Millions of seniors depend on Social Security to pay the bills in retirement. But that dependence might be reaching an unhealthy extreme. In fact, 66% of seniors believe that Social Security will be their primary source of income over the course of their retirement, according to a new Transamerica study. And that means a host of older Americans will inevitably wind up putting their finances at risk.
You can't live on Social Security alone
One thing many people fail to realize about Social Security is that it's not designed to sustain seniors in the absence of other income, nor is it meant to constitute the bulk of one's financial resources. In reality, those benefits will only replace about 40% of the average earner's preretirement income. Most folks, however, need roughly twice that amount to live comfortably once they retire. The fact that two-thirds of seniors are depending so heavily on Social Security therefore paints a rather ominous picture about their prospects, especially since future cuts in benefits aren't off the table.
Remember, Social Security, at its core, is simply a means of poverty protection. Those benefits can generally cover basics like modest housing, transportation, food, utilities, clothing, and healthcare (though if healthcare inflation keeps picking up as projected, that might change in the not-so-distant future). They often can't, however, cover small but meaningful luxuries many seniors depend upon, like cell phone service, cable, and leisure. Counting on Social Security as a primary retirement income source therefore means potentially resigning oneself to a lifetime devoid of entertainment and enjoyment -- and that's no way to live.
Boosting your income in retirement
Folks who aren't yet retired have a prime opportunity to boost their savings before leaving the workforce. But for seniors who are already retired and on Social Security, that option may not exist to the same degree. Still, there are steps you can take to beef up your income in retirement so you're not depending as heavily on Social Security.
For one thing, get some sort of job. It doesn't have to be something you hate; you can consult in your former field, work for a nonprofit whose mission you support, or even start your own small business. Another option? Turn an existing hobby into a money-making opportunity. If you enjoy gardening, set up shop at local flower shows. If you're an avid baker, see about peddling your goods at pop-up markets or small grocery stores (though keep in mind that certain states have strict rules about selling homemade food to the public). It doesn't really matter what you do for money as long as you snag yourself a nice little income stream.
Another benefit of working in some capacity during retirement is that in doing so, you'll occupy some of your time without spending money. And that will help stretch your limited income even further.
Otherwise, see whether your various assets can serve as a source of income. If you own a home with space to rent out, consider becoming a landlord, whether on a full-time or seasonal basis. If you have an impressive collection of artwork, sell a few pieces you can do without and use the proceeds to help keep up with your living costs (or stick them in the bank for a rainy day).
Like it or not, Social Security is barely enough to keep seniors afloat at present, and if those benefits get cut in the future (which might happen as early as 2034), they'll have even less buying power. The only way to avoid dipping dangerously close to that poverty line is to take steps to generate more income yourself, no matter how you choose to go about it.