At sixty-nine, the typical Social Security benefit is this amount.
The typical individual sucking down a retired worker's benefit from Social Security pockets around $1,905.31 every month, according to the 2024 Social Security Statistical Supplement. However, the common 69-year-old beneficiary bags $1,945.18 – approximately $40 more per month than the typical retired worker's earnings.
Translation to annual figures, this amounts to approximately $23,342 in inflation-adjusted retirement income for a typical 69-year-old.
Why the extra dough?
The primary rationale for the 69-year-old's excess income lies in the percentage of Social Security beneficiaries who chose to draw their benefits early. The overall average encompasses countless individuals who haven't yet reached their full retirement age. This means that their number is disproportionately high when compared to 69-year-olds, as they usually claim reduced benefits for early retirement.
To be precise, 63% of all retirees experience reduced benefits due to early retirement. Conversely, merely 51% of the retirement crowd aged 69 finds itself in the same boat.
The secondary contributing factor is wage growth, which causes the income of high-earners to increase, even after accounting for inflation. The Social Security formula takes wage growth, not inflation, into account to determine the level of income. Therefore, younger beneficiaries tend to receive higher initial benefits compared to past generations. For instance, the typical Social Security beneficiary aged 85-89 netts around $1,806 each month, and this age group tends to pull down the overall average. For those interested, I recently scribbled an article on the average Social Security benefit 40 years ago that sheds light on this issue.
Just averages
Remember, this average figure is just that – an average. Some 69-year-old Social Security recipients walk away with substantially more, while others end up with less. It all hinges on when the retiree claimed Social Security for the first time and the amount of income they gained throughout their working years.
In contrast to many early retirees who experience reduced benefits due to claiming Social Security before their full retirement age, only 51% of 69-year-olds face this situation. This disparity contributes to the higher retirement income for the average 69-year-old.
Furthermore, the Social Security formula considers wage growth, not inflation, when determining benefits. This results in younger beneficiaries, including the 69-year-olds, receiving higher initial benefits compared to previous generations, contributing to the inflated average income. With regards to finance, managing and savings strategies should be considered to maximize retirement income, regardless of the average figure.
