In response to the recent burst of inflation, the government increased Social Security benefits significantly in the past two years. But compared to average pre-retirement income, net benefits have been falling for decades. And the trend will continue. One big reason: Rapidly rising Medicare premiums that usually are deducted directly from Social Security checks.
Think about Social Security benefits in terms of how much of an average wage the retirement program covers. And despite steady increases in gross benefits, by this “replacement rate” measure, net Social Security benefits are declining. In other words, Social Security is providing a smaller share of the cash income older adults need to maintain their pre-retirement standard of living.
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