Social Security benefits are an important part of most people's retirement plans. But while it's okay to anticipate that you'll get some money from this entitlement program when figuring out your sources of retirement income, you don't want to rely too much on it at the expense of saving enough.

If you're depending on Social Security to be your major or sole source of retirement income, there are four big reasons you could find yourself in serious financial trouble. 

Older woman sitting on couch looking at Social Security check.

Image source: Getty Images.

1. Benefits are too low already, and their buying power is falling

The average monthly Social Security benefit in 2020 is just $1,517 for retired workers as of August 2020, which means the typical senior would have a household income of just $18,204 annually without money from sources outside of Social Security. That's not too far above the federal poverty level, and it's far too low for most people to enjoy a comfortable standard of living. 

As if that's not bad enough, the buying power of benefits is slowly being eroded, despite the fact that Cost of Living Adjustments (COLAs) are supposed to prevent that from happening. COLAs don't accurately keep pace with rising costs for seniors because the periodic spending adjustments are based on changes to a pricing index that tracks spending for urban wage earners and clerical workers. Unsurprisingly, seniors prioritize different things, including healthcare and housing, which tend to rise in price faster. The consequence is that benefits have lost about 30% of their value since 2000, and this trend is expected to continue. 

With Social Security already providing an insufficient income and the buying power of benefits eroding, retirees absolutely cannot rely on Social Security as the sole or even major source of retirement funds. 

2. A benefit cut could happen

Social Security's trust fund is not in good shape, and while the program's trustees projected it could run dry by 2035, this day of reckoning could happen sooner.

When the trust fund money runs out, revenue will still be collected and will provide enough to pay about 76% of promised benefits -- but that would leave retirees looking at a 24% cut. That would mean those monthly checks, which are already insufficient as a sole source of support, would get even smaller.

Of course, lawmakers can take action to prevent this cut -- but most solutions would also result in at least some retirees losing benefits. So, whether a fix is found or not, there's a good chance you'll get less than you were promised. 

3. Too much of your money could be taken up by healthcare expenses

According to the Bureau of Labor Statistics, mean healthcare spending among seniors 65 and over totals $6,833 per year. A little quick math tells you that would eat up around 38% of the average annual Social Security benefit. 

Healthcare is a substantial required expense for seniors that tends to rise as you get older. If you're dependent on Social Security as a sole or primary source of income and you incur typical healthcare expenses, you'll be left with very little money for anything else. 

4. You may not be able to afford surprise expenses

Emergency expenses don't stop just because you retire. In fact, they may increase because your house or car may be aging along with you and need costly repairs, or because there's a greater chance of major medical issues that come with large unexpected bills. 

If you're struggling to get by on a fixed income from Social Security, you may not have the money from your monthly checks to cover these huge surprise expenses -- or to either save up an emergency fund or rebuild the one you had when you retired after you're forced to spend it. 

You don't want to spend your later years worried about how to cover the bills, struggling with debt you had to take on in an emergency, or unable to afford the healthcare you need -- so make sure you prioritize saving a big nest egg that you can use it along with Social Security to live out your retirement years in comfort.