Feb 22, 2025
Each year, the Social Security Administration (SSA) adjusts the amount of money that recipients receive in benefits, helping to account for factors such as inflation.
Ideally, the adjustments give the 68 million Social Security benefit recipients more purchasing power during their retirement years. But according to a 2024 study from The Senior Citizens League, these benefit checks have actually lost significant buying power over the years.
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Here we’ll take a look at the benefit amounts of past and present to see how this came to be.
2010 vs the present
The SSA’s annual adjustment to benefit payments is known as the Cost-of-Living Adjustment, or COLA. It was designed to safeguard the purchasing power of Social Security Income (SSI) benefits from decline due to inflation.
In 2025, Social Security benefit checks will get a 2.5% bump thanks to the COLA. These adjustments can go higher, as we saw back in 2022 when Social Security benefit checks increased by 8.7% due to high-inflation rates following the COVID-19 pandemic.
On paper, the annual COLA looks like a decent increase that gives retirees a larger Social Security check. And while that’s true — the average monthly Social Security check in 2010 was $1,164, while the average check as of January, 2025, is $1,976 — COLA appears to have slowly fallen behind the rate of inflation over the years.
As The Senior Citizens League’s study notes, Social Security benefits have lost 20% of their buying power since 2010, which means monthly benefit checks today are worth 20% less than they were about 15 years ago.
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How buying power has been affected
Though COLA is an attempt to ensure that Social Security checks match the pace of inflation, the adjustment often falls short.
Take 2024, for example. While 2024’s COLA added a 3.2% bump to benefit checks, the inflation rate sat at 3.4%. And then there’s 2022, when the COLA boosted benefit checks by 5.9% despite an inflation rate that sat at 7%.
A 1.1% difference may not seem like much, but the discrepancies between the rate of inflation, rising prices and COLA can be harmful to retirees, especially those who rely on benefit checks as a major chunk of retirement income.
Consider the escalating costs of many of today’s essentials. Expenses like transportation have gone up by a staggering 96.6% since 2010, while housing has risen by 81.2%. And then there’s food and beverage, which rose by 56.7% in the last 15 years.
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In order to compensate for the Social Security benefit losing 20% of its value, retirees would need to earn $370 more per month, or $4,440 more per year. Without these compensating funds, retirees relying on Social Security alone will have a tough time safeguarding their finances from the sting of inflation.
How to combat Social Security’s lost value
The first thing you should look into is maximizing your Social Security benefit. Your age at retirement — in relation to your full-retirement age — can have a big effect on the size of your benefit checks.
For example, if you were to retire in 2025 at 62 years old, your maximum benefit would be $2,831 per month. But if you retired this year at 67, your max benefit would jump to $4,018. And if you were able to delay claiming your Social Security benefit and retire at 70, your max benefit would jump even higher to $5,108.
If the Social Security benefit is losing some of its value, you may want to do your best to get the fattest benefit check that you can.
For those nearing retirement who are still working, you may want to think about putting more money into investment accounts like an Individual Retirement Account (IRA) or a 401(k). Each year, the IRS updates its contribution limits for these investment accounts.
With the Social Security benefit losing value, the more money you can save before retirement, the less you'll have to rely on Social Security in your golden years.
For those who are already retired, taking on a part time job — if you’re able to — could help stave off the effects of rising costs and a depreciating Social Security benefit. It’s not ideal — after all, you ideally want to relax and enjoy your golden years — but it could help with expenses and keeping up with inflation.
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Sarah Li-Cain, AFC is a finance and small business writer with over a decade of experience.
