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Many Americans who are now retired or near retirement are facing or will be facing financial difficulties over the next several years, according to new research targeting Social Security benefits.
Better Benefits Guide, which provides information on Social Security, Medicare and retirement benefits, recently released an updated breakdown of what Social Security payments could look like in the future, amid the rising cost of living.
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The researchers looked at the annual rise in Social Security payments since 2001 and found an average increase of 3.08%, compared to the increase in the Consumer Price Index, which has risen by an average rate of 2.19% over the last 20 years. They used this data to predict what the social security payment could look like in 2030.
In 2001 the average monthly Social Security payment was $874, while today it is around $1,657. In fact, two years from now the average monthly social security benefit could be more than double what it was in 2001 if payments continue to rise at a similar rate as the Consumer Price Index for all Urban Consumers (CPI-U), which is the metric used to determine the annual cost of living adjustment that gets applied to social security benefits payments to help those in need keep up with rising costs.
If Social Security payments continue to rise in line with increases in the CPI-U, then by 2030 the average monthly check could be $2,112.
In the climate of a rising cost of living, seniors could be feeling the pinch more than most, according to Better Benefits. The average social security payment for those in retirement in 2022 is $1,657, which means that most retired Americans are receiving around just $19,884 a year.
Social Security payments have had a yearly cost of living adjustment (COLA) applied since 1975 to keep up with the rising cost of living. COLAs ensure that Social Security benefits rise enough to cover inflation, and from 2021 to 2022 the average monthly payment rose by $93.
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
