1 in 4 Workers Plan to Rely Primarily on Social Security in Retirement. Here's What That Could Look Like.

Social Security has been a part of most people's retirement plans for decades, but it was never intended to be the only source of retirement income. Back in the day, a lot of people could rely on a pension as well and then supplement that with their personal savings. Now, pensions are much less common, and many workers struggle to save on their own, so Social Security has taken on a more prominent role in their retirement budget.

About one in four workers have said they plan to rely upon Social Security as their primary source of retirement income, according to a recent Transamerica survey. But that could be more problematic than many realize. Here's why.

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How far will Social Security go in retirement?

The average Social Security benefit is about $1,828 for retired workers. That amounts to just under $22,000 per year. It's not a small sum, but it's probably not enough to cover most seniors' annual retirement expenses either. Married couples might fare a little better, since they have two Social Security checks coming in, but even then, it can be challenging to cover all your costs this way.

The average household headed by an adult 65 or older received about $28,516 from Social Security in 2021, according to the Bureau of Labor Statistics. But their average annual expenditures were $52,141. Their Social Security benefits covered a little more than half of their annual bills.

Of course, this is only an average. Some people could have larger Social Security checks and lower annual expenses, or vice versa. But it's unlikely the average person will be able to pay all of their bills with their Social Security checks, especially if they have costly health issues.

This is even more true for younger workers because of all the uncertainty around Social Security's future. The latest estimates indicate the program's trust funds will be depleted in 2035. After that, it will only be able to pay out about 80% of scheduled benefits unless the government does something to increase the program's funding.

It's possible Social Security won't go as far in the future as it does today, and that could create a real problem for those who rely on it. They'll probably have to watch their spending carefully, and they may need to take on a part-time job or rely upon the assistance of family members to make ends meet. If working or getting support from others isn't an option, seniors without significant savings could find themselves struggling with massive amounts of debt.

How to reduce your reliance upon Social Security

Though it can be difficult, it's best to contribute regularly to a retirement account when possible. The more money you have saved on your own, the better the lifestyle you'll be able to afford in retirement. Even if you aren't able to set aside a lot, or you don't think you'll be able to afford to retire, having some money in reserve in a retirement account can be a big help when emergencies arise.

If you're struggling to save as much as you'd like, you may have to look for ways to boost your income, like working overtime or finding a better-paying job. You could also deposit extra money, like year-end bonuses and tax refunds, into your retirement account. Aim to increase your retirement contributions by 1% of your income each year if possible.

You don't have to plan for a retirement without Social Security, because even in the worst-case scenario, the program will still be able to provide you with some money. But it's best not to be too optimistic about how much you'll receive.

You can create a my Social Security account on the Social Security Administration's website to help estimate how much you'll get from the program based on your work history to date. And if you want to be really conservative, plan for checks that are 20% smaller, just in case of benefit cuts. Then, do your best to save as much of the remainder of your estimated retirement costs on your own.

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