Social Security isn't designed to be the primary source of income for retirees. In fact, the program is designed so Social Security benefits replace about 40% of the average worker's salary.
Most financial planners agree that retirees will need about 80% of what they were making before retirement to maintain the same standard of living after they leave the workforce. So many Americans supplement their Social Security income with savings in 401(k) or IRA accounts, pensions, annuities, and other sources.
However, is it possible to retire on Social Security alone? While there is no perfect answer to this question, here's a rundown of some of the important statistics and information to keep in mind.
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The average American's Social Security benefit in 2024
According to the latest (December 2023) data from the Social Security Administration, the average retired worker receives a monthly Social Security benefit of $1,905.31 per month. If we add the 3.2% cost-of-living adjustment (COLA) beneficiaries received for 2024, we can estimate the current average monthly benefit at approximately $1,966. This means that the average retired worker brings in about $23,600 per year from Social Security.
Some retirees get a lot more than the average
It's impossible to answer whether you can retire on Social Security alone without knowing how much your benefit will be. And there are several factors to consider, such as your income throughout your career and your age at which you decide to claim benefits.
When it comes to your income, Social Security considers your 35 highest-earning years, adjusted for inflation, up to each year's taxable maximum earnings. For example, in 2024, up to $168,600 in earned income is taxable for Social Security. The benefit formula is weighted in favor of lower-income workers, so if you had a low-to-moderate salary throughout most of your career, you might find that Social Security replaces significantly more than 40% of your income.
There's also your claiming age to consider. For Americans born in 1960 or later, full retirement age for Social Security purposes is 67.
If you start receiving Social Security benefits before you reach full retirement age, your payments will be permanently lower. You can claim Social Security as early as age 62, but your benefit will be 30% lower than if you had waited until full retirement age. On the other hand, your benefit will be permanently increased by 8% for every year you wait beyond full retirement age, until a maximum of age 70.
Of course, your benefit will depend on your income, but just to put things in perspective, here are the maximum possible Social Security benefits at different claiming ages in 2024:
|
Claiming Age |
Maximum Monthly Benefit |
|---|---|
|
62 |
$2,710 |
|
66 |
$3,652 |
|
67 |
$3,911 |
|
70 |
$4,873 |
Data source: Social Security Administration.
The key takeaways are that higher earners can get significantly more than the average beneficiary, and that the age at which you claim makes a big difference. In fact, the maximum possible benefit at age 70 is 80% more than the maximum at age 62.
Can you retire on Social Security alone?
Beyond the actual dollar amount of your Social Security checks, there are a lot of other moving parts to consider. Is your spouse also receiving a retired worker's Social Security benefit? Will you still have a mortgage and car payment in retirement, or will you be debt-free? Do you hope to travel frequently after retirement, or live a modest lifestyle? The answers to questions like these can help determine how much income will be enough for you.
The short answer is that it's possible to retire on Social Security alone. Millions of Americans do it. But Social Security is designed to provide some of your income, not all of it, so if you're still several years away from retirement, it could be a smart idea to contribute to retirement accounts and save as much as possible in the meantime.
