Can You Afford to Live On Just Social Security?

Many retirees look to Social Security as their biggest source of income in retirement. How many? The answer depends on who you ask.

It might be as high as 40%. That’s the number in a frequently cited study by the National Institute on Retirement Security, a nonpartisan organization that helps inform policymaking around retirement.

That proportion is echoed by the Center on Budget and Policy Priorities, an organization that advances policies to promote economic justice. The center analyzed census data from March 2022 and found about 4 in 10 adults 65 and older depended on Social Security for at least 50% of their income in 2015.

Or, it might be that fewer than half that many people depend primarily on Social Security. A Forbes contributor decided to look into NIRS’ numbers, and found, among other data, a Social Security study that says 19.6% of benefit recipients 65 and over received most of their total income from the program.

What’s not in dispute is that Social Security benefits lift a lot of retirees out of poverty, according to the Center on Budget and Policy Priorities. The Center estimates that income from the program is preventing more than 15 million older adults from falling below the poverty line.

Those who depend heavily on Social Security can look forward to a bump in their monthly payments. Benefit checks look likely to rise by a modest 3% or so in 2024, which is a steep drop from this year’s 8.7% increase. Call it the downside of cooling inflation. For more on next year’s COLA (cost of living adjustment) to Social Security benefits, read Mary Ellen Cagnassola’s story.

— Jill Cornfield, deputy editor

Retirees tend to spend more than they make, according to St. Louis Fed online economic database FRED. In 2021, the average retiree household spent 111% of its after-tax income in 2021. That’s about $5,100 more than its after-tax income. That gap only underlines the importance of having retirement savings accounts to draw on after you retire.

The largest expenses for these households were:

• housing, 37%
• transportation, 14%
• health care, 14%
• food, 13%

• You can cut these 10 expenses from your post-work budget for substantial savings in retirement.
• Here’s how to zero in on the blindspots in your retirement plan — and eliminate them.
• It’s midyear, which means a great time to review your retirement resolutions.

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