Over one-third of current workers today believe Social Security will be a major source of income during retirement. Unfortunately, those who believe their primary income will come from this benefits program could be setting themselves up for financial disaster. 

In fact, according to a recent study from the National Institute on Retirement Security (NIRS), households that get the majority of their income from Social Security are much more likely to be poor than those who have ample additional income to supplement it. 

Worried looking older woman with her arms crossed.

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If Social Security makes up the bulk of your income, you're much more likely to not have enough

While the vast majority of senior retirees get at least some income from Social Security, there are striking differences between the percentages of income these benefits account for when comparing high- and low-income households. 

For male retirees with incomes of $80,000 or more, for example, just 24% of their household income in retirement came from Social Security benefits in 2016, according to the NIRS study. Female retirees of the same income level got slightly more of their money from Social Security -- 25% -- but still got the bulk of their funds from other sources. 

By comparison, male retirees with incomes under $20,000 got a whopping 65% of their money from Social Security, while female retirees at that lower income level got 75% of their money from these benefits, the NIRS said. 

For those in the middle, there was still a clear correlation between relying more on Social Security and having a lower income. For example:

  • Men with incomes of $60,000 to $79,999 relied on Social Security for 42% of their retirement funds, while women in this income group got 40% of income from these benefits. 
  • Men with incomes of $40,000 to $59,999 got 57% of household funds from Social Security, and women in this income range got 54%.
  • Men with incomes of $20,000 to $39,999 got 72% of their money from retirement benefits, while women in this range got 69% of household income from Social Security.

It's not a surprise that relying a lot on Social Security ends up leaving you with an income shortfall. The average Social Security benefit in 2020 is just $1,503 per month, according to the Social Security Administration. Even for those who get more than the average, Social Security benefits are only designed to replace around 40% of pre-retirement income. They simply aren't designed to provide you with enough to live a comfortable life in your later years without additional funds.

How to supplement your Social Security with other income sources 

If you don't want to be poor as a retiree, it's clear you need money besides Social Security to support you. And since most people don't get a pension from their employer anymore, this will need to come from savings. 

The best way to make sure you have enough is to set a specific retirement savings goal, build your budget around hitting that target amount, and automate contributions to a tax-advantaged account such as a 401(k) or IRA. Then, invest in index funds or take the time to build a diversified portfolio of stocks you hold over the long term. 

The earlier you take these steps and start making regular contributions to your retirement accounts, the less likely it is that you'll find yourself without the money you need to supplement your Social Security benefits.

While building a hefty nest egg is hard work throughout your career, it will pay off when you have plenty of money to live on in retirement. You don't want to spend your later years struggling to make do with barely enough to get by, so start working on supercharging your retirement savings today.