Here’s What Your Social Security Benefit Could Be in 2030

Many retirees rely on Social Security benefits as an important part of their retirement income. According to the Social Security Administration , nearly 97% of older adults ages 60 to 89 either currently receive or will receive Social Security benefits.

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Given that you’re likely to rely on Social Security in the future, it’s important to understand what your future benefits might be . However, even though Social Security benefits are not determined beforehand, we can use past trends to predict what they might look like.

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What Is the Current Social Security Benefit?

The maximum monthly Social Security benefit in 2024 is $4,873. However, to receive that amount, you would have needed to have had a long and well-paying career. According to the Social Security Administration, the average monthly payout is closer to $1,907.

When you look back to the average Social Security benefit over the past 24 years, it has increased from $815.62 in 2000 to $1,907 in 2024. This is an average increase of around 3.6% each year.

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Why Social Security Benefits Have Increased Over Time

There are two main reasons Social Security benefits have increased over time. The biggest impact is that wage levels have changed over time — the average wage index influences the initial payout of Social Security.

Higher Wages

The average wage index calculates the average monthly earnings amount for each retired worker by indexing income from the 35 highest-paid years of work. Then, this number is run through the Social Security benefits formula to determine the amount the retiree would receive if they claimed Social Security at their full retirement age .

This process helps Social Security benefits reflect the cost of living increases over a worker’s lifetime. In general, workers receive more money as they progress in their careers, so Social Security benefits as a whole will increase as the years pass.

“The primary factor is your lifetime earnings record — specifically, your average indexed monthly earnings during the 35 highest-earning years,” said James Campigotto, data journalist for Atticus . “This amount goes through a formula that provides a higher percentage of pre-retirement income to lower earners. The age you claim benefits also matters — claim before full retirement age, and benefits are reduced; wait until after, and they increase up to age 70.”

Inflation

The second reason Social Security benefits have increased over time is that payments are adjusted annually based on changes in inflation . These changes are measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers.

Social Security benefits are modified with annual cost-of-living adjustments, which have gone up year over year. Using cost-of-living adjustments helps benefits hold their buying power as prices increase.

Prediction for Social Security Benefits in 2030

The average Social Security benefit for retired workers has increased about 3.6% yearly since 2000. If that trend continues, the average Social Security benefit for retired workers will increase 28% over the next seven years to reach $2,363 by 2030.

This prediction is just that — a prediction. The exact number depends on wages and inflation over the next seven years. It will also depend on workers’ behavior. A significant change in the average age workers claim retirement benefits could impact the average payout.

Although Social Security benefits are predicted to increase, that doesn’t mean that recipients will necessarily feel the effects. Cost of living will likely increase right alongside Social Security benefits. Some Social Security recipients are barely surviving: Social Security benefits lift more than 15 million older adults above the poverty line. Without Social Security benefits, about four in ten adults 65 and older would live below the poverty line, according to the Center on Budget and Policy Priorities.

“Looking ahead to 2030, the Social Security program faces financial strains due to an aging population,” said Campigotto. “Unless reforms are enacted, the Trust Fund reserves that help pay benefits are expected to be depleted by 2035, after which only 80% of scheduled benefits could be paid from ongoing payroll taxes.”

Campigotto added that to address the potential depletion of reserves by 2030, policymakers will likely need to make a combination of adjustments, such as raising the retirement age, increasing payroll taxes and reducing benefits for higher-income recipients.

The Bottom Line

Social Security benefits are very helpful for many retired Americans. If you plan to retire near or before 2030, know that your benefits will likely be higher than they are today. However, it’s important to understand that Social Security benefits aren’t guaranteed. Because many experts are worried about a potential shortfall in funds used to pay benefits, changes could be on the horizon.

This means planning ahead for your retirement has never been more important than it is today. Having other sources of retirement income, like 401(k)s, Roth and traditional IRAs, investment accounts and other savings, could be crucial to a comfortable retirement. If you need help understanding how to plan properly, financial planners are available to help.

This article originally appeared on GOBankingRates.com : Here’s What Your Social Security Benefit Could Be in 2030