Will it or won't it? That's the question investors and workers of all ages are increasingly asking themselves of the United States' Social Security program's payments these days. Will it be enough to fully supplement my retirement needs? Indeed, given the chatter about its sustainability, will the SSA even be able to make payments as promised?
The answer of course depends on how much you'll need in retirement, and how much you're saving while you're still working. At the very least, however, it's good to have a rough idea now about what to expect then.
To this end, here's a visual breakdown of how many people are getting how much every month from the nation's Social Security Administration. Odds are good you'll find yourself somewhere around the middle of the average, for better or worse.
Here's how much Social Security people are collecting
The average retiree's monthly Social Security payment in 2022 is $1,657. But the funny thing about averages is they can obscure a great deal of extreme data. A lot of people are getting much, much less than that amount, and a few lucky ducks are collecting considerably more. Many personal factors go into determining your particular monthly payment, like how long you worked, how much you earned, and what age you're retiring. So while that figure is fine to start making a financial plan with, it's hardly a number you can afford to etch in stone.
The chart below really puts things in perspective. While the average monthly check is worth $1,657, about 20% of the program's participants will receive less than $1,000 per month, and there's a big clump of people taking home right around $1,000 every month. Half will get less than $1,600.
And the SSA isn't quite as fruitfully top-heavy for higher-earners as some people might be hoping. Only about 4% of Social Security recipients are seeing more than $3,000 worth of monthly benefits. The remaining 45% of the crowd collecting more than the average of $1,657 per month are still only cashing checks of less than $3,000, although that adds up to right around the nation's median annual earnings for a full-time worker, according to data from the Social Security Administration.
Simply put, assuming you're earning average money, there's about a 50% chance your monthly retirement benefit check from Social Security could be as little as $1,000 (in today's dollars) and no more than $2,000 per month. There's only a 30% chance it will be any bigger than that, as it takes consistent income of (again, in today's dollars) of around $6,000 per month or more to reach that payout tier.
You can easily make more if you plan
That's enough to survive, to be fair. For someone with plans to travel in retirement or looking to leave a nest egg to their children, though, that limited level of income presents challenges. Most people will want more.
The good news is that this "more" is certainly possible even earning a modest salary in the meantime. The key is consistently saving something now, no matter how small the amount may seem. Even investing a mere $100 per month in an S&P 500 index fund and earning an average of 8% per year can grow to a stash worth around $135,000 over the course of 30 years. Investing that sort of nest egg in good, dividend-paying stocks later in life could supplement your monthly Social Security benefit by several hundred dollars, making the difference between a difficult retirement and a comfortable one.
And for the record, while earning more increases your Social Security check's size, the chart above also suggests there's a law of diminishing returns at play here. That is to say, while you don't lose money by earning more, your Social Security upside wanes the more you make, and the additional upside stops altogether once your income exceeds this year's cap of $147,000. Ergo, the closer you get to that mark, the more important it is to invest for growth on your own if you want to maintain your current standard of living.