This was the average Social Security benefit in 1964 and here is what it is now

Many people know that Social Security retirement benefits grow over time. But by how much? Are these increases actually keeping pace with inflation as intended?

Here’s how things have changed over the past 60 years.

Then and now

In 1964, the average monthly Social Security payment was just $77.57. It has since increased to the current level of $1,920.48 per month for retired workers (not including payments to surviving spouses and children of retired workers).

That seems like a massive increase in some ways, it is. That’s an annual increase of 5.49% over the 60-year period, compared to an average annual increase of 3.93% for the Consumer Price Index, or CPI. On a so-called “core basis”, which excludes volatile food and energy prices, the average annual CPI increase was just 3.89%.

Image source: Getty Images.

But what about the most important spending categories for retirees?

Many people don’t realize it, but the popular CPI numbers only reflect the average of the worker the cost of living. Another index that measures the average old The typical cost of living for US residents paints a different picture for retirees. Since its inception in late 1982, this CPI measure (known as CPI-E) has grown at a compound annual rate of 2.99%, while monthly Social Security payments have grown by an average of 3.69% per year in the same period.

While cost-of-living adjustments (or COLAs) still exceeded inflation as measured by the CPI-E, the gap was much smaller.

Make additional arrangements

From a retiree’s perspective, there will always appear to be rising prices or additional expenses that are not fully reflected in the Social Security Administration’s COLA calculation.

Given the small margin between inflation and the Social Security COLA, not to mention the potential for emergencies and other unexpected expenses, future retirees should recognize that Social Security benefits themselves leave no room for error. You’ll absolutely want to save for retirement on your own, boosting those benefits when the time comes.