For many retirees, Social Security provides a steady source of monthly income, but it is rarely designed to cover every retirement expense. Following the 2026 cost-of-living adjustment (COLA), the average Social Security retirement benefit has increased, offering some additional financial support. However, rising living costs continue to put pressure on many households. Knowing how Social Security benefits are calculated, what the average retiree receives, and how personal savings can supplement retirement income can help workers prepare for a more secure future.
As of May 2026, the average Social Security retirement benefit is approximately $2,083 per month, or just under $25,000 per year.
The increase follows a 2.8% COLA that took effect in 2026. Cost-of-living adjustments are designed to help benefits keep pace with inflation, although many retirees continue to face higher housing, healthcare, and everyday living expenses.
The Senior Citizens League (TSCL) has projected a 3.8% COLA for 2027. If that estimate becomes official, the average monthly retirement benefit would increase by about $79, bringing the average payment to roughly $2,162 per month, or nearly $26,000 annually.
Benefits
The table below summarizes recent Social Security benefit figures.
| Year | Average Monthly Benefit | Average Annual Benefit |
|---|---|---|
| 2026 | $2,083 | Just under $25,000 |
| 2027 (Projected) | $2,162 | Just under $26,000 |
While annual COLA increases help offset inflation, actual purchasing power depends on changes in living expenses during retirement.
Calculation
Social Security retirement benefits are based on a worker’s lifetime earnings and the age at which benefits are claimed.
The Social Security Administration reviews a person’s 35 highest-earning years, adjusted for wage growth, to calculate their Average Indexed Monthly Earnings (AIME).
The AIME is then used to determine the worker’s Primary Insurance Amount (PIA), which represents the monthly benefit available at Full Retirement Age (FRA).
Workers with fewer than 35 years of earnings have years with zero income included in the calculation, which can lower future benefits.
Claiming
The age at which someone claims Social Security has a significant effect on monthly payments.
| Claiming Age | Effect on Benefits |
|---|---|
| Before Full Retirement Age | Permanent reduction in monthly benefits |
| Full Retirement Age | Receives 100% of Primary Insurance Amount |
| Up to Age 70 | Benefits increase through delayed retirement credits |
For workers whose Full Retirement Age is 67:
- Claiming at age 62 reduces benefits by about 30%.
- Waiting until age 70 increases monthly benefits by approximately 24%.
Delaying benefits may result in larger monthly payments for retirees who can afford to wait.
Income
Although Social Security plays an important role in retirement, it was never intended to replace all retirement income.
Retirement planning has traditionally relied on three primary income sources:
| Retirement Income Source | Purpose |
|---|---|
| Social Security | Foundation of retirement income |
| Employer Pension | Additional guaranteed income |
| Personal Savings | Supplemental retirement funds |
Today, many private employers no longer offer traditional pension plans, making personal retirement savings increasingly important.
According to Congressional Research Service data, nearly 14% of retirees between ages 65 and 69 rely on Social Security for at least 90% of household income. That percentage increases among older retirees.
Meanwhile, TSCL estimates that a senior’s average monthly living expenses total about $2,700, compared with an average Social Security benefit of $2,083. This creates an annual shortfall of roughly $7,400 for retirees who depend primarily on Social Security.
Savings
Financial experts generally recommend viewing Social Security as one part of a broader retirement plan.
Saving early allows investments more time to benefit from compound growth.
For example:
| Starting Age | Monthly Investment Needed to Reach $1 Million by Age 65* |
|---|---|
| 25 | About $500 |
| 40 | About $1,450 |
*Example assumes a 6% annual investment return.
Many financial professionals recommend saving 10% to 20% of annual income, although any consistent contribution can help build retirement savings over time.
Accounts
Employer-sponsored retirement plans and Individual Retirement Accounts (IRAs) remain among the most common retirement savings options.
401(k)
A traditional 401(k) allows employees to contribute pre-tax income, with investments growing tax-deferred until retirement.
Many employers also offer matching contributions. Contributing enough to receive the full employer match can significantly increase retirement savings over time.
Traditional IRA
Traditional IRAs allow investments to grow tax-deferred, and withdrawals during retirement are generally taxed as ordinary income.
These accounts are available regardless of employer participation, although tax deduction rules may vary.
Roth IRA
Roth IRA contributions are made using after-tax dollars. Qualified withdrawals in retirement are generally tax-free, making Roth accounts attractive for individuals who expect higher tax rates later in life.
Income limits apply for Roth IRA eligibility.
Investing
Workers who prefer a simplified investment approach may consider robo-advisors.
These automated investment platforms create diversified portfolios based on an investor’s financial goals, investment timeline, and risk tolerance. Portfolios are automatically monitored and rebalanced as market conditions change.
Robo-advisors can provide a straightforward option for long-term retirement investing, particularly for individuals who prefer a hands-off approach.
Social Security remains an important source of retirement income for millions of Americans, but it is generally intended to serve as a foundation rather than a complete retirement plan. While annual COLA increases help preserve purchasing power, many retirees continue to face expenses that exceed their monthly benefits. Building retirement savings through employer-sponsored plans, IRAs, and long-term investing can help provide additional financial flexibility and strengthen retirement security.
FAQs
What is the average Social Security benefit in 2026?
About $2,083 per month on average.
How are Social Security benefits calculated?
Using your highest 35 years of earnings.
Does delaying Social Security increase benefits?
Yes, benefits grow until age 70.
What is the projected 2027 COLA?
TSCL estimates a 3.8% increase.
