Originally published October 2015. Last updated March 2026.
Social Security was designed to replace about 40% of your pre-retirement income. Not 80%. Not 100%. Forty percent.
Yet roughly half of single retirees and 21% of married couples depend on Social Security for 90% or more of their income. If that’s your plan, the math doesn’t work.
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What Social Security Actually Pays
The average monthly Social Security retirement benefit in 2025 is approximately $1,976 ($23,712 per year). The maximum benefit at full retirement age is $4,018/month if you’ve earned above the wage base for 35 years. Most people are closer to the average.
Can you live on $24,000 a year? Some people can. But it doesn’t leave room for travel, unexpected medical expenses, home repairs, helping your kids, or much of anything beyond basic expenses.
Why People Over-Rely on Social Security
- They haven’t done the math. Without a financial plan, it’s easy to assume Social Security will “be enough.”
- They started saving too late and don’t have enough in 401(k)s or IRAs to generate meaningful income.
- They underestimate expenses in retirement. Healthcare alone can cost $165,000+ per person over a 20-year retirement (Fidelity, 2024 estimate).
- They assume the benefit is guaranteed at current levels. The Social Security Trust Fund is projected to be depleted by 2035 (2024 Trustees Report). After that, payroll taxes would cover about 83% of benefits without Congressional action.
How to Build Income Beyond Social Security
- Max out your 401(k): $23,500/year in 2025 ($31,000 if 50+). Over 20 years at 8% average returns, $23,500/year becomes roughly $1.1 million.
- Open and fund a Roth IRA: $7,000-$8,000/year. Tax-free income in retirement.
- Delay Social Security to 70 if you can. Each year of delay between FRA (67) and 70 adds about 8% to your benefit. That’s a guaranteed return you can’t get anywhere else.
- Plan for healthcare. Medicare doesn’t cover everything. Budget separately for premiums, copays, dental, vision, and long-term care.
- Reduce debt before retirement. Every dollar of debt payment in retirement is a dollar you need to generate from savings or Social Security.
FAQ
What percentage of my income should I replace in retirement?
A common target is 70-80% of pre-retirement income. Social Security covers roughly 40%. The rest needs to come from savings, pensions, or other income sources.
Is Social Security going to run out?
No. Even in a worst-case scenario, payroll taxes still fund about 83% of benefits. But potential benefit cuts make it even more important to have other income sources.
Schedule a free 20-minute consultation to build a retirement income plan that doesn’t depend entirely on Social Security.
R.L. Brown Wealth Management
106 W Vine St, Suite 300, Lexington, KY 40507
859.317.5889
