Social Security is undoubtedly going to help you fund your retirement. But, it should not be your only source of income for your later years. In fact, if you are anticipating that Social Security will be enough to support you, you are setting yourself up for a major disaster.
Here are three big reasons why you absolutely cannot afford to live on Social Security alone.
1. Your benefits will be too small
The first big problem with trying to rely solely on Social Security is that you would have a very low income if you go this route.
The average Social Security benefit is only $1,976 as of January 2025. Unless you feel pretty confident you can live on $23,712 per year without any other income, you don’t want to try to rely on Social Security without extra money coming from somewhere.
Now, you may expect your benefit to beat the average — especially if you worked and earned a lot during your career. The only problem is that the benefit formula is designed to ensure that you collect payments worth around 40% of pre-retirement income (and high earners get a little less because the formula is progressive).
When Social Security was created, the idea was that it would help you fund retirement along with a pension and savings. Those three income sources were once referred to as a “three-legged stool” supporting retirees. Without the other two legs, you are going to struggle big time to maintain anything close to your current living standard if you assume you’ll be able to get by on just 40% of what you were making before leaving work.
2. Your retirement security will be reliant on political stability
Social Security’s trust fund is expected to run out in 2035, necessitating a cut to benefits that would happen automatically and reduce the amount seniors get by around 17%.
Now, Congress probably is going to address this issue somehow and stop seniors from getting hit with such a big benefit cut. However, their methods of fixing Social Security could result in you having to wait until you’re older to get your full benefit or otherwise getting less than you may have been expecting.
The reality is that future Social Security rule changes are entirely outside of your control. While the program is almost assuredly going to always exist in some form, it doesn’t make sense to bet your entire future on getting your promised benefits when you have no choice about whether that happens.
Instead, you should make sure your savings can support you even if you must wait a little longer to claim Social Security or in case something else goes wrong with the benefits program. When you invest in a retirement account, you control what happens and you obviously care a lot more about your security than the government does so you want your future in your own hands.
3. Your benefits are losing buying power
Finally, the last big problem with trying to live solely on Social Security is that benefits are losing buying power quickly. That’s because the formula used to award Cost of Living Adjustments (COLAs) is based on the spending habits of urban wage earners and clerical workers. It’s not based on the actual spending you’ll do as a retiree.
Since this formula underestimates how inflation will affect some of the biggest expenses seniors incur, like healthcare and housing, it results in seniors getting a benefits increase that is too small in most years. In fact, the Senior Citizens League estimated that benefits have lost 36% of buying power since 2000.
If you are relying on Social Security and the value of your benefits declines steadily over time, you’re going to have a hard time making ends meet late in life — at a time when going back to work probably would be impossible.
For all of these reasons, don’t try to live on Social Security alone. Instead, use your mySocialSecurity account to estimate benefits, and build your retirement savings around ensuring that you have plenty of extra money to supplement the income the government will send you.
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