In 1935, the Social Security Act was signed into law with the aim of providing a financial foundation for the American workforce aging towards retirement. Once the calendar moves into the month of June next week, Social Security retiree benefits will do something for the first time in the program’s 90 year run.
Social Security to break a historic record
A “Monthly Statistical Snapshot” is published monthly by the Social Security Administration (SSA) which outlines in great detail where the paid benefits from the month prior ended up.
The April Statistical Snapshot, for instance, reveals that “$128.736 billion in traditional Social Security benefits were doled out to 69.378 million people. Retired workers account for nearly 76% of all beneficiaries (52.587 million), with disabled workers (7.156 million) and survivor beneficiaries (5.841 million) comprising much of the remainder.”
If your math is correct, you will notice that these three figures do not add up to 69.378 million and this is because children, spouses, or other direct relatives may also qualify for benefits on behalf of a disabled, retired, or deceased worker.
Additionally, the snapshot also provides the average monthly benefit for each category. In April, the average benefit amount for all beneficiaries amounted to $1,855.57. Retired workers, however, are just a week away from making history with regard to their average monthly benefit.
The average monthly payout for retired-worker beneficiaries for last month was a check of $1,999.97. The average benefit amount for this cohort is not static, however. Some beneficiaries pass away, and new beneficiaries enter the pool to receive their first Social Security check on a monthly basis. Furthermore, the cost-of-living adjustments (COLAs), alongside the higher nominal wages paid to American workers over time, also impact the average monthly take-home pay for beneficiaries.
Because of these factors, the average retiree benefit consistently rises on a monthly basis, as per over a decade of published SSA statistical snapshots. The increases fluctuate and are sometimes quite noticeable, for example, the average payout of $1,980.86 for retired workers in February 2025 jumped to $1,999.97 just two months later. A $1 to $2 retiree benefit increase is seen more often on a month-to-month basis, however.
If this trend maintains its course, the average retiree benefit for May, as per the upcoming June statistical snapshot, will cross over the $2,000 threshold for the first time in the history of the program. This is a “a psychologically important figure for a program that serves as a financial foundation for many aging workers,” according to the Motley Fool.
The value of a Social Security dollar
Beneficiaries should not celebrate just yet despite the history that is being made. Even though nominal retiree benefits continue to increase, the rate at which they have been growing is considerably slower than the inflationary pressures retirees have been facing for the last 25 years.
Since 1975, Social Security began using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) as a measure of inflation. The CPI-W is then used to determine the COLAs for the year. The CPI-W has over 200 spending categories that are condensed into a single figure at the end of the month. This is in turn used for year-over-year comparisons to determine if collective prices are rising or falling (inflation or deflation).
Unfortunately for retirees, however, the CPI-W does them no favors since it analyses the spending habits of “urban wage earners and clerical workers” — which happens to be a cohort who does not currently receive Social Security benefits.
Furthermore, retirees do not spend their money in the same way working individuals do. Retirees or seniors put a a higher portion of their monthly budget towards medical care services or shelter, whilst an average working American will spend more on education, apparel, and transportation.
So whilst the vast majority of Social Security beneficiaries are at retirement age (62 and above), the index used to determine the annual COLAs does not sufficiently weigh in shelter and medical care to their needs. Subsequently, “the purchasing power of a Social Security dollar dropped by 36% from January 2000 to February 2023,” according to a May 2023 analysis from The Senior Citizens League (TSCL), a nonpartisan senior advocacy group.
A more recent TSCL analysis also points to a “20% loss of buying power for Social Security income between 2010 and July 2024.”