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The Average Social Security Benefits To Be Lower In 2024

Social Security Benefits
Social Security Benefits; Source- Forbes

For many seniors, Social Security is the most essential source of income since, unlike savings, it is guaranteed to last a lifetime and never run out. However, retirees, both present and future, must have a realistic understanding of the true value that their retirement benefits will bring.

Social Security Benefits

Social Security Benefits; Source- MARCA

Average Social Security COLA

The average monthly benefit from Social Security will be $1,907 in 2024. From $1,848 in 2023, that is more. Due to a COLA that will take place in 2024 and result in higher payouts to help pensioners keep up with inflation, the average benefit increased. You will undoubtedly see that the average benefit amount for the upcoming year is not particularly high, even though it did grow. With a monthly payment of only $1,907, your annual income would be a meager $22,884. When you factor in all the expenses you’ll have to pay for it, such as housing and medical care, that’s not exactly a fortune.

Lower Social Security Benefits

That the average pension gives retirees so little money to cover all of their necessities is regrettably not a bug. As it is, Social Security was only intended to replace roughly 40% of pre-retirement income. Therefore, your benefit will still only give you a little portion of the money you made when working, even if it is far over this average. Originally intended to be one of three sources of money for retirement, Social Security was never intended to contribute more than around 40% of your income. The other two sources were meant to be savings and an employer-sponsored pension.

And that poses a serious issue for those whose employers do not offer pensions, for those who did not save, or for those who did save but may not have made prudent investment decisions or saved enough. Depending on their goals for their retirement and their health, seniors may need to replace between 80% and 90% of their pre-retirement income, if not more, to live comfortably. This implies that in addition to what Social Security provides, anyone hoping for a decent retirement will need a sizable sum of money. Hopefully, if you are far from retirement, this low average benefit will motivate you to work hard to boost your savings and investments for the future.

Now is the time to start saving as much as you can for your future self-employment by opening a tax-advantaged retirement account (401(k) or similar account. Additionally, it’s critical to explore additional sources of income beyond Social Security if you are approaching or have already reached retirement. If you find you’re overly dependent on these benefits and they don’t go as far as you had intended, you can also make significant lifestyle adjustments, such as moving to a low-cost area.

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