It's Official: Social Security Retired-Worker Benefits Have Made History

In August 1935, the Social Security Act was signed into law, with the first retired-worker benefit being issued in January 1940. For decades, this prized social program has been providing a financial foundation for those who could no longer do so for themselves.

Based on a recently updated analysis from the Center on Budget and Policy Priorities, Social Security helped pull more than 22 million people above the federal poverty line in 2023, 16.3 million of whom were aged 65 and above. It's also reduced the federal poverty rate for seniors to 10.1% from an estimated 37.3% if the program didn't exist.

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Separately, national pollster Gallup has been surveying retirees in each of the last 23 years to gauge how important their Social Security income is to making ends meet. Anywhere from 80% to 90% of respondents noted it was necessary, in some capacity, to cover their expenses.

In May, the average Social Security check for retired-worker beneficiaries, who comprise the bulk of recipients, made history by surpassing a psychological milestone.

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Social Security retired-worker benefits hit a milestone for the first time in 90 years

Every month, the Social Security Administration (SSA) publishes what's known as its "Monthly Statistical Snapshot," which provides a detailed rundown of where every dollar in traditional Social Security outlays ends up. "Traditional" benefits refer to payouts for retired workers, survivor beneficiaries, and workers with disabilities.

For example, the June statistical snapshot from the SSA shows that 69.628 million people received a benefit in May 2025. This includes more than 52.8 million retired workers, close to 5.9 million survivors of deceased workers, and 7.1 million workers with disabilities. You'll note these figures don't add up to 69.628 million, with the difference made up by spouses, children, widow(er)s, and parents of current/former beneficiaries who also qualify for a monthly check under select circumstances.

The SSA's detailed monthly breakdown also allows anyone to see how much in benefits was outlaid, which includes the average benefit paid for each specific category.

As a whole, $129.351 billion was dispersed in May to the aforementioned 69.628 million beneficiaries, which worked out to an average payout, across all beneficiary types, of $1,857.75.

However, the highest average check of all beneficiary categories went to retired workers. For the first time in the program's 90-year history, the average Social Security retired-worker benefit crested $2,000 -- officially, it came in at $2,002.39.

This average payout for retired workers has risen on a month-to-month basis for as long as the SSA has been publishing its Monthly Statistical Snapshot. This is because of the dynamic of new workers filing for and receiving initial benefits, as well as some beneficiaries dying. With wages and salaries nominally increasing over time, as well as near-annual cost-of-living adjustments (COLAs) boosting how much Social Security beneficiaries receive, it was simply a matter of time before the average Social Security retired-worker benefit hit the psychologically important $2,000 level.

Unfortunately, this nominal achievement isn't reason to cheer.

Image source: Getty Images.

The purchasing power of a Social Security dollar has been in a steady decline

Despite the average retired worker now receiving a payout that begins with a "2" for the first time in the program's storied history, studies have shown that Social Security payouts have done a very poor job of keeping up with the inflationary pressures retirees have contended with since this century began.

Prior to 1975, there was no rhyme or reason to how Social Security COLAs were determined or passed along. Following an entire decade without a COLA in the 1940s, Congress passed a whopping increase to benefits of 77% in 1950.

Beginning in 1975, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) was "adopted" as Social Security's measure of inflation, which would allow for annual adjustments, if necessary. The CPI-W has in excess of 200 spending categories, all of which have their own unique percentage weightings. These weightings are what allow the CPI-W to be chiseled down to a single number at the end of each month, which makes for easy year-over-year comparisons to determine if this broad basket of goods and services is rising (indicating inflation) or declining (indicating deflation).

Though you'd think a broad-basket inflationary index would be perfect for mirroring the prevailing rate of inflation, this simply hasn't been the case.

The inherent flaw with the CPI-W can be easily seen in the latter half of its full name: "urban wage earners and clerical workers." This inflationary index is tracking the spending habits of mostly working-age Americans who aren't currently receiving a Social Security benefit. In comparison, more than 85% of Social Security beneficiaries are 62 and older.

Working-age Americans and retirees budget their money differently. Whereas the former are likely to spend a higher percentage of their monthly budget on education and apparel expenses, seniors dole out more for shelter and medical care services than the typical working-age American. Unfortunately, the CPI-W doesn't account for the added importance of shelter and medical care service expenses, thus leading to a fairly persistent decline in the purchasing power of a Social Security dollar over time.

According to a July 2024 study from nonpartisan senior advocacy group The Senior Citizens League, the buying power of a Social Security dollar has dropped by 20% since 2010. As long as the CPI-W remains Social Security's inflationary tether, even a record-breaking monthly benefit for retired workers is unlikely to keep pace with the pricing pressures beneficiaries are contending with.

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