The Average Monthly Social Security Benefit Might Surprise You

In the course of planning for retirement, there are different sources of income you may be able to count on.

If you’re contributing to your company’s 401(k), for example, withdrawals from that plan can serve as one retirement income stream. If you own a larger home with a finished basement you plan to rent out once your kids move out, that’s another source of retirement income right there.

For many people, Social Security represents a large chunk of their retirement income. But if your plan is to have it constitute the bulk of your senior income, you may be in for a rude awakening.

Why you can’t rely too heavily on Social Security

The Social Security Administration updates benefit data on a regular basis. Based on its January 2025 monthly snapshot, the average retired worker’s benefit is $1,978.77 per month.

You can’t help but notice that that’s not a whole lot of money.

Sure, it’s a decent monthly payday when combined with other income sources, like IRA or 401(k) distributions. But on its own, it’s less than $24,000 a year. So if your plan for retirement is to live mostly on Social Security, you may want to rethink that strategy.

One thing a lot of people don’t know about Social Security is that it’s only going to replace about 40% of your pre-retirement wages. And that assumes two things.

First, it assumes you’re an average earner. If you earn an above-average wage, Social Security will replace an even smaller percentage of your previous wages. Secondly, it assumes that benefits don’t get broadly reduced in the future.

Social Security is facing a revenue shortfall that could result in sweeping benefit cuts in about a decade’s time. If they come to be, you may find that Social Security pays you a lot less than you were anticipating.

Save now to avoid struggles later

Because you can only count on getting so much income from Social Security in retirement, it’s important to do what you can to save well for your senior years. And to that end, one of the best things to do is start funding an IRA or 401(k) from a young age.

The reason it’s important to get money into your retirement account early on in your career is that you’ll give your investments more time to grow. And speaking of investments, do make sure you’re investing your nest egg wisely. Shying away from stocks won’t serve you well when you’re younger and are trying to build retirement wealth.

It’s really only once you get close to retirement that you need to start scaling back on stocks. And even then, you certainly shouldn’t dump them completely.

There’s nothing wrong with factoring Social Security into your retirement income. If your anticipated benefit is in line with the average today, that’s almost $24,000 per year, which isn’t pocket change.

But it’s also not a lot of money to live on. So your best bet is to save as well as you can and set yourself up with investments and other income streams.

If you retire mostly on Social Security, you might have to make serious spending cuts during your senior years. And that could make that stage of life a lot less pleasant.