Millions of seniors collect Social Security in retirement, and for a large chunk, those benefits constitute the bulk of their income. Unfortunately, those who rely on Social Security too heavily risk struggling financially during their golden years, and new data from the nonpartisan Senior Citizens League is further driving home this point.

Social Security benefits have lost a whopping 33% of their buying power since 2000, according to a new report. And even though recipients saw a pretty generous cost-of-living adjustment, or COLA, in 2019, that boost was effectively negated by other rising expenses.

Food and medical costs -- things seniors tend to spend a large of their income on -- rose more so than other common expenses, leaving beneficiaries to bear the brunt. And despite the fact that the average monthly Social Security benefit rose by $39 this year, that increase wasn't enough to compensate for the fact that the overall cost of living is rising more rapidly.

Social Security cards on top of hundred-dollar bill


The problem is compounded by the fact that many seniors don't have access to income outside of Social Security, and so when benefits fall short, recipients are apt to struggle to pay their bills. And while today's seniors can take steps to lower their living expenses, whether by downsizing, relocating, or other such relatively drastic measures, many are already at a point where they're just paying for basics and nothing more.

That said, it's not too late for workers with time between now and retirement to start saving independently for their golden years. This way, they're less likely to fall behind financially if Social Security continues to have a hard time keeping up.

Supplementing Social Security with savings

Many people mistakenly think that they can live on Social Security alone, and plenty of seniors try to do just that. Those benefits, however, are only designed to replace about 40% of the average worker's pre-retirement income, and most seniors need roughly double that amount to live comfortably. Saving independently is therefore the best way to bridge that gap.

Workers who start building a nest egg early enough in life can amass a nice amount of wealth by saving modest amounts over time, as the following table illustrates:

Age to Start Saving $300 a Month

Ending Balance by Age 67 (Assumes an 8% Average Annual Return):











Data source: AUTHOR.

Note that these calculations assume an average annual 8% return, which is just below the stock market's historical average. Those with a savings window of 10 years or longer should load up on stocks when building their nest eggs, since that's enough time to ride out the market's downturns and come out ahead. Furthermore, that 8% well outpaces the general rate of inflation -- something Social Security has apparently failed to do. Furthermore, while parting with $300 a month over time isn't easy per se, it's also not impossible for average earners who are willing to keep their spending in check.

Many workers will argue that they don't need savings of their own, but rather, they'll just cut back on luxuries and live on Social Security in retirement. That plan, however, is a dangerous one, as evidenced by the millions of seniors today who are teetering dangerously close to the poverty line with no easy way of turning things around.