Best Strategies to Retire on Social Security Alone

Social security cards on money

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We remember many phrases uttered by Franklin Roosevelt, including, “All we have to fear is fear itself” and “a day that will live in infamy.” Alas, most of us have forgotten the FDR pronouncement most relevant to our lives. 

Upon signing Social Security into law in 1935, Roosevelt said:

None of the sums of money paid out to individuals in assistance or in insurance will spell anything approaching abundance. But they will furnish that minimum necessity to keep a foothold…

That’s still the case. Yet today Social Security provides 35% of retirees with 90% or more of their monthly income. 

Our over-dependence on Social Security, which pays an average of just $1,180 per month, is largely the result of changes in employment benefits and society. Private sector pensions, once the cornerstone of retirement funding, have nearly disappeared, replaced by 401(k) and other savings programs that require us to largely self-fund our retirement and aggressively save towards that goal. Meanwhile, we are living longer, having children later in life and often supporting elderly parents — all in a volatile economy. These factors can play havoc with a couple’s retirement savings efforts. The chart below illustrates how low-income retirees depend on social security benefits for more than half of their retirement income, while retirees in the top income quintile have other sources of income.

If you are facing the prospect of relying on Social Security in retirement, there are steps you can take to make the most of that less-than-optimal situation, even if you are nearing retirement age.

Max Out Your Benefits

Make sure that you work at least 35 years, even if that means pushing back your retirement. Social Security benefits are based on your 35 highest-earning working years. Work less than 35 years and the deficit years go into the calculation as goose eggs, which could significantly lower your monthly retirement benefit.

While you are working, maximize your income. If you’re at the top of the pay scale in your career job, think about taking a second job. Anything you do to boost your yearly income will pay off in the long run on your Social Security check.

You can get a detailed estimate on the Social Security Administration’s website.

Hold Off on Taking Benefits

You want to make sure you wait until you are at least full retirement age to start claiming benefits. Your full or “normal” retirement age, as defined by the Social Security Administration, is between 65 and 67; depending on what year you were born.

Choosing to take early distributions will reduce your monthly benefit amount for life. If you can, postpone tapping into your benefits until you are age 70. This will get you what the Social Security Administration calls “delayed retirement credits.” Your benefits increase 8 percent each year you delay taking Social Security income until age 70. Waiting until you hit 70 translates into about a third more income for life.

Move to a Cheaper Place

Consider moving to a less expensive area to reduce your retirement cost of living. This time-honored tradition helps explain the on-going migration of older Americans from places like New York and Massachusetts to Florida and North Carolina. There is any number of vibrant small cities where you can live a full life and cover your largest costs — housing, food, et cetera — on what you and your spouse receive from Uncle Sam. You might even consider moving overseas to any one of the Central and South American countries that welcome American retirees with warmth, easy-going lifestyles, modern amenities and low costs of living.

Social Security should be just one revenue stream in your retirement income. Savings, a part-time job, and even some rental income should also be in the mix. Life happens — sometimes with terrible timing. If things do go sideways, know that by employing these strategies you can still have a great post-career life, courtesy of the benefits you started earning back in high school as a waitress or gas pump jockey.