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Retiring on Social Security alone

By Jennie L. Phipps ·
Sunday, July 14, 2013
Posted: 6 am ET

Retiring to live only on Social Security is risky retirement planning, but lots of people do it anyway. 

I read a report recently from Social Security that said 23 percent of elderly married couples and 46 percent of elderly single people count on Social Security for 90 percent or more of their income.

Even if you are prepared to live a frugal lifestyle in retirement, depending on Social Security alone won't leave you much breathing room. The Social Security Administration offers these calculations that explain why. They are based on the assumption that a beneficiary and spouse will be collecting jointly.

  • A couple retiring with $25,000 in final income can expect to receive a total Social Security annual benefit of $19,311, which is 77 percent of what they earned during their last year of employment. That will put them about $3,800 above the rock-bottom federal poverty level of $15,510 for a two-person household. They might be able to get by on that, but it isn't going to be pretty.
  • If they retired with a household income of $50,000 -- close to the U.S. average -- Social Security says they can expect a joint benefit of $30,438, which is 61 percent of their final income. Most experts believe that they need a minimum of 70 percent to 80 percent, but by some calculations, 61 percent is doable.
  • If they retired earning a household income of $100,000, then they can expect Social Security to replace 44 percent of their final income. Let's hope they managed to save some.
  • For high earners, with a final household income of $250,000, the total benefit is only slightly more than what lower earners get because of the $113,700 cap on Social Security payroll taxes. Big earners max out at a total annual benefit of $45,608, which is just 18 percent of their final salaries at this level -- less if they made more.

Granted, these calculations assume that one spouse will qualify for only a spousal benefit -- half of what the higher-earning spouse is getting. In many households, both halves of the couple qualify on their own for worker benefits and collect more than what Social Security says here. Nevertheless, these numbers make it obvious that putting as much money as you can into the retirement kitty is an excellent idea because Social Security just won't be enough.

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need to get back to basics
July 01, 2014 at 6:53 pm

Need to stop voting the two party system. vote for the person that will do what's best for u.s. long after we are dead. Like a balanced budget amendment for starters.
As far as social security, like every other real solution to U.S. problem, it's going to hurt on the front end. I forget the country but their version of social security is a basically a bank #. upon staring work money is put in like our system and like our system can not be removed by person until a certain age. Unlike our system the government can not "borrow" from it either, or add in other benefits for non-contributors. The individual knows his/her #. The individual decides how aggressive/conservative to invest their money. Some kind of sliding scale to get off this government accessible fiasco we have and something more individualistic(freedom of choice pops in my head).

Carol S.
March 24, 2014 at 10:55 pm

We. Would have been better off choosing Romney and Not Obama. Obama has made the U S a weak nation

Carol S.
March 24, 2014 at 10:53 pm

I feel like we would have been so much better off by choosing Romney and Not Obama. Obama has made the U S look like idiots and others think we are a week nation

September 18, 2013 at 10:03 pm

Most people in this worldwide depression will never earn or qualify for Social Security at all... so tell us, how are we suppose to survive on nothing but food stamps after 60?

Because that's what I and most of my contemporaries have forward to look forward too. No savings, because no jobs, and no social security ahead.

Its not a fiction. Its the reality. These metrics you are using from the 80's... don't exist any more. There is no social security for us.

Curtis Gwin
September 02, 2013 at 2:01 am

This doesn't bode well for future retirement plans! Retirement was supposed to be the best time in our lives but instead it is just becoming an extension of the increasingly difficult time that has become life in the US! Work til you're 68 but no one will hire you c/o your age! Then cut bennies without wondering if you'll be able to make up the difference !!!

August 28, 2013 at 5:57 pm

How about addressing singles? They are a significant part of the population.

August 04, 2013 at 12:15 pm

Very well said....