Social Security remains an important source of financial support for millions of retired Americans. However, a growing number of older households are relying on these monthly payments as their only source of income. According to a study by The Senior Citizens League (TSCL), 44% of retirees now depend entirely on Social Security, compared with 39% last year.
The findings highlight a broader challenge facing American retirees. Social Security was designed to provide a foundation for retirement income, not necessarily cover every household expense. Without workplace pensions, personal savings or investments, some older Americans may find it difficult to manage rising healthcare costs, housing expenses and everyday living costs.
Building additional income can help reduce this dependence. From saving and investing before retirement to managing expenses after leaving the workforce, several strategies can help households improve their financial position.
Dependence
The TSCL study suggests that Social Security accounts for a substantial share of retirement income for most older Americans.
Around 75% of retired adults receive more than half of their household income from the program. The findings also show how heavily different groups depend on monthly benefits.
| Share of household income from Social Security | Percentage of retirees |
|---|---|
| 100% | 44% |
| 76% to 99% | 13% |
| 51% to 75% | 18% |
| 50% or less | 25% |
These figures reflect the importance of having multiple sources of retirement income.
Traditional retirement planning often refers to a three-legged stool consisting of Social Security, workplace pensions and personal savings. Each source serves a different purpose. Social Security provides a regular benefit, pensions can offer predictable payments, and savings give retirees additional financial flexibility.
However, many Americans enter retirement without all three sources available. The absence of a pension or sufficient personal savings can make monthly Social Security payments particularly important.
Shortfalls
One reason retirees may struggle financially is the difference between Social Security benefits and their previous employment income.
According to the Social Security Administration’s retirement benefits information, retirement benefits are based on an individual’s earnings history and the age at which they begin claiming.
Social Security generally replaces approximately 40% of pre-retirement earnings, although the actual percentage varies depending on lifetime income.
Financial planning guidelines often suggest that retirees may need approximately 70% to 85% of their previous income to maintain a comparable lifestyle.
This difference can leave households needing additional resources to cover expenses.
Claiming benefits before full retirement age can also reduce monthly payments. For some workers, early claiming may result in a permanent reduction of up to 30%, depending on their birth year and claiming age.
The average monthly retirement benefit was reported at $2,037.84 in October 2026. However, individual payments vary according to earnings history and claiming decisions.
Discounts
Retirees already receiving Social Security may have limited opportunities to increase their monthly benefits. Reducing regular expenses can therefore become an important part of retirement planning.
Organizations such as AARP offer membership benefits that include discounts on travel, entertainment, insurance, restaurants and selected healthcare services.
These savings can help retirees manage their budgets without relying entirely on additional investment income.
It is also worth reviewing available government assistance programs. Depending on income, assets and location, older Americans may qualify for assistance with prescription costs, Medicare premiums, food expenses or property taxes.
The Benefits.gov assistance information can help individuals identify government programs based on their circumstances.
Retirees should review eligibility requirements carefully because benefits and assistance programs differ by state and household situation.
Investing
For Americans who are still working, regular investing can help build financial resources before retirement.
A consistent investment strategy does not necessarily require large contributions. Even relatively small amounts can accumulate over several decades when investment returns are reinvested.
For example, someone investing $25 every week for 30 years would contribute $39,000.
Assuming a hypothetical annual return of 7%, with regular contributions and compounding, the investment could grow to approximately $126,966 before fees and taxes.
This is an illustrative projection, not a guaranteed return. Actual investment performance can vary, and investors may lose money.
Exchange-traded funds (ETFs) are one option for people looking to invest regularly. These funds hold a collection of securities, such as stocks or bonds, and trade on stock exchanges.
Rather than purchasing shares in individual companies, investors can use ETFs to gain exposure to multiple businesses or market segments through a single investment.
Some platforms, including Acorns, offer automated investing features that allow users to invest small amounts regularly. However, investors should compare management fees, account costs and investment risks before selecting a platform.
Diversification
Retirement savings do not necessarily need to be concentrated in the stock market.
A diversified portfolio can include different asset classes, depending on an investor’s financial objectives, time horizon and tolerance for risk.
Common investment options include:
- Stocks and ETFs: Offer potential long-term growth but can experience market volatility.
- Bonds: May provide interest income and help balance stock market exposure.
- Dividend investments: Can generate periodic distributions, although payments are not guaranteed.
- Real estate: May provide rental income and potential property appreciation.
- Savings accounts: Offer liquidity and relatively stable balances for short-term financial needs.
Some investors also consider private real estate opportunities. Multifamily housing and industrial properties are examples of assets that may provide rental income.
However, private real estate investments can require substantial initial capital and may be difficult to sell quickly. Investors should also consider property expenses, management fees and market conditions.
Diversification can help spread risk, but it does not guarantee profits or prevent investment losses.
Automation
Automating savings and investment contributions can make long-term financial planning more consistent.
Workers can arrange automatic transfers from their bank accounts into retirement accounts or investment portfolios. This approach reduces the need to make repeated decisions about when to save.
A practical strategy includes establishing an emergency fund, contributing regularly to retirement accounts and reviewing investment allocations periodically.
Workers should also consider employer-sponsored retirement plans, particularly when employers offer matching contributions. Taking advantage of available matching benefits can increase retirement savings without requiring the employee to contribute the entire amount.
As income increases, gradually raising contribution levels can further strengthen long-term savings.
Planning
For people already retired, the focus may shift from accumulating wealth to managing available resources.
Part-time employment, rental income and carefully planned withdrawals from retirement accounts can provide additional financial support. However, each option comes with different tax implications, responsibilities and risks.
Retirees should also consider how inflation may affect their purchasing power over time. A monthly benefit that covers essential expenses today may not provide the same level of support several years later.
Reviewing household expenses, healthcare coverage, investment withdrawals and available assistance programs can help identify areas where adjustments are needed.
The growing dependence on Social Security highlights the importance of preparing for retirement beyond government benefits. While the program provides a valuable financial foundation, personal savings, pensions and investments can help fill the income gap. For workers, starting early and contributing consistently can make a meaningful difference. For current retirees, managing expenses and identifying suitable additional income sources may help create a more sustainable financial plan.
