In 1994, the average monthly Social Security benefit was approximately $736. Adjusted for inflation, this would equate to around $1,220 in today’s dollars. In contrast, the average Social Security benefit as of 2023 is approximately $1,830 per month.
While this is a significant increase nominally, the actual increase in terms of purchasing power is much less dramatic due to inflation. The Cost of Living Adjustment (COLA) was first put in place in 1975 to help monthly checks keep up with rising prices for everything from housing to groceries.
Cola adjustments and purchasing power
The COLA helps ensure that Social Security benefits maintain their value over time. However, as the cost of living continues to rise, many retirees still feel the pinch. Understanding these figures highlights just how crucial these adjustments are for the millions of Americans who rely on Social Security to support their daily lives.
By keeping an eye on these trends and the annual COLA adjustments, those relying on Social Security can better plan and manage their finances amid changing economic conditions. If you’re not retired yet, now’s the time to explore other sources of income to avoid leaning too heavily on Social Security. The more you can plan ahead, the more flexibility you’ll have in retirement.
