this will be the average payment in 15 years

Social Security payments are one of the most uncertain certainties retired Americans live with. Its funding is always at stake with every new yearly budget and the new generations are told that they will not be able to collect when they retire, but things seem to be looking up and experts are ready to posit what the future of these payments will look like in fifteen years.

Doing the math

Martha Shedden, a CFP and president and co-founder of the National Association of Register Social Security Analysts, is ready to do the math for us and help Americans discern what amount of money they will be able to receive. There is a key caveat that must be taken into account. The economy is very volatile and there is no way to predict with certainty what the economic landscape will truly look like in fifteen years with inflation and cost-of-living being what they are today, but with that caveat mentioned, lets make our best educated guesses.

Right now, the average Social Security benefits check is around $1,900 per month and according to Shedden and her calculator “If you assume an inflation rate of 2.25%, the average benefit would be around $2,663 in 15 years. However, given the historical cost of living adjustments (COLAs) over the past 20 years of 2.6%, the average benefit amount in 15 years will actually be closer to $2,802.”

The number itself is not important, the key thing is the purchasing power it will give you in the economy you live in, which Shedden said the 2,802 number would still feel like $1,907 today. So not an improvement in quality of life for those receiving the payments.

This is just the average payment though, some people will be eligible to collect a lot more than they imagine and their quality of life won’t be impacted as greatly as they have been told. It is common to underestimate the amount of benefits you will receive in your golden years when looking just at the national averages. As Shedden states “The lifetime total cumulative amounts for some high-earner couples who have earned the maximum amount every year is in the millions” which is not something most of us contemplate.

There are many factors that determine why this disparity of perception appears, but the most important one is the real purpose of Social Security, which is to ensure that old people who have worked all their life won’t fall into abject poverty. This is why these lower contributors will see their retirement checks match sometimes up to 90% their original salaries. It is easy to be blinded by the perceived gains when collecting Social Security, but as Shedden explained “It’s important for lower-income individuals to be educated and understand exactly what that amount will be. Because, for every month and every year that they can delay collecting, that amount is going to go up.”

And the increment will be noticed for the rest of their lives as cost of living increases, The later you manage to collect, the more you will be able to keep up with inflation and your medical bills, but if that is not a possibility for you and you are already on the poverty line, there is an additional line of defense supplemental security income (SSI).

Shedden cautions against counting on it to make your retirement dreams happen “That’s not really a substantial amount, but it’s definitely a critical part of many Americans’ retirement.”

Social Security, a guaranteed program in the future?

These predictions only work if the system continues to function as it has been, Brian Kuhn, CFP and senior vice president at Wealth Enhancement Group is less than optimistic about Social Security funding in the future “If we consider the Social Security Administration’s predictions that benefits would need to be reduced by 23% around 2033 to maintain program stability without legislative intervention, the average benefit would decrease to about $2,182.”

Once we have seen all the future options, the only real recourse we have is to start prepping early for retirement and never plan to fully rely on the program to survive in our golden years. Shedden cautions Americans to diversify their earnings “It’s never too early to start planning for retirement. It can’t be overstated how important it is to start the savings habit early and watch it grow. Social Security is only one piece of retirement income and was never meant to replace 100% of pre-retirement earnings. If you’re planning for retirement in your 40s or younger, save as much as possible by “paying yourself first,”. Have a certain percentage of each paycheck go into a savings or investment account.”