefit formula: The Social Security Administration benefit formula uses bend points to determine what percentage of a person's AIME will be included in their benefit amount. These bend points go up each year, which leads to higher average checks.
- Cost-of-living adjustments (COLAs): The Social Security Administration increases existing Social Security benefits in most years to help checks keep up with inflation. It applies the COLA to the December payment, which seniors receive in January of the following year.
The average benefit usually sees the biggest increase in January because of the COLA. However, it tends to rise by a few dollars each month during the rest of the year, primarily because of new beneficiaries signing up.
Social Security's average monthly benefit as of February 2025 was $1,980.86 for retired workers. This doesn't include those receiving spousal, survivors, or disability benefits.
The February 2025 average is about $70 higher than the February 2024 average for retired workers, so I feel confident predicting that the average Social Security check will surpass $2,000 per month by January 2026 at the latest.
As already discussed, average benefits normally rise a little each month. This year, they could climb faster than normal because of the Social Security Fairness Act. This law increases Social Security benefits for 3.2 million Americans, many of whom are expected to see a permanent benefit boost with the checks they receive this month.
Retired workers will see a $360 average monthly increase, according to a Congressional Budget Office report. While this will only apply to a fraction of Social Security's more than 52 million retired beneficiaries, it could cause the average benefit to rise faster than we've seen in years past.
If the average check doesn't reach $2,000 per month in 2025, the next COLA will almost certainly push it over the top. The Social Security Administration won't announce the official COLA for next year until mid-October. But The Senior Citizens League's (TSCL) latest projections estimate it will be about 2.2%. A 2.2% increase on the existing $1,980.86 average benefit would add another $44, enough to crack the $2,000 mark.
What this means for Social Security beneficiaries
While larger Social Security checks are always good news, it's important to put this milestone in perspective. A $2,000 monthly check would give you $24,000 in annual benefits. Average annual expenditures for a household headed by an adult 65 or older in 2023 -- the most recent data available -- are just over $60,000, according to the Bureau of Labor Statistics.
Living off Social Security alone will still be difficult, if not impossible. Married couples may fare a little better with two checks to rely upon, but it will likely be a challenge.
How far that $2,000 per month goes will also depend on inflation. Some are worried that President Trump's tariffs could not only hurt the stock market like they have recently, but they could also increase inflation. If that happens, Social Security may have less buying power than it does now, even if the average benefit is larger.
Then, there are the long-term implications to think about. Rising benefits increase Social Security's expenses, and the program is already less than 10 years away from being unable to pay out all scheduled benefits. This doesn't mean Social Security would go away, and it's not even a guarantee of benefit cuts.
There's a good chance that Congress will reform the program in the next few years to prevent that from happening. But the faster benefits climb today, the less time it'll have to come up with a solution that minimizes the pain for workers and seniors.
None of this is to say that we shouldn't be excited about Social Security reaching this historic milestone. It's something the program's earliest beneficiaries could never have dreamed of. But it's important to remember why benefits increase and the long-term implications these increases have, so you can make the best decisions about your retirement finances going forward.
