A third of Americans plan to retire on Social Security alone, but it may not be enough to get by (2024)

America's retirees have a lot on their minds.

About a third of US adults believe Social Security alone will provide enough income for them to live comfortably in retirement, but another third said they won't have a retirement account to pull from when they leave the workforce.

That's according to a report published on August 13 by the personal finance firm NerdWallet. In July, analytics company Harris Poll surveyed 2,096 Americans over the age of 18 about their retirement plans on behalf of NerdWallet. Of the respondents, 779 were enrolled in Medicare.

Elizabeth Ayoola, personal finance writer at NerdWallet, said it can be difficult for hopeful retirees to predict how much money they'll need. Many wonder if they're building enough wealth, how long it will last, and if that money is distributed in the right savings accounts.

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"Everyone's expenses are going to look different during retirement," she told Business Insider.

NerdWallet's report comes as the US faces a retirement crisis. Millions of older adults don't have the savings or assets necessary to retire from their 9-to-5s or are living from one Social Security check to another. In 2024, the average check is $1,907, but for many, it isn't enough to get by. What's more, the federal fund could start shrinking by 2030.

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Highly vulnerable to these retirement woes are "peak boomers," the last of the generation who are turning 65 this year — many of whom are caught in the middle of America's switch to a 401(k) system from pensions in the 1980s. Half of adults age 65 and above have an income below $30,000 a year. And, a fifth of Americans over 50 have no retirement savings at all.

BI has heard from boomers who are worried their savings won't last the rest of their lives, and others who struggle each month to afford food, housing, and healthcare. Many worry about becoming financial burdens on their adult children or suffer from loneliness.

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"It never hurts to have more than you need for retirement," Ayoola said.

401(k)s can help supplement Social Security income

For the majority of Americans, Social Security is a pillar of their retirement plans. NerdWallet found that about 30% of US adults don't expect to have a savings account by the time they retire — meaning that federal benefits are many people's only option to live on.

Ayoola said it may or may not be realistic to afford basic necessities on a monthly Social Security check, depending on your lifestyle. Some people are comfortable living frugally in retirement, Ayoola said, while others would prefer to travel and have luxury experiences. There are no wrong choices, she said — as long as retirees budget and live within their means.

To best prepare for retirement, Ayoola suggests that people take the time to calculate how much money they will likely spend. She said individuals can most accurately estimate their economic needs by comparing their projected retirement savings and Social Security income with their monthly spending. Cost of living varies widely based on a person's location and lifestyle, she said.

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"This can be an intimidating process — some people are scared to see in plain numbers how far behind they are in terms of retirement savings — but it can give you a lot of clarity about what steps you need to take next," she said.

For savings, Ayoola said people can start simple, with "low-hanging fruit." Even adding $50 a month to a 401(k) account throughout a person's career can make a difference, Ayoola said, because the amount grows over time with interest.

Ayoola said it's also important to have a health savings account. About 90% of Americans rely on Medicare in retirement, per NerdWallet. This federal health insurance can help people over 65 pay for prescriptions and basic medical visits, but it might not be enough to cover urgent or long-term care. Ayoola said a health savings account often has tax benefits and can help people avoid draining their retirement savings if they have a health emergency.

To be sure, not all retirees struggle to build retirement savings. Some have strong corporate 401(k) matches or a robust investment portfolio that makes them less reliant on Social Security income.

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Ayoola, however, said people can experience financial curveballs —changes in health, increases in expenses, or outliving their savings. It's best to be prepared, even if that means saving a small amount of money over time.

"Although investing and saving for retirement may seem intimidating, it's really about putting one foot in front of the other," she said.

Are you living on Social Security or government assistance? Have you experienced stigma or loneliness because of your finances? If you're open to sharing your story, reach out to allisonkelly@businessinsider.com.

A third of Americans plan to retire on Social Security alone, but it may not be enough to get by (2024)

FAQs

A third of Americans plan to retire on Social Security alone, but it may not be enough to get by? ›

About a third of US adults believe Social Security alone will provide enough income for them to live comfortably in retirement, but another third said they won't have a retirement account to pull from when they leave the workforce.

Why is Social Security alone not sufficient for retirement? ›

The downside is that for all but the most frugal Americans Social Security alone simply won't be enough to retire on comfortably. The Social Security Administration says the program should replace about 40 percent of your pre-retirement income. In short, you'll need more income to maintain your standard of living.

How many people retire on Social Security alone? ›

Only a small percentage of older Americans, 6.8 percent, receive income from Social Security, a defined benefit pension, and a defined contribution plan. A plurality of older Americans, 40.2 percent, only receive income from Social Security in retirement.

What is it like to retire on almost nothing but Social Security? ›

Roughly one in seven Social Security recipients ages 65 and older depend on their benefits for nearly all their income, according to an AARP analysis. Unable to maintain the lifestyle of their working years, they trim their already trim budgets, move into smaller homes, or rely on the kindness of relatives to get by.

Can you retire solely on Social Security? ›

Living on Social Security alone is not only possible, but many retirees already accomplish that very feat every year. While the lifestyle associated with Social Security income isn't exactly luxurious, it doesn't have to equal rice and beans for the rest of your life, either.

What happens if you don't have enough to retire? ›

Without savings, it will be difficult to maintain the same lifestyle an individual had in working years. Some retirees make adjustments by: Moving into a smaller home or apartment. Reducing television or streaming services.

Why is it advised not to rely solely on Social Security for your retirement? ›

Your benefits won't give you enough replacement income

To put it another way, Social Security will only replace about 40% of your pre-retirement wages, assuming you earn an average income. But most seniors need a larger percentage of replacement income to live comfortably.

At what age do you get 100% of your Social Security? ›

The full retirement age is 66 if you were born from 1943 to 1954. The full retirement age increases gradually if you were born from 1955 to 1960 until it reaches 67.

Can you live comfortably on Social Security alone? ›

Is Living on Social Security Alone Possible? You can potentially use Social Security alone to support yourself, but you would need to plan in advance to ensure that your monthly check will cover your necessary expenses at minimum, including your food and housing.

How much do most retirees live on? ›

Average Retirement Spending

According to the Bureau of Labor Statistics (BLS), the average income of someone 65 and older in 2021 was $55,335, and the average expenses were $52,141, or $4,345 per month.

How to survive retirement with no money? ›

If you determine you need more than Social Security income to meet your retirement needs, consider these options:
  1. Set a detailed budget to minimize expenses. ...
  2. Downsize your home. ...
  3. Continue working. ...
  4. Take advantage of tax-advantaged retirement plans. ...
  5. Open a traditional or Roth IRA.
Jan 31, 2024

Can you get Social Security retirement if you never worked? ›

There are other ways to collect Social Security benefits, besides SSI, if you have not worked. You may also collect benefits on a spouse's work and benefit record. The Motley Fool recently published an article explaining these benefits. We just learned that Social Security benefits are calculated based on earnings.

When a husband dies, does his wife get his Social Security? ›

Surviving spouse, any age, with a child younger than age 16, gets 75% of the worker's benefit amount. Child gets 75% of the worker's benefit amount. There's a limit to the benefits we can pay to you and other family members each month. The limit varies between 150% and 180% of the deceased worker's benefit amount.

Can I get a tax refund if my only income is Social Security? ›

You would not be required to file a tax return. But you might want to file a return, because even though you are not required to pay taxes on your Social Security, you may be able to get a refund of any money withheld from your paycheck for taxes.

What is the Social Security 5 year rule? ›

• If you become disabled before your full retirement age, you might qualify for Social Security disability benefits. You must have worked and paid Social Security taxes in five of the last 10 years.

Is Social Security self sufficient? ›

And so, Social Security was from its first day of operation a fully self-supporting program, without any general revenue funding.

Why is there not enough Social Security money? ›

There are fewer workers left to contribute to retirement benefits as the U.S. population ages and more Baby Boomers retire. The Social Security retirement trust fund is projected to be depleted by 2033 as a result.

Are Social Security benefits enough to support retirement? ›

Even now, Social Security barely covers living expenses for recipients. If you are planning to retire in the next decade, it is important to use the time you have left wisely. Boost your retirement savings as much as possible while paying down debt and keeping spending low.

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