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Is Social Security Enough to Retire On? The Hard Truth About Your Golden Years

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Alden and Dena Swartz draw nearly $4,000 a month from Social Security, the government program designed to support Americans in retirement. And they are struggling.

Gail Randle and her partner, Mike DellaVolpe, collect only $2,400 a month in Social Security benefits: Not quite $30,000 a year. And they are doing all right.

“We are frugal people,” said Randle, 73. “Almost everything in our house is recycled. Used, you know? Thrifted. But it looks nice. Everything works. ”.

Social Security was never intended to fund the full cost of retirement. On average, the benefit covers about 40% of a workers preretirement earnings. And that figure could drop: Social Security will face a shortfall by 2035, according to the Congressional Budget Office. President-elect Donald Trump proposes to eliminate taxes on Social Security, which could deplete the fund two years sooner.

Most Americans think you need at least $1 million in the bank, on top of Social Security, to live a comfortable retirement. That way of thinking is rewarded by investment firms and news headlines: “Plan to save 10 times your annual income before you retire if you want to keep the lifestyle you have now.”

But here’s the problem: Most Americans don’t save nearly that much. A federal survey of consumer finances found that the average family with a retirement account has about $200,000 saved for retirement. This is for people aged 65 to 74. Only about half of those households have retirement accounts at all.

Just fine, says Andrew Biggs, a senior fellow at the American Enterprise Institute think tank. He penned an essay that went viral this year, arguing that you can retire with a lot less than $1 million in the bank: $50,000 to $100,000 in savings should do it, he said.

As evidence, Biggs points to another federal report, the Survey of Household Economics and Decisionmaking. That survey asked retirement-age Americans, 65 to 74, how well they were managing financially. Roughly 85% said they were doing OK.

After they retire, “people spend dramatically less,” Biggs said. “This sort of rat race you get when you’re working, a lot of that drops off in retirement. ”.

To test that theory, USA TODAY reached out to retirees across the country who are living mostly on Social Security and asked how they were doing. Our help came from the 83,000 people who post in the r/retirement community on Reddit, who talk about this all the time.

The Crumbling Three-Legged Stool of Retirement

To be honest, most of us have heard of the “three-legged stool” way to save for retirement: Social Security, employer pensions, and personal savings. This model was meant to help us build a strong base for our golden years. But I have to say, that stool looks really unstable these days.

Why? Well, for starters:

  • Traditional employer pensions have practically vanished, replaced by 401(k)s and similar plans
  • Personal savings vary wildly across households, with many Americans struggling to save anything meaningful
  • Social Security, once considered rock-solid, faces serious financial pressure

This makes a lot of people who are about to retire wonder: Is Social Security enough to live on?

The short answer? Nope Not even close,

The Sobering Reality of Social Security Benefits

Here’s something that might shock you – Social Security was never designed to be your only source of retirement income. In fact, it’s only meant to replace about 40% of your pre-retirement income. That’s according to the National Council on Aging, not just my opinion.

Meanwhile, most financial experts say that you should have between 70 and 80 percent of your pre-retirement income saved up to keep up your standard of living after you stop working. Notice the problem? There is a huge difference between what Social Security gives you and what you need.

Let’s break this down with a simple example:

If you made $75,000 a year before you retired, Social Security might give you about $30,000 a year. But if you need $55,000 a year to keep up your current lifestyle, you’ll be short $25,000 a year. That’s a big hole to fill!.

The Future of Social Security: Not Looking Great

I hate to be the bearer of bad news, but Social Security’s future isn’t exactly rosy. According to the latest estimates, the Old-Age and Survivors Insurance (OASI) Trust Fund – the part that pays retirement benefits – is projected to be depleted by 2033.

Does this mean your benefits will completely disappear? No, but without Congressional action, benefit reductions of 9% to 25% could be coming, with later generations facing even steeper cuts.

Why is this happening? It’s simple math:

  1. Americans are living longer
  2. More people are retiring than ever before
  3. There aren’t enough younger workers paying into the system

How Much Will Social Security Actually Pay You?

Your Social Security benefit amount depends on several factors:

  • Your earnings history (specifically your highest 35 years)
  • The age you start claiming benefits
  • Whether you continue working while receiving benefits

According to the Social Security Administration, the average monthly benefit for retired workers in December 2024 was $1,975. That translates to an annual income of $23,700.

Can you live on that? Maybe in some areas with an extremely low cost of living and if you’ve paid off your mortgage, but for most Americans, that’s not gonna cut it.

The Retirement Income Gap

The difference between what Social Security provides and what you actually need for a comfortable retirement is what experts call the “retirement income gap.” And lemme tell you, for many Americans, that gap is more like a canyon.

In 2023, U.S. households led by someone 65 or older spent an average of $64,326, according to the Bureau of Labor Statistics. With Social Security providing roughly $23,700 annually on average, that’s a potential gap of over $40,000!

However, it’s worth noting that most retiree households spend less than the average. A 2022 survey by the Employee Benefit Research Institute found that 68% of retirees spend less than $40,000 per year. But even with more modest spending, Social Security alone typically falls short.

When to Start Claiming Social Security Benefits

One way to maximize your Social Security income is to carefully choose when to start claiming benefits. You can begin receiving Social Security retirement benefits as early as age 62, but your benefits will be reduced if you start before your full retirement age.

Your full retirement age depends on when you were born:

  • If you were born between 1943-1954: Full retirement age is 66
  • If you were born in 1955: Full retirement age is 66 and 2 months
  • If you were born in 1956: Full retirement age is 66 and 4 months
  • If you were born in 1957: Full retirement age is 66 and 6 months
  • If you were born in 1958: Full retirement age is 66 and 8 months
  • If you were born in 1959: Full retirement age is 66 and 10 months
  • If you were born in 1960 or later: Full retirement age is 67

If you claim at age 62 instead of waiting until full retirement age, your benefit could be reduced by as much as 30%. On the flip side, if you delay claiming beyond your full retirement age, your benefit increases by about 8% for each year you wait, up until age 70.

How to Fill the Gap: Beyond Social Security

Since we’ve established that Social Security alone won’t cut it for most retirees, how do you fill that pesky income gap? Here are some strategies:

1. Build Your Personal Savings

The most obvious solution is to save more during your working years. This could include:

  • 401(k) or 403(b) retirement plans
  • Traditional or Roth IRAs
  • HSAs (Health Savings Accounts)
  • Taxable investment accounts

2. Consider Working Longer

Working a few extra years can benefit you in multiple ways:

  • More time to save for retirement
  • Fewer years of retirement to fund
  • Potential for higher Social Security benefits
  • Possible access to employer health insurance

However, don’t count on part-time work as a permanent solution. As the National Council on Aging points out, “At some point, we all won’t physically be able to go to work.”

3. Explore Lifetime Income Options

One emerging option that’s worth considering is lifetime income funds, which can be found within some employer-sponsored retirement plans. These funds:

  • Provide steady income payments, similar to a regular paycheck
  • Protect your retirement income from market volatility
  • Ensure you won’t outlive your income, even if you live to 100

Unlike traditional annuities, lifetime income funds offer greater flexibility and potentially lower fees since they’re offered through employer plans.

4. Tap Into Home Equity

If you own your home, you might consider:

  • Downsizing to a smaller, less expensive property
  • Exploring a reverse mortgage
  • Renting out part of your home

5. Reduce Your Expenses

Many retirees find they can live comfortably on less by:

  • Relocating to an area with a lower cost of living
  • Eliminating debt before retirement
  • Taking advantage of senior discounts and benefits
  • Adopting a more frugal lifestyle

What a “Good” Retirement Income Looks Like

So what counts as a “good” retirement income? There’s no one-size-fits-all answer, as it depends on factors like:

  • Where you live (cost of living varies dramatically across regions)
  • Your health status and anticipated medical expenses
  • Whether you own your home outright
  • Your desired lifestyle (travel, hobbies, etc.)

As Joe Conroy, financial advisor and owner of Harford Retirement Planners, puts it: “You can have a great retirement on $5,000 a month, and you can have a great retirement on $50,000 a month.”

That said, the old rule of thumb is that you’ll need about 80% of your pre-retirement income to maintain your standard of living. So if you earned $60,000 annually before retirement, you might aim for about $48,000 per year in retirement.

Steps to Take Now (No Matter Your Age)

Whether retirement is decades away or just around the corner, here are some concrete steps you can take:

  1. Estimate your Social Security benefit using the calculators at SSA.gov
  2. Calculate your retirement income gap by determining how much you’ll need in retirement versus how much you’ll have from Social Security and other sources
  3. Maximize your retirement savings by contributing as much as possible to 401(k)s, IRAs, and other retirement accounts
  4. Consider working with a financial advisor who can help you create a personalized retirement strategy
  5. Explore guaranteed income options available through your employer’s retirement plan or elsewhere
  6. Stay informed about changes to Social Security and retirement planning best practices

The Bottom Line: Social Security Is Just One Piece of the Puzzle

I hate to burst your bubble, but the answer to “Is Social Security enough to retire on?” is a resounding NO for most Americans. Social Security was designed as a safety net, not your primary retirement funding source.

The good news? By understanding this reality early and taking proactive steps to build additional income streams, you can still create a comfortable, financially secure retirement. It just takes planning, discipline, and a clear-eyed view of what Social Security can and cannot provide.

Remember, retirement planning isn’t a one-time event—it’s an ongoing process that requires regular attention and adjustments. The sooner you start addressing your potential retirement income gap, the better positioned you’ll be to enjoy those golden years without financial stress.

So, what steps will you take today to supplement your Social Security and build a more secure retirement?

is social security enough to retire on

‘I have worked so hard all my life’

Gail Randle’s approach to retirement living has a lot to do with staying out of trouble.

“I don’t drink, I don’t smoke, we don’t get arrested, we don’t go to jail,” she said. “We don’t start arguments with people. ”.

Randle had a long career in the Army and Army Reserve, working as a colonel’s clerk and as a general’s driver. She dabbled in property management and sometimes moonlighted as a cocktail waitress. For the final 16 years of full-time work, she owned a retail store. “Adult,” she clarified. “It was stripper clothes. ”.

She retired in 2016 at age 65. She felt that she deserved it.

“I have worked so hard all my life, working two jobs, sometimes three,” she said. “You throw in the Army Reserves. And it has really been a struggle. ”.

For all that work, Randle has only $2,000 in retirement savings. She has a modest annuity, about $500 a month, but it runs out in a couple of years.

And so, Randle and her partner, Mike DellaVolpe, 82, survive mostly on Social Security. Their combined benefit is about $2,400 a month.

The money goes farther than you might think.

In the years before retirement, Randle “put some things into effect that would make my life easier,” she recalled. “I said, OK, we’re going to need a newer car. We need to get our pool resurfaced. ” Earlier this year, she paid off her $82,000 mortgage on her home in Clearwater, Florida.

She has two grown kids who support themselves. She and her partner enjoy keeping to a budget.

“We are both very frugal,” she said. “We look at those menus and we say, ‘They’re crazy. We are not going to pay that. I can do better at home. ’”.

Randle recently said, “I had a little pizza for $11, and my Mike had an Italian beef for $11 at their last dinner out.” ” Their bill was $23.

“We have a place we go for breakfast,” she said. “It’s owned by Greeks, so you know it’s good, and breakfast is $6. 50. ”.

‘There’s not a whole lot we need’

Suzanne and Susie Leedy have been retired for 14 years and can say from personal experience that it is possible to live off of Social Security.

Suzanne retired from her real estate job in 2010. Susie, a registered nurse, suffers from multiple sclerosis and has been on disability since 2008.

They had some savings, but neither partner had a retirement savings account. What they did have was a track record of work. Their combined Social Security checks total $4,500 a month.

“I feel very fortunate that our careers kept us at the higher end” of Social Security earnings, Suzanne Leedy said: The average benefit check is about $1,900.

When they retired, the Leedys lived in Alexandria, Virginia, an affluent, high-cost Washington, D.C., suburb.

“At 92 years old, we knew my mom couldn’t keep living alone, so we brought her to live with us,” Suzanne Leedy said. “I was determined at that point to move out of Northern Virginia,” in search of a lower cost of living.

Suzanne’s parents had owned a timeshare in Massanutten, a resort near Shenandoah National Park. The couple decided to move there, and Suzannes mother agreed to come with them.

Mom died just two months after the move, and Susie Leedy’s mother died a year after that. The partners inherited enough money to buy a home and settle in rural Virginia for good.

“As it worked out, it was exactly enough to buy the house,” Suzanne Leedy said. They bought it in cash.

The couple learned to live on their new budget.

“I think travel was the first thing to go,” Suzanne Leedy said. Susie was from England, and Suzanne had wanted her to see “as much of the United States as possible,” she said. “We took trips to the West Coast, Olympic National Park, that sort of thing.”

“We also sold our second car,” Leedy said. “We realized that if we went anywhere, we always went together.”

The couple used to eat out “maybe once a week,” she said. “But now we invite friends over for dinner, or we go to their house. I think we actually eat better, and it is a lot more fun.”

Money got tighter four years ago when Susie had a stroke. Now, the couple faces ongoing medical expenses. Still, they get by.

“At some point, you realize that, you know, I’m 79 years old,” Suzanne Leedy said. “There’s not a whole lot we need. We have a comfortable life. We have a lot of really good friends.”

Is Social Security Enough For Retirement?

FAQ

Can you retire on Social Security only?

It is not ideal but possible to retire on Social Security alone, though it requires careful financial planning, a very frugal lifestyle, and often a debt-free home in a low-cost area. Although Social Security was meant to supplement other retirement income, it wasn’t meant to cover all costs. Typically, it only replaced about 40% of pre-retirement earnings.

What is the smartest age to collect Social Security?

The “smartest” age to collect Social Security is a personal decision, but delaying benefits until age 70 offers the highest possible monthly payment. You can start as early as age 62, but your monthly payment will be permanently reduced.

How many people retire with only Social Security?

Approximately 16. 4 million adults relied on Social Security as their sole source of income in 2022, according to Pew Research Center data, while other estimates vary. Another example is that AARP found that 90% of men and 90% of women relied on Social Security for most of their income in 2012 and 2015, respectively. A study found that nearly 2 million seniors relied solely on Social Security.

What happens if I don’t get 40 credits for Social Security?

If you don’t earn 40 credits for Social Security, you will not be eligible for Social Security retirement benefits based on your own work history. You may still qualify for other benefits, such as disability or survivors benefits, but these have their own eligibility requirements.

Do retirees rely on social security?

The finding appears in the institute’s 2024 Spending in Retirement Survey, published in November. “The reliance on Social Security as an income source declines with age, or at least that’s what the retirees are telling us,” said Bridget Bearden, research and development strategist at EBRI and author of the study. Need a break?.

Will Social Security raise the retirement age?

The Social Security Administration has clarified its stance on raising the retirement age. While Social Security can supplement your retirement fund, Americans should still look to grow their own savings, as the government benefit may not be enough to live comfortably.

What percentage of retirement income comes from Social Security?

The oldest retirees, ages 74 and 75, reported that 52% of their income came from Social Security. The youngest, ages 62 and 63, said they drew 67% of their income from the retirement trust fund. The finding appears in the institute’s 2024 Spending in Retirement Survey, published in November.

Does retirement have strict rules?

Retirement doesn’t have strict rules—understand what income works for you and how to achieve it. Sources of retirement income include Social Security, retirement accounts, pensions and employment wages. Retirees can expect to spend 80% of their pre-retirement income in retirement, according to one rule of thumb.

How much social security do retired workers get?

However, nearly 90% of people age 65 and older receive Social Security, according to the Social Security Administration. The average monthly benefit for retired workers in December 2024 was $1,975. That equals an annual income of $23,700, which may not be enough to sustain a household. But don’t expect to keep working indefinitely for extra income.

Are retirees leaning more on social security?

As traditional workplace pensions go away, retirees are relying more on Social Security. For generations of Americans, Social Security has been a reliable source of retirement income. At its peak, 42 million Americans were in private sector defined benefit pension plans. Since then, that number has gone down. 3 million in 2008 to 30. 2 million in 2022, federal data show.

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