America Has a $4 Trillion Retirement Savings Gap. At 63, His Social Security Estimate May Still Be Counting Salary He Will Never Earn
Stopping work at 63 while delaying Social Security until 67 sounds like a smart plan, but the benefit estimate on your screen is quietly counting four more years of salary you never intend to earn.
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
A 63-year-old software project manager earning $90,000 decides his most recent paycheck was his last. He plans to wait until 67 to claim Social Security, and his online account shows a benefit estimate for that date. He treats the number as money already earned. Buried in that figure, though, is an assumption he never made: that he will keep collecting a paycheck at his current salary for four more years.
Similar scenarios appear routinely in retirement forums. Someone in their early sixties stops work, opens Social Security’s estimator, changes expected future earnings to zero, and watches the benefit estimate drop by a couple hundred dollars a month. The calculator had been forecasting income they no longer plan to earn.
The stakes are real. TIAA has described roughly a $4 trillion gap between what Americans need for retirement and what they have saved. A 2026 Schroders survey found that 51% of workplace retirement plan participants expect to have less than $500,000 set aside by the time they retire. The U.S. personal saving rate stood at 2.7% in June 2026, down from 6.4% in January 2024, leaving less cushion for any surprises along the way.
Why the Estimate Assumes You Are Still Working
Social Security knows only what has been posted to your earnings record. When it shows a projected benefit at 67 or 70, it makes an educated guess about what happens between now and then. That guess: you keep earning what you have been earning. For a 63-year-old staying in the same job, the assumption holds. For one who has already walked out the door, it overstates the eventual check.
The benefit is calculated from your highest 35 years of indexed earnings. Missing years count as zeros. If you have 35 solid years already, four additional years of six-figure income might replace weaker years from early in your career. Remove those projected years and the low years stay in the average. Someone with gaps or thin early earnings can see a meaningful drop.
Stopping Work and Claiming Are Two Different Decisions
He can stop working at 63 and delay claiming until 67 or 70. Delayed retirement credits accrue after full retirement age (FRA), worth 8% per year up to 70. Crucially, those credits apply to the benefit his actual earnings record supports, not to projected future salary. The age-70 number will still be higher than age-67, but both figures may sit lower than the account first showed.
Consider this example: if the current estimate at 67 is $2,800 a month and zeroing out expected future income drops it to $2,600, that is $200 a month, or $2,400 a year for life. Over a 25-year retirement, that gap works out to roughly $60,000 before cost-of-living adjustments. The 2027 COLA was officially set at 3.6% by the Social Security Administration on October 14, 2026, the largest increase since 2023, which will compound the dollar impact of any benefit gap over time.
Run the Estimate Twice, Then Look Backward
The following exercise takes about 10 minutes inside the my Social Security account and delivers a clearer picture than most people expect:
- Open the Plan for Retirement tool and record the estimate at 67 and 70 using the income Social Security currently assumes.
- Change expected future annual income to zero and record both figures again.
- Run a third version with realistic part-time earnings, then compare all three side by side.
After that, scroll to the earnings history and review it year by year. A missing or understated past year can drag the benefit down independently of any future-income assumption. One more working year is most valuable when it replaces a zero or a weak year in the top 35.
What to Do With the Lower Number
If the revised estimate changes the plan, there is still room to respond at 63. Part-time work for a year or two can add a covered earnings year and often replaces a weaker one from earlier in a career. Delaying the claim to 70 still adds roughly 8% per year to whatever the earnings record actually supports. Adjusting withdrawals from a 401(k) or IRA during the gap years can also smooth taxes before Social Security and required minimum distributions (RMDs) arrive.
The estimate on the screen was counting work not yet reported as finished. Running the numbers against your own record before locking in a claiming date is the most important step most early retirees skip.
Editor’s note: This article was updated to reflect the Social Security Administration’s official 2027 COLA of 3.6%, announced October 14, 2026, replacing the earlier estimate of “mid-3% range,” and to refresh the U.S. personal saving rate to 2.7% as of June 2026 per Bureau of Economic Analysis data, down from 3% cited previously. A new data point from Schroders’ 2026 U.S. Retirement Survey was also added to illustrate the breadth of the retirement savings gap.
Contact [email protected] for any questions or corrections.
Gerelyn Terzo is the author of dividend investing handbook "Dividend Investing Strategies: How to Have Your Cake & Eat It Too." A veteran financial journalist, she covers agri-finance for outlets like Global AgInvesting and the broader stock market and personal finance for 24/7 Wall Street. She began at CNBC and later helped launch Fox Business in New York. Gerelyn currently resides in Woodland Park, Colorado and dabbles in nature photography as a hobby.
