“The only constant in life is change,” goes the old saying, and Social Security benefits reflect that fact. For better or worse, there are constant changes to the Social Security program, from eligibility to benefit calculation methods to the average monthly retirement benefit.

Part of the “better” portion of “for better or worse” is that the average Social Security benefit has almost doubled in the past 20 years. In 2004, the average monthly Social Security benefit was $961. Today, it’s $1,873 (as of September).

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Why are benefits much higher now than in 2004?

Have you been to your local grocery or convenience store lately? If so, you’ve seen how much more expensive items are now than in previous years. This is thanks to nothing other than good ol’ inflation.

To help offset inflation, Social Security implements an annual cost-of-living adjustment (COLA). The COLA doesn’t perfectly cancel out inflation, but it does help maintain some of Social Security’s purchasing power.

Social Security uses a metric called the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to determine the annual COLA. It looks at the prices of common goods and services in each year’s third quarter (July, August, and September), compares them to the previous year’s numbers, and sets the difference as the COLA.

The COLA heading into 2025 is 2.5%, meaning retirees can expect their monthly checks to be slightly higher. If we apply that COLA directly to the current monthly average, it would jump a modest $47 monthly to around $1,920.

Aim to make Social Security one part of the equation

At $1,873, many Americans will find that the average monthly Social Security benefit isn’t enough to fully cover all their retirement expenses. That’s why the goal should always be to be in a position where Social Security is just supplemental retirement income.

This is admittedly easier said than done for many, but that’s what you should at least strive to do. Having other sources, such as retirement accounts and investments, can help ease some of the stress of not being as financially prepared for retirement as you’d like.

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