Whether you are a brand-new retiree in 2024 or have been out of the workforce for a while, there are a few key things that you should know about Social Security this year.
Here are four crucial facts to know about your benefits so you don't end up with less money than you expected -- or less than you need.
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1. The average Social Security benefit is just $1,907
The first thing to be aware of is that the average Social Security benefit as of January 2024 was just $1,907 per month. That's not a lot of money for most seniors to live on.
Your benefit may be above average if your earnings were higher than your fellow Americans' for most of your career. On the other hand, if you didn't make a lot of money, your benefit may be lower than the average.
Regardless, the fact that the typical senior gets just $1,907 a month illustrates an important point: Social Security should not be your sole source of retirement money. These benefits are only intended to replace about 40% of pre-retirement income, and that's not enough to maintain your living standard.
You'll need to supplement Social Security with plenty of savings if you don't want to struggle financially when you should be enjoying your later years.
2. Full retirement age is 66 and 8 months if you're turning 66 this year
If you're turning 66 this year, there's another important fact to know: Your Full Retirement Age (FRA), or the age when you can claim your standard benefit, is 66 and 8 months. This is two months later than the full retirement age of people who turned 66 last year.
Full retirement age is changing over time and is based on your birth year. For those who turn 66 next year, it will be 66 and 10 months. Finally, for those who turn 66 in 2026 and beyond, FRA is set at 67. Reforms to Social Security in 1983 gradually pushed FRA later to shore up Social Security's finances.
Unfortunately, this means you must wait until you're 66 and 8 months old to get your first benefit check if you don't want it reduced by early filing penalties. This can be a disappointment if you had 66 in your head as the age when you planned to claim Social Security.
3. Your benefits aren't worth as much as they used to be
Finally, the last thing to know is that inflation is eating away at the value of your benefits. The Senior Citizens League found that benefits have lost 36% of their buying power since 2000.
This is despite the fact that the Social Security program has cost-of-living adjustments (COLAs) built into the program. Unfortunately, those COLAs are calculated by using a formula that looks at price increases on goods and services used by urban wage earners and clerical workers. As a result, it underestimates the inflation seniors actually experience.
What's more, COLAs have often fallen short in recent years because inflation has continued to surge after the COLA went into effect for the year. In 2024, for example, seniors saw their checks increase by 3.2%. However, April's inflation data showed prices up 3.4% year over year, and March's data showed a 3.5% year-over-year increase.
When your buying power falls, you need to be more careful with your money so you don't end up broke.
Seniors need to know these three key Social Security facts so they can make informed choices about their benefits. You may need to cut your budget, aim to save more before retiring, or wait a little longer to claim Social Security -- and you now have the information to do those things if necessary to secure your financial future.
