Why Social Security Will Never Be Enough

My agency helps tens of thousands of baby boomers with their New-to-Medicare journey every year. Something I’ve noticed from watching all of these folks enter their golden years is this: nearing retirement can be an exciting time or a scary time based on how much money you’ve set aside for the future.

I’m continually surprised by how little these new Medicare beneficiaries know about what just Medicare (and healthcare) will cost them during retirement, let alone all their other expenses. And it’s downright terrifying how many of them have absolutely nothing saved for retirement.

CNBC reported last year that most Americans close to retirement have saved only 12% of what they will need to retire comfortably.

One-fifth of them have saved absolutely nothing.

We often wonder how so many of them could have gone through their entire adult life without being able to save anything for the years ahead. But the reality is that life in America can be expensive. If the average household has an income of around $50,000/ year, raising kids and saving for college can come before saving for your own retirement.

That’s a mistake that can really cost you though, so I hope that after reading this, you can learn to put yourself first.

The Problem with Perception

When Social Security was introduced back in the ‘30s, it was never designed to be a sole income for anyone. President Roosevelt himself said this when speaking about Social Security in a 1930’s radio address: “None of the sums of money paid out to individuals in assistance or in insurance will spell anything approaching abundance.”

Social Security was designed simply to keep you out of poverty, and that is all. Since it was designed as just a safety net, it cannot, and will never, replace the paychecks that boomers have been used to earning for the last 40 years.

Unfortunately, people learn this when it’s too late. Younger generations have a perception of Social Security as replacing their paycheck once they retire.

While the maximum possible Social Security in 2018 was $2788 if claiming at full retirement age, few people actually earn this much.  The average Social Security recipient receives just over $1400/month, or around $16,800/year, and for women, the annual average is even lower.

When is the last time you lived on less than $17k a year?

What’s worse is that people who claim benefits early at age 62 – and many do – can receive considerably less. Considering that the federal poverty level in 2019 falls at $12,490 (for the 48 contiguous states and the District of Columbia), it’s no wonder why so many seniors fear their golden years instead of looking forward to them.

The Reality of Retirement Expenses

While the age-old idea is that when you retire, you will live on less money, that is far easier said than done. The reality is that many people really don’t reduce their lifestyle costs just because they are now retired. And some costs, like utilities, can’t be reduced all that much anyway.

increase retirement fund

Here are just of the expenses you need to be planning for:


Many of us hope to have our homes paid off by the time we retire. However, even if we do, there are still property taxes to pay in many areas.

A surprising percentage of seniors actually don’t own their homes these days. About 15% of seniors live in apartments or rental properties, and this rent can eat up a huge chunk of that $1400 Social Security check.


Many retirees also pay some sort of tax on their Social Security income benefits too. Half of your SSI benefits are taxable if your modified adjusted gross income is more than $25,000/year as an individual taxpayer or $32K as a joint filer. Earning more could result in taxes that affect up to 85% of your SSI.

Depending on where you live, your state may also tax your SSI benefits. You’ll want to investigate all of this before you retire so that you can maximize how much of your money will stay in your own pocket.


New retirees also are surprisingly unaware of their potential healthcare costs during retirement.

Although most of us have paid taxes during our working years to prepay Part A, the reality is that we will pay monthly premiums for Parts B and D for as long as we are enrolled in it. In 2019, the Part B premium for most beneficiaries is $135.50/month, which covers only about 80% of your health expenses, not to mention the deductibles, copays, and coinsurance that you will spend as you use your healthcare services.

Medicare also doesn’t cover routine dental, vision, and hearing expenses and unfortunately your care for these parts of your body don’t just go away when you retire.

Fidelity recently reported that the average couple needs about $280,000 to fund the costs of healthcare in retirement. After rent, taxes, and healthcare costs, you also need to find the money for groceries, insurance, car payments, debt repayments, entertainment, travel, and many other items. What we see all too often is that there comes a time when many retirees feel they have to rob Peter to pay Paul.

Long Term Care

No one likes to think about it, but the reality is that about half of us will end up needing some form of long-term care someday. This is yet another expense that Medicare will not pay for and it’s a really expensive one with monthly room rentals costing many thousands of dollars.

In some states you can qualify for Medicaid to pay for long-term care for you, but only after you have spent down nearly all of your own assets. A Medicaid bed will pay for only a semi-private room which often means you’d be rooming with a stranger. You also don’t get to choose which facility they put you in; it may be one that is not close to your friends and family, so this is not what you want to count on for long-term care either.

So, you may be wondering, with expenses this high, what can you possibly do about it? The key begins with preparation earlier in life when you still have time.

Changes to Make Today

If you hope to never be in the group of retirees who rely solely on Social Security for their income, there are some things you need to do now to get ahead.

Tackle Debt and Downsize Your Life

social security danielle k roberts
Could you use your home as equity to further your nest-egg?

Use any free money in your budget to tackle your debts. Start with the smallest debt and then work your way up through them, paying off one at a time.

Consider also what things you can do to help you pay off debt sooner. Many people approaching retirement live in homes that have more space than they need nowadays. If your children have flown the coop, can you consider selling your home and moving to a smaller home, a condo, or an apartment?

The equity in your home can be put toward your retirement and you’ll also have less home maintenance expenses. Hold a garage sale and sell the things you may no longer need, like the lawn mower.

Start Saving Now

Once you’ve tackled your debt, it’s time to increase your net worth.

If you don’t have much saved for retirement, it can sometimes be all too easy to say, “Why bother?” right now. However, you can’t allow yourself to obsess over all the things you should have done. The very best time to start saving, no matter your age is right now.

Review your spending with a critical eye and get help from a financial planner if necessary. What are the things you regularly spend money on that you can live without? Can you save money by selling an expensive car and downsizing to a used vehicle? Are you able to eat in more often than you dine out? Can you drop your Kindle subscription and go to the library instead? What about that gym membership? Could you run or walk in your own neighborhood instead?

All of these things can free up small sums of cash that start your retirement nest egg today. Start with building an emergency savings account and then move on to contributing money to a retirement account such as 401K or IRA.

People over age 50 can also take advantage of catch-up contributions that will let you save more toward your retirement that you may have been able to in the past.

Take on Extra Work While You Still Can

The more that you earn, the higher your future Social Security check will be. Also, if you are making ends meet on your salary from your day job, taking on a part-time side job can create the cash that you need to start or increase your retirement savings. There are literally dozens of options in today’s digital world.

Consider freelancing through sites like Upwork where you can get paid to write. Check into driving for Uber or Lyft during evenings or on weekends to pocket extra cash. This can lead to additional gigs delivering food through programs like UberEats or DoorDash.

What about renting a spare room in your own home? I did this myself for nearly 5 years and it earned me thousands of dollars in extra income.

You can also visit the Nextdoor website and join the group in your neighborhood. People often post odd jobs here that can result in quick cash like babysitting or pet-sitting or even watering plants for a neighbor while they are out of town. If you offer a service that you think your neighbors might find useful, consider posting it here.

You get the point. Find the thing that can put a few extra dollars in your pocket and commit to transferring those in your savings or investments as soon as possible.

Delay Social Security

Once you’ve taken on extra work, you want to delay your Social Security until age 70 if you possibly can. The money you are earning at your second job can potentially increase your future Social Security income benefits but waiting to take them until age 70 will definitely increase them.

This can result in hundreds of more dollars to take home every month when every dollar really counts. Remember that some of that check will automatically be deducted by Medicare to pay for your Part B outpatient benefits, so you want it to be as large as possible going in.

Whatever you do, just remember that it’s never too late to start saving for your retirement. If you’ve missed the best years of potential compounding interest, don’t worry about that. Do what you can now with the time that you have and be aware that every extra dollar that you put away is one that will make a difference for you down the road.

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