SOCIAL Security recipients will soon experience a significant payment change, marking a milestone in the federal program’s history.
It’s the first time the benefits will break a specific threshold in 90 years, putting more money in Americans’ pockets.
In 1935, the Social Security Act was signed into law, offering millions of Americans retirement, disability, and survivor benefits, among other benefits.
Since then, the Social Security Administration (SSA) has kept a detailed record of where money is allocated and publishes a “Monthly Statistical Snapshot” for recipients to see the details.
The snapshot released is always for the previous month, and April’s revealed that about $128 billion in benefits was sent to 69.4 million Americans by the SSA.
Average payouts were $1,855.57.
Except retirees, who make up about 76% of all beneficiaries, were averaging about $1,999.97.
Those averages fluctuate on a month-to-month basis as there are always new Americans eligible for benefits and others pass away.
Other factors, such as cost-of-living adjustments (COLA) and earning increases, also affect the numbers.
In the past 10 years of Monthly Statistical Snapshots from the SSA, retired workers have seen a consistent rise in payment averages every month, with some being bigger than others.
From February to April of this year, retirees’ average payouts went from $1980.86 to $1,999.97, for example.
Month to month, it’s more like a $1 to $2 increase, except for after the new COLA is announced.
HIGHEST EVER
Still, given that the current average for April was $1,999.97, there’s nearly a statistical certainty that retirees’ benefits will crack $2,000 for May, a first-ever in the 90 years the SSA has been around.
This is huge for seniors who rely on Social Security checks to supplement their income.
Between 80% and 90% of retirees cover some of their bills and expenses with Social Security, according to Gallup surveys.
That cash can help pull some Americans out of poverty.
HOW TO SUPPLEMENT YOUR SOCIAL SECURITY
Here's how to supplement your Social Security:
Given the uncertainty surrounding Social Security’s long-term future, it’s essential for workers to consider ways to supplement their retirement income.
Senior Citizens League executive director, Shannon Benton recommends starting early with savings and investing in retirement accounts like 401(k)s or IRAs.
401(k) Plans A 401(k) is a retirement account offered through employers, where contributions are tax-deferred. Many employers also match employee contributions, typically between 2% and 4% of salary, making it a valuable tool for building retirement savings. Maxing out your 401(k) contributions, especially if your employer offers a match, should be a priority. IRAs An Individual Retirement Account (IRA) offers another avenue for retirement savings. Unlike a 401(k), an IRA isn’t tied to your employer, giving you more flexibility in your investment choices. Contributions to traditional IRAs are tax-deductible, and the funds grow tax-free until they are withdrawn, at which point they are taxed as income.It did for 22 million people in 2023, which was more than any other program in the United States at the time, per data from the Center on Budget and Policy Priorities.
Not to mention, at least 75% of those who made it above the poverty level thanks to the payments were 65 and older.
FLAWED SYSTEM?
Unfortunately, it’s not all good news, though, as there’s also data that shows increases in Social Security amounts aren’t keeping up with inflation and the day-to-day expenses seniors face.
This has been the case for the past 25 years.
Some experts have argued that the cause of this is a fundamental flaw in how the COLA is determined.
It’s always based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
The CPI-W considers the spending habits of Americans who are of working age, not retirees.
Therefore, it doesn’t reflect rising costs in areas that working-age Americans typically don’t have to spend as much on, like healthcare.
Currently, around 76% of Americans are afraid that their monthly Social Security check will not be enough for expenses, even with the $2,000 milestone that’s set to hit.
Still, there are secrets with Social Security that could get some recipients an extra $27,324 per year.
An upcoming calendar quirk also means early $5,000 payments for select Americans this month.
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