Many Retirees Rely Solely on Social Security—And Their Experiences Vary Widely

The question of whether Social Security benefits can support a comfortable retirement continues to divide Americans approaching their later years. Interviews with households that depend primarily on the federal program reveal sharply different outcomes, underscoring how lifestyle, savings habits and geographic costs shape the answer.

Two households, two realities

Alden and Dena Swartz, relying on almost $4,000 in combined monthly Social Security income, say they are finding it difficult to cover essentials. Rising housing expenses and medical bills consume much of their benefit before other costs are addressed. In contrast, Gail Randle, 73, and her partner, Mike DellaVolpe, receive approximately $2,400 a month—about $30,000 a year—but report living within their means by practicing strict frugality. Randle says nearly every household item is second-hand, yet functional, allowing the pair to avoid debt and maintain a sense of financial stability.

Program never designed as a stand-alone pension

Social Security originally aimed to replace only a portion of preretirement earnings. On average, benefits cover roughly 40% of previous income, according to the Social Security Administration. Future retirees may receive an even smaller share: the Congressional Budget Office projects a funding shortfall by 2035 unless adjustments are enacted. A detailed explanation of that projection is available through the CBO’s long-term budget outlook.

Savings expectations clash with reality

Surveys show many workers believe at least $1 million in personal savings is required for a secure retirement. Financial firms often advise accumulating ten times annual pay before leaving the workforce, reinforcing that perception.

Actual balances fall well short of those targets. Federal Survey of Consumer Finances data indicate that among households aged 65 to 74 with a retirement account, the median balance is about $200,000. Roughly half of families in that age range have no retirement account at all.

Research challenges the $1 million benchmark

Andrew Biggs, a senior fellow at the American Enterprise Institute, argues that far lower savings can suffice when combined with Social Security. In a widely circulated essay, he contends that a nest egg between $50,000 and $100,000 often bridges the gap, citing the Survey of Household Economics and Decisionmaking. In that poll, roughly 85% of respondents aged 65 to 74 said they were managing “okay” or better financially.

Biggs points out that many costs drop after leaving the workforce. Commuting, payroll taxes and work-related purchases disappear, while retirees frequently downsize housing or relocate to less expensive areas. “This sort of rat race you get when you’re working, a lot of that drops off in retirement,” he wrote.

A closer look at everyday adjustments

To explore how theory translates into daily living, USA TODAY contacted retirees nationwide, with assistance from the r/retirement community on Reddit. Contributors described several common strategies:

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• Housing choices: Some moved to smaller homes or regions with lower property taxes, trimming the largest line item in most budgets.
• Healthcare planning: Many emphasized shopping carefully for Medicare Advantage or supplemental plans and setting aside funds for out-of-pocket costs.
• Transportation savings: Giving up a second vehicle, using public transit or driving older, paid-off cars reduced insurance and maintenance expenses.
• Second-hand consumption: Frequenting thrift stores and community exchanges allowed retirees like Randle and DellaVolpe to furnish homes and replace appliances at minimal cost.
• Part-time income: A minority supplemented benefits with seasonal or freelance work, not for luxury spending but to cover unforeseen expenses without tapping savings.

Uneven impact of inflation

The annual cost-of-living adjustment (COLA) helps benefits keep pace with inflation, yet individual experiences differ. Recipients with higher medical or housing inflation report that COLAs lag behind actual costs, eroding purchasing power. Others whose primary expenses remain stable say the increase is adequate.

Policy backdrop in flux

Lawmakers continue debating options to address the projected Social Security shortfall, including raising payroll taxes, modifying the benefit formula or increasing the retirement age. Any change could influence future retirees’ reliance on personal savings versus federal benefits.

No single formula

The Swartz and Randle households illustrate the spectrum of outcomes possible on Social Security alone. Higher monthly benefits do not guarantee comfort if expenses outpace income, while disciplined budgeting and modest expectations can make a smaller check sufficient.

Ultimately, how comfortably someone lives on Social Security depends on individual spending patterns, debt levels, geographic location and the presence—or absence—of even modest savings. As retirement approaches for millions of baby boomers and Generation X workers, the debate over what constitutes “enough” is likely to intensify.

Crédito da imagem: USA TODAY