As of December 1994, the average monthly Social Security benefit for a retired worker was $697 per month. This means that the average retired worker received $8,364 in annual, inflation-protected retirement income.
As of August 2024, the average Social Security benefit for a retired worker is $1,920.48 per month, or $23,046 per year. This means that the average Social Security benefit has increased by about 176% over the past 30 years.
Do retirees have more spending power than they did in 1994?
Obviously, inflation has changed the value of money over time. In other words, $1 in 1994 isn’t the same as $1 in 2024. Let’s take a look at how Social Security has changed over the past 30 years when adjusted for inflation.
Using the Bureau of Labor Statistics (BLS) inflation calculator, which uses the same Consumer Price Index (CPI) data that is used to determine Social Security cost of living adjustments, or COLAs, the average $697 monthly Social Security benefit in 1994 would be worth about $1,465 in spending power today.
The average Social Security beneficiary receives more money today, even after adjusting for inflation, than they did 30 years ago. One possible explanation is that the amount of income that’s used to determine Social Security benefits has gravitated higher.
In 1994, the Social Security contribution and benefit base (the amount of income that can be taken into account in the benefit formula) was $60,600, which is equivalent to $127,329 in today’s dollars. But the contribution and benefit base in 2024 is $168,600. This is because while Social Security benefit increases are determined by inflation, the contribution and benefit base depend on changes in the national average wage index.
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