FINANCE
Is it possible to live on Social Security payments alone? This is what the experts say
Month after month, the SSA issues millions of payments to Social Security beneficiaries, but some wonder if that’s enough to keep the bills paid.
Every month, the Social Security Administration (SSA) distributes tens of millions of payments to beneficiaries, primarily retired workers. To qualify for these Social Security checks, workers must meet several criteria: they need a Social Security Number (SSN), have to have earned sufficient income and credits during their working life, and be at least 62 years old or have reached full retirement age, which is 67 for those born after 1960, to receive full benefits. The later one claims their benefits, the higher the monthly payment will be.
Payments are individually calculated based on each worker’s unique earnings record, but the SSA provides broad estimates to give a general picture of retirement in the United States. With the 3.2% Cost-of-Living Adjustment (COLA) for 2024, the average monthly payment for a retired worker is approximately $1,900, while couples filing jointly can expect around $3,303.
However, this raises an important question: is this amount sufficient to live comfortably after retiring? Let’s delve into the details.
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How much can Social Security benefits cover?
The answer to whether the SS payments are enough to survive on is fairly straightforward: probably not. These benefits alone are actually insufficient to support even a modest lifestyle in retirement. As James Brumley at The Motley Fool highlights, the average monthly check of $1,900 translates to approximately $22,800 per year, which falls significantly short (less than a third) of the $72,967 estimated by the U.S. Census Bureau to cover basic expenses such as food, clothing, and housing.
The financial outlook for many nearing retirement is concerning. The Census Bureau reports that half of Americans aged 55 to 66 have no retirement savings. This stark reality underscores the necessity for workers to begin retirement planning well in advance to enhance their financial security when the time comes. One of the best options is to include an additional retirement plan for the money that goes to basic social security benefits or even invest in a stock index fund. Speak to a qualified financial advisor to assess your personal situation.