Future retirees need to be realistic about the role Social Security will play in supporting them. Unfortunately, far too many people intend to rely on it more than they should. And this could leave retirees far short of affording the necessities.

This problem is why the chart below is the most important Social Security chart you'll ever see. 

Two older adults reviewing financial paperwork.

Image source: Getty Images.

Spending vs. benefits

The chart below shows the average annual spending among households ages 65 and older from 2015 until 2020. It also shows the average Social Security benefits retirees received in each of those years. 

Chart showing average Social Security benefit vs. consumer expenditures

Chart by author. Data sources: Bureau of Labor Statistics and Social Security Administration.

As you can see, the average Social Security benefit falls far short of covering the costs most seniors incur. And there's a simple reason that's the case. Social Security benefits are supposed to be one of several sources of retirement income, not the only source or even the primary source. 

Sadly, many people no longer get enough income from the other two sources the government expected to provide it when Social Security was created. Pensions and savings were supposed to provide the remainder of the income that seniors needed, while Social Security checks replaced about 40% of what they were earning before leaving work.  

But with so few employers providing pensions, and with Americans struggling to save, retirees may end up relying too much on Social Security. 

How to make sure you can cover necessities

Since you can't necessarily choose a job that has a pension when there are so few of them available, that means savings must make up the difference. To ensure you have enough invested by the time you retire, there are a few things you'll need to do:

  • Set a retirement savings goal. You'll want to know how big your nest egg must be to produce enough income. You can set a goal by estimating the amount of income you'll need from savings and multiplying by 25 if you intend to use the 4% rule for withdrawals. So if you wanted $40,000 a year in savings to supplement Social Security and cover household expenses, you'd need $1 million invested. 
  • Begin investing right away. The sooner you begin saving for your future, the less you must invest each month to meet your goals. There's a calculator on Investor.gov that will help you figure out your monthly savings target based on how old you are at the time you begin investing and how much you must save. 
  • Manage your money wisely. You'll want to ensure you have a balanced portfolio that exposes you to the right risk level. 
  • Set a safe withdrawal rate and don't retire until you'll have enough income. Before quitting your job, be sure your Social Security benefits and investment income will cover your necessities.

The chart above shows you why saving is so essential -- and gives you an idea of just how large of a gap there will be if you're relying on retirement benefits alone. And that's why it's the most important Social Security chart you'll ever see.