How Many People Retire with Only Social Security?

Here are the strategies millions of people who will soon be retiring have planned to use to deal with the loss of their savings or inability to save money.

Editor’s note: This post is part of Next Avenue’s “Retirement for the Rest of Us” series.

Allen R. Smith says that he never planned to retire. With degrees in exercise physiology, he worked as a ski instructor in Colorado for ten years and was involved in the wellness sector. He intended to transition into a second career as an author and columnist as he approached retirement age.

“I made a vow years ago to never be in this situation,” Smith, an Oceanside, California resident, says. “I wanted to work until the day I quit.” What I wasnt prepared for was reality. During the 2008 financial crisis, I lost my house, depleted my 401(k), and almost all of my savings. “.

“I wanted to work until the day I quit.” What I wasnt prepared for was reality. “.

He goes on, “COVID-19 hit, and it has been difficult to find the type of work I enjoy since then.” I am mostly dependent on Social Security benefits to support a modest lifestyle, though not always voluntarily. “.

Smith is just one of the 51 million or so Americans who are 65 or older and receive monthly benefits from Social Security. According to the Social Security Administration, a percentage of those beneficiaries rely on Social Security for 90% or more of their income.

Many recipients have “more month at the end of the money,” meaning they have to defer or only pay a portion of their bills. Madelaine LEsperance, an assistant professor at the University of Alabama, found in a recent study that when days go by since the last check, financial difficulties get worse.

Social Security benefits are distributed based on each recipient’s birthdate: benefits are paid on the second Wednesday of each month to those born in the first ten days of the month, third Wednesday of each month to those born in the second ten days, and fourth Wednesday to the remaining beneficiaries.

When a retiree’s benefits arrive on or around the due date of their rent or mortgage, they are likely to use it to cover housing costs. If their benefit is received earlier in the month, they might not have enough money when their rent or mortgage is due because they will probably spend it on food, utilities, and other expenses.

Teresa Johnson, 63, intends to live off of Social Security benefits in the near future. She moved her retirement funds from a 401(k) to a traditional savings account recently so she could easily access funds in an emergency. The transferred savings were subject to income tax, but it was well worth it for her peace of mind.

It helped me get over my fear of what would happen if I didn’t have any freelance work. Fortunately, that has never happened,” Johnson says. “I also understood that by the time I reach my full retirement age of 66 years and 10 months, my house would be paid off if I just made the regular payments.” “.

Johnson describes herself as “naturally frugal” and resides in a modest 900-square-foot home in Kansas City, Missouri. Her retirement strategy calls for cutting costs by paying off her auto loan, signing up for Medicare, and not taking on any credit card debt.

“My intention is to subsist on $2,400 in monthly Social Security benefits,” she states. “The Midwest, where I reside, is significantly less expensive than other parts of the country. Additionally, I’m increasing my emergency fund, which currently only has about $1,000 in it. In 2022, I experienced a few financial crises, which included ER visit expenses, a $1,000 veterinary bill, and roughly $5,000 in home repairs. “.

According to Chuck Czajka, the founder of Macro Money Concepts in Stuart, Florida, and owner of the Certified in Social Security Claiming Strategies (CSSCS) credential, Johnson can increase her benefits by optimizing her income prior to filing for Social Security.

Czajka continues, “Your top 35 years of earnings are used to calculate Social Security benefits, which are then adjusted for inflation.” “However, you can maximize by delaying. The longer you wait until after you reach retirement age, the higher your benefits will be (8%). This can be done until you reach age 70. “.

Recipients may work part-time after receiving Social Security benefits, but earned income limits may apply based on the recipient’s age or the amount of additional income they receive.

Johnson says she plans to continue freelancing after retirement. She currently earns an additional $500 to $1,000 per month by pet-sitting through a nationwide service. “I’ll keep pet sitting for as long as I can,” she declares. Advertisement.

In spite of their lack of savings and reliance on Social Security, older adults can still successfully navigate retirement, according to a recent Edward Jones study:

Smith claims that in order to save money, he looks up local senior discounts. “I take advantage of savings on food, cell phone service, utilities, internet, and more even though California is an expensive place to live,” he says. “My entire medical care is covered by the Veterans Administration.” Its tough, but I am making it. “.

BenefitsCheckUp, an online tool provided by the National Council on Aging, helps senior citizens find out what benefits, such as those for housing, utilities, and transportation, they might be eligible for.

Johnson declares, “I’ll enroll in Medicare and can afford the affordable Medigap or Medicare Advantage plans.” “I’ll also need to budget for property taxes and homeowners insurance.” “.

“I don’t need to have every luxury when I retire because I’ve always lived within my means,” she continues. “I live in a lovely neighborhood with a cute house, and I have wonderful friends.” Thats whats important to me. “.

Social Security is a vital source of income for millions of Americans, especially those in their retirement years. While many retirees have additional income sources such as pensions, investments, and part-time work, a significant portion rely primarily on Social Security benefits. This article delves into the number of people who retire with only Social Security as their primary source of income, highlighting the crucial role it plays in their financial well-being.

Understanding the Importance of Social Security in Retirement

Social Security is a federal program that provides monthly payments to eligible individuals, including retirees, disabled individuals, and survivors of deceased workers. The program is funded by payroll taxes paid by both employees and employers.

For many retirees, Social Security benefits constitute a substantial portion of their retirement income. In 2023, Social Security provided benefits to over 67 million Americans, totaling approximately $1.5 trillion. This translates to an average monthly benefit of $1,657.

The Prevalence of Retiring with Only Social Security

While many retirees have multiple income sources, a significant number depend primarily on Social Security benefits. According to a 2021 study by the Center on Budget and Policy Priorities, 40.2% of older Americans rely solely on Social Security income in retirement. This translates to approximately 24.8 million individuals.

The reliance on Social Security as the sole source of retirement income is particularly prevalent among certain demographic groups. Women, minorities, and individuals with lower lifetime earnings are more likely to fall into this category.

Reasons for Relying Solely on Social Security

Several factors contribute to individuals retiring with only Social Security benefits:

Low lifetime earnings: Individuals who have consistently earned lower wages throughout their careers may not have accumulated sufficient savings or retirement plan assets.
Limited access to employer-sponsored retirement plans: Not all workers have access to employer-sponsored retirement plans, such as 401(k)s or pensions, which can significantly impact their retirement savings.
Health issues or disabilities: Individuals with health issues or disabilities may have limited work opportunities, hindering their ability to save for retirement.
Divorce or other life events: Life events such as divorce or the death of a spouse can impact an individual’s financial situation and ability to save for retirement.

Challenges Faced by Retirees Relying Solely on Social Security

Retiring with only Social Security income presents several challenges:

Limited income: Social Security benefits are often not sufficient to cover all living expenses, especially in areas with a high cost of living.
Increased risk of poverty: Individuals relying solely on Social Security are more likely to fall into poverty, particularly those with limited savings or other assets.
Healthcare costs: Rising healthcare costs can significantly strain the budgets of retirees who depend solely on Social Security.
Limited financial flexibility: With limited income, retirees may have less flexibility to handle unexpected expenses or emergencies.

Strategies for Supplementing Social Security Income

For individuals approaching retirement with limited savings or other income sources, it’s crucial to explore strategies for supplementing Social Security income:

Work part-time: Consider working part-time during retirement to generate additional income.
Downsize housing: Downsizing to a smaller home or moving to a more affordable location can reduce housing costs.
Explore government assistance programs: Government programs such as Supplemental Security Income (SSI) and the Supplemental Nutrition Assistance Program (SNAP) can provide additional financial support.
Seek financial advice: Consult with a financial advisor to develop a retirement plan that maximizes your income and minimizes expenses.

Social Security plays a vital role in ensuring financial security for millions of retirees, especially those who rely solely on its benefits. Understanding the challenges faced by this population and exploring strategies to supplement their income is crucial for ensuring their well-being in their golden years. By implementing proactive measures and seeking assistance when needed, individuals can navigate the challenges of retirement with limited income and enjoy a fulfilling and financially secure later life.

Here are the strategies millions of people who will soon be retiring have planned to use to deal with the loss of their savings or inability to save money.

“Retiree incomes have been growing much faster than working-age households’ incomes over several decades,” he stated.

Biggs contends that a large number of retirees are in fact wealthier than research suggests, while NIRS maintains that the wealth gap still exists and needs to be closed.

However, Biggs of the American Enterprise Institute questions how many people actually rely solely on Social Security for their income.

Older households are becoming more financially insecure over time, and their savings as a percentage of their income are decreasing. That points to a foreseeable problem, Weller said.

Its an attention-grabbing statistic. And one expert in particular, Andrew Biggs, resident scholar at the American Enterprise Institute, finds it hard to believe.

How Am I Supposed to Live Off My Social Security? It’s not enough…

FAQ

How many Americans retire on Social Security alone?

Living on Social Security alone isn’t easy, but it’s the reality for many seniors in America. According to the Center on Budget and Policy Priorities, roughly 40% of Americans ages 65 and older rely on Social Security for at least half of their incomes.

Can someone live off of Social Security alone?

Surviving financially on retirement and Social Security alone can be challenging, and it often depends on various factors such as the individual’s lifestyle, health, housing costs, and any additional sources of income or savings.

How many people receive only Social Security?

Type of beneficiary	Total	Social Security only
All beneficiaries	71,885	64,467
Aged 65 or older	54,725	52,317
Disabled, under age 65 a	11,531	6,522
Other b	5,629	5,629

How many adults in the US have no savings for their retirement?

Almost half of Americans don’t have a dedicated retirement savings account, according to the Federal Reserve’s 2022 Survey of Consumer Finances. The survey, which includes the latest government data, reveals only 54.4% of American families reported having dedicated retirement accounts such as a 401(k) or IRA.

How many people receive Social Security benefits?

Nearly 9 out of 10 Americans age 65 and older recieve a Social Security benefit. About 3.5% of the total population aged 60 or older never receive Social Security benefits. Retired workers account for just over 74% (49.4 million) of Social Security beneficiaries, and receive a total of $90.8 billion ($1,837 average monthly benefit).

Is Social Security enough for a secure retirement?

Retirees with these three sources of income are far less likely to face poverty and economic hardship. A new report also finds that a large portion (40 percent) of older Americans rely only on Social Security income in retirement. Social Security alone is not considered sufficient for a secure retirement, and it was not intended to stand alone.

Do older Americans only receive Social Security in retirement?

Americans are concerned and even afraid for their retirement security. And the news headlines often don’t make them feel better. The latest is a claim from the National institute for Retirement Security that “A plurality of older Americans, 40.2 percent, only receive income from Social Security in retirement.” If true that’s very worrying.

How much social security do retirees get?

From the SIPP, NIRS declares that 40.2 percent of retirees receive all of their income from Social Security. And yet, a 2017 study by researchers at the Social Security Administration, also using the SIPP, found that only 19.6% of Americans 65 and over received at least 90% of their total incomes from Social Security.