If you and your spouse both plan to claim Social Security benefits, will your combined income from this program give you enough to live on?
This is a common question, especially since many people don't have a ton of money saved for retirement and may plan to rely on their government benefits to make ends meet. Unfortunately, the answer may disappoint you.
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An average couple will bring in $2,753 a month from Social Security
In 2022, the average monthly income that Social Security retirement benefits will provide a senior couple comes in at $2,753. This average is based on an older couple where both spouses are receiving benefits.
You may be surprised to see that this amount is less than double the average benefit for individual retirees, which is $1,657. There's a simple reason for that: It's common for one spouse to get less benefits than the other because one may have been a higher earner or worked for more years.
The most important thing to note about this number is that it would only provide $33,036 for two people to live on. This is a very low household income for two people, especially given that the Bureau of Labor Statistics reports the mean for annual expenditures is $47,579 for consumers 65 and over -- including $6,668 per year on healthcare services. With the average Social Security income, most senior couples would struggle to afford the basics if they aimed to live on these benefits alone.
How can senior couples ensure they have enough to live on?
Senior couples can take two steps to ensure they have enough money in their later years:
- They can optimize their Social Security benefits by strategizing the best claiming approach.
- They can bring in supplementary income from savings, pensions, or other sources.
Optimizing Social Security benefits involves carefully considering all possibilities for when each spouse should claim benefits to ensure the highest possible income. For example, a lower earner may want to claim benefits first to enable a higher-earning spouse to wait longer and raise their monthly income amount.
However, there's a limit to the impact of this strategizing since Social Security benefits are only designed to replace around 40% of each person's preretirement income -- even under the best-case scenario, where benefits are fully optimized. And living on 40% of what your household was previously bringing in is obviously going to require some uncomfortable sacrifices.
The good news is that the potential to bring in supplementary income is limited only by how much you're willing and able to save throughout your career or by factors such as whether you're willing to work part-time as a retiree.
If you can invest a reasonable sum throughout your working life or do some part-time or consulting work as a senior, you may be able to earn plenty of extra money to supplement savings and have the security you deserve in your later years.
