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4 Drawbacks of Relying Only on Social Security in Retirement

By Christy Bieber - Mar 2, 2021 at 5:47AM

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Here's why you can't count on these benefits to be your sole source of support.

Social Security is an important source of retirement income, but it shouldn't be the only thing you rely on in your later years. In fact, there are numerous downsides to trying to survive as a senior on these retirement benefits alone. 

Wondering why having supplementary income is so important? Here are four big reasons you absolutely don't want to make Social Security your only source of support.

Older couple talking with financial advisor.

Image source: Getty Images.

1. You won't have very much money

The average Social Security benefit in 2021 is just $1,543 per month. If it doesn't sound like a lot, that's because it isn't. In fact, your household income will be just above the federal poverty level. 

While this may come as a surprise, it's not actually a glitch in the system. Social Security wasn't ever meant to be the only money seniors receive.

These benefits replace around 40% of pre-retirement income because they were designed to be part of a "three-legged stool" of support. The other two legs include a pension and retirement savings. But since most people don't get pensions from their jobs anymore, savings have to pick up the slack.

2. Your buying power will probably fall over time

Benefits rise in most years, as there are annual cost-of-living adjustments built into the Social Security program. They're supposed to help benefits keep up with inflation. Unfortunately, research has shown these raises aren't enough to keep pace with price increases in the actual goods and services that seniors need. As a result, true buying power has fallen 30% during the past two decades. 

This trend will most likely continue. As you get older, checks that were already too small to fund a comfortable lifestyle will be worth even less in real terms. You could find yourself with significant financial shortfalls late in life unless you have a retirement savings account to fall back on. 

3. Your retirement security will depend on the government

Social Security isn't going to go bankrupt, and it's unlikely the government will make major changes to it anytime soon.

But the program is facing some financial trouble. And certain approaches to shoring it up, such as raising the full retirement age, could mean it provides less money in the future. 

The bottom line is, the size of your benefit checks largely depends on the government not changing the rules in a way that causes you to get less money. Do you want to bank your financial security in retirement on politicians always doing the right thing? 

4. You may have to wait to retire

Social Security retirement benefits don't become available until age 62. As a result, retiring before that age won't be an option if you're planning on relying on these benefits. Furthermore, you'll have to wait until your full retirement age to get your full standard benefit. Or you'll need to wait even longer -- until age 70 -- to maximize the size of your checks. 

If you don't want to get stuck staying in the workforce longer than planned solely for the purpose of supersizing Social Security checks you'll have to depend on, make sure you have other money set aside to support you. 

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