The Average Retiree Gets $25,000 a Year From Social Security. Here’s Why That Doesn’t Cover Retirement

If there’s one thing financial planners tend to tell clients, it’s “save for retirement from as early an age as you can.” There’s a reason for that.

There are many retirees today who are living on just Social Security. And people in that situation tend to struggle financially. If you don’t save well for retirement, you could end up being one of them.

Let’s compare today’s average Social Security benefit to the cost of retirement in America so you can see how important it is to prioritize your savings.

What the average Social Security benefit pays today — and how it holds up

The average monthly Social Security benefit tends to rise over time because benefits are eligible for a cost-of-living adjustment each year. As of August 2026, the average monthly Social Security benefit for retirees was about $2,088. When we multiply that benefit by 12, it amounts to a little more than $25,000 a year.

Now, let’s compare that $25,000 in Social Security to what it costs to be retired today. According to the most recent Consumer Expenditure Survey from the U.S. Bureau of Labor Statistics, households led by someone aged 65 or older spend an average of $61,432 annually.

Here’s how that spending breaks down:

• Housing: $22,193 annually
• Transportation: $9,538 annually
• Food: $7,940 annually
• Healthcare: $7,799 annually

The remaining $14,000 (roughly) covers retirees’ remaining expenses.

This suggests that the typical Social Security benefit today covers only about 41% of the average older American’s spending. So if your plan is to retire on Social Security alone, you should know that if you’re eligible for the average benefit, it may not cover much more than housing.

Don’t set yourself up for a financially stressful retirement

If you don’t want to spend your senior years struggling financially, it’s important to do what you can to save for retirement. The good news is that you don’t need to part with tons of money every month to build up a large nest egg over time. You just need to consistently fund a retirement account from a young age and let your investment portfolio do the rest.

Let’s imagine you start saving $300 a month for retirement at age 25 and continue to do so until you turn 65. If you invest that money heavily in stocks, your portfolio might deliver an 8% annual return, which is slightly below the market average.

Your total balance in that scenario? Almost $933,000.

Now, if we apply the popular 4% rule to a savings balance of $933,000, that would give you another $37,000 a year in retirement plan withdrawals. Combine that with $25,000 a year in Social Security, and you have enough money to spend what the average older American does on annual living expenses.

Without those retirement account withdrawals, though, the numbers fall apart. So while it’s fine to factor Social Security into your retirement income plan, living on those monthly checks alone is not a smart idea. You may not even be able to afford a basic lifestyle if you don’t save any money at all.

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