There's no single retirement savings number that guarantees you'll have enough money to pay all of your bills. But as a general rule, it's a good idea to retire having banked 10 times your ending career salary. Now there's wiggle room with that number, such as if you plan to downgrade your lifestyle or hold down a part-time job as a senior. But either way, you do need a healthy level of savings to retire with confidence.
But what if you're approaching your senior years and you're lacking in the savings department without much time to catch up? The good news is that Social Security may be able to bail you out. Here's how.
1. Social Security pays you for life
If you kick off retirement without enough savings, you might deplete your nest egg in your lifetime. Social Security, on the other hand, will pay you a monthly benefit for as long as you live. You don't have to worry about that income source running out on you.
2. You can boost your benefits
You may not have a lot of time to boost your nest egg if your days in the workforce are limited. But one thing you may be able to do is delay your Social Security filing until age 70. In doing so, you could easily boost your monthly benefit by 24% or more, depending on what your full retirement age looks like.
Cost-of-living adjustments help you keep up with inflation
Social Security beneficiaries are entitled to a yearly cost-of-living adjustment, or COLA, which can help you retain your buying power as common goods and services go up in price. Now COLAs aren't so generous -- and it's possible to have a year with no COLA at all. But even when COLAs are on the stingy side, at least it's some sort of boost to your monthly income. To achieve something similar from your savings, you'll need to bump up your retirement plan withdrawal rate -- and risk depleting your IRA or 401(k) at a time when you still have many years of retirement ahead of you.
3. Social Security and savings should go hand in hand
To be clear, Social Security is not meant to serve as a replacement for retirement savings. Rather, the two should be used to supplement one another so that collectively, you have a healthy income stream to look forward to as a senior. The point, however, is that if you're nearing the end of your career and realize you don't have anywhere close to the amount of savings you'd like, you don't necessarily need to panic. Instead, you can make smart choices, like delaying your Social Security filing as long as possible, to squeeze more money out of the program on a monthly basis.
You can also make a point to live frugally in retirement to stretch a limited nest egg further. Moving to a smaller home, cooking instead of dining out, and sourcing free entertainment can help you thrive in retirement, even with minimal savings to draw from.