There are few government programs that have the reach that Social Security has. With tens of millions of people receiving benefits, Social Security plays a vital role in fighting poverty among older Americans while providing key financial support to families dealing with a family member’s death or disability.
Yet as important as Social Security benefits are, they’re still relatively modest. The typical monthly Social Security payment doesn’t come close to replacing wage income for the vast majority of participants. Although average Social Security monthly benefits have risen modestly in recent years, they still amount to less than $1,400 per month.
Most of the increases are tied to a couple of things. First, for current recipients of Social Security benefits, each year brings a cost-of-living adjustment that typically boosts monthly payouts by a small percentage. For instance, starting in January 2020, Social Security recipients will get a 1.6% increase in their monthly checks. That follows increases of 2.8% at the beginning of 2019 and 2% at the start of 2018.
Meanwhile, steady boosts in the Social Security wage base help increase benefits for new retirees compared to what their counterparts in previous years received. For 2020, the maximum wage base will rise to $137,700 compared to $132,900 in 2019 and $128,400 in 2018. Higher wage bases can boost average monthly earnings for higher-income recipients, and the way the formula for benefit payments works also helps boost payments.
Social Security was never intended to be the only source of income for Americans. Given the program’s modest payments, it’s important for retirees in particular to have other sources of income to supplement what they get from Social Security.