Social Security has existed for over 89 years, and in 1984, the amount that beneficiaries were paid was a fraction of what it is now. A lot has changed since then, and people are finding it a lot harder to keep up with inflation now than in the 1980s, even with the COLA increase every year. Millions of Americans rely on their monthly benefits from the Social Security Administration as essential income, and for many, it’s their only source of income.
The context of Social Security in the United States
The Social Security program was signed into law in 1935 and the first benefits started going out five years later in 1940. Its initial purpose was to provide support for the elderly. The program evolved to later cover people with disabilities and the unemployed, and now, it also includes survivors.
These are the main federal programs administered under the SSA:
- Retirement benefits
- Disability benefits (SSDI)
- Survivor benefits
- Supplemental Security Income (SSI)
- Medicare
Social Security is a fundamental source of support, especially for older citizens. According to SSA statistics from 2024, 90% of Americans aged 65 and above collect some form of Social Security benefits. Out of the entire population, there are 68.4 million beneficiaries across all programs.
The COLA is not enough to cover inflation
Although benefits increase annually in line with the Cost-of-Living Adjustment, people are struggling a lot more under the pressure of inflation and the increased costs of goods and services.
The SSA introduced the COLA system in 1975 to help recipients maintain their buying power in the face of rising inflation. Under the COLA, beneficiaries receive a small increase every year. In October 2024, the COLA for 2025 was set at 2.5%, meaning recipients started seeing 2.5% more money in their accounts from January.
Not everyone is satisfied with the increase, saying it doesn’t reflect the true increased cost of living, especially since the economic upheaval of the COVID-19 pandemic. Economically vulnerable groups such as the elderly are more affected by inflation, yet the COLA makes no allowance for this.
Another factor that affects the lives of Americans relying on Social Security funds is the full retirement age (FRA), which changed in 2025.
What did Social Security benefits look like in 1984?
Today’s economic climate is vastly different from what it was in 1984 when a loaf of bread cost $0.94, a dozen eggs would set you back just $0.86, and a gallon of milk was $2.26.
These were the average monthly benefits amounts per decade over 40 years:
- 1984: $461
- 1994: $697
- 2004: $955
- 2014: $1,329
- 2024: $1,925
However, while figures show that benefits are increasing, they’re not necessarily worth more than they were decades ago. In fact, according to a 2024 report from the nonprofit group The Senior Citizens League, which advocates for the rights of the elderly, Social Security has lost around 20% of its buying power since 2010.
Social Security is struggling to keep pace with rising costs, even with the COLA applied every year. If things carry on the way they are heading now, retirees will not be able to rely on their benefits as much in the future as they do now. It’s advisable to plan for the future and not rely on a single source of income in your later years.
Strategies to ensure you have various forms of income in retirement
There are a number of avenues to save money and earn interest so that Social Security is not the only income you have to rely on:
- Retirement savings accounts: Examples of these are 401(k), 403(b), and Roth 401(k) plans, and Individual Retirement Accounts (IRAs).
- Pensions: These are usually Defined Pension Plans.
- Annuities: There are different kinds of annuities, namely, immediate, deferred, fixed, and variable annuities.
- Investment strategies: You can invest in dividend stocks, bonds, mutual funds and ETFs, and real estate.
In more news about pensions, Joe Biden has signed a bill into law that raises Social Security benefits, including pensions, for millions of Americans. The bill, which is called the Social Security Fairness Act, affects around three million people’s pensions.