An estimated 44.5 million retired workers receive monthly income in the form of Social Security benefits. If you work and pay Social Security taxes, then chances are, those benefits will be an important source of income for you once your career comes to an end. But if you rely on those benefits too heavily and neglect your savings as a result, you may be in for an unpleasant reality check as soon as your golden years kick off.

Currently, 50% of married seniors and 70% of unmarried seniors get 50% or more of their income from Social Security, while for 21% of married seniors and 45% of unmarried retirees, those benefits represent 90% or more of their income. But when we look at how much money that actually translates into, it's easy to see why Social Security alone isn't enough to sustain the typical senior.

Older man in a supermarket adjusting eyeglasses


The average retiree on Social Security today collects $1,471 a month, or $17,652 a year. Meanwhile, the average senior aged 65 and over spends $46,000 a year on living expenses, reports the Bureau of Labor Statistics. Clearly, there's a pretty wide gap between those two numbers, and it's for this reason that planning to live on Social Security alone in retirement is a truly bad idea. If that's your intent, consider this your wakeup call to start building savings and come up with a backup plan.

What will your expenses look like in retirement?

Many people expect their living costs to drop dramatically once they retire, but many seniors don't see all that substantial a decline. And when we think about the things seniors generally spend money on, that makes sense.

Seniors require housing, transportation, food, clothing, utilities, and modest forms of leisure, like cable TV, just like working folks do. Furthermore, retirees tend to face higher healthcare costs than workers, especially when we consider the various out-of-pocket expenses associated with Medicare. And that's why most seniors can't get by on just 40% of their former income, which is what Social Security is designed to pay the average earner. Retirement just plain costs too much money.

The solution? Save as much as you can while you're working. If you start out young, you can get away with contributing smaller amounts to a retirement savings plan and growing your balance with the right investments. If you're already older, you'll need to make more sizable contributions to build a solid level of savings.

Check out the following table, which illustrates how your savings efforts might pan out, depending on the window of time you have to work with and the amount of money you sock away in a retirement plan each month:

Age You Start Saving

Monthly Retirement Plan Contribution

Total Savings by Age 65 (Assumes a 7% Average Annual Return)

















The less time you give yourself to sock away funds for retirement, the less wealth you stand to amass. In our table, increasing monthly contributions doesn't help compensate for delayed savings. That's because by putting off your savings, you miss out on years of critical investment growth. And if you're wondering about the 7% return used above, it's actually a couple of percentage points below the stock market's average yearly performance.

Of course, building savings isn't the only way to supplement your Social Security benefits. You can also get a part-time job in retirement or monetize a hobby. In fact, your retirement income can come from a variety of sources. Just make sure your plan is not to have all of it come from Social Security.