A lot has changed in the past 20 years. In 2005, Netflix was still mailing out DVDs, MySpace was the most popular social media platform, and many phone plans still charged per text sent or received.
Another thing that’s changed in the past two decades is the average monthly Social Security benefit. In 2005, it was $1,002, or just over $12,000 annually.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »
Fast-forward 20 years, and the average monthly benefit as of January of this year is $1,979, or close to $23,750 annually. That’s over a 97% increase.
Image source: Getty Images.
Inflation is easy to notice for anyone responsible for buying groceries, paying rent, or filling up their gas tanks. Now, imagine if prices kept rising, yet Social Security benefits stayed the same. Retirees would lose a large chunk of their purchasing power, and many would have their livelihoods threatened.
Luckily, Social Security has an annual cost-of-living adjustment (COLA) to help retirees maintain some of their purchasing power. The COLA may not keep up with inflation perfectly each year, but any bit helps.
To determine how much to increase benefits each year, Social Security compares inflation data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) during the previous year’s third quarter to the current year’s third quarter.
However much the CPI-W increases is how much monthly benefits are increased. If the CPI-W data decreases or remains the same, monthly benefits remain the same.
The current COLA system is far from perfect, but it has been how Social Security has functioned for the past 50 years.
If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $22,924 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Simply click here to discover how to learn more about these strategies.
View the “Social Security secrets” »
The Motley Fool has a disclosure policy.
—
Blog powered by G6
Disclaimer! A guest author has made this post. G6 has not checked the post. its content and attachments and under no circumstances will G6 be held responsible or liable in any way for any claims, damages, losses, expenses, costs or liabilities whatsoever (including, without limitation, any direct or indirect damages for loss of profits, business interruption or loss of information) resulting or arising directly or indirectly from your use of or inability to use this website or any websites linked to it, or from your reliance on the information and material on this website, even if the G6 has been advised of the possibility of such damages in advance.
For any inquiries, please contact [email protected]
