8 Good Reasons You Shouldn't Rely on Social Security Too Much

Social Security can help you have a comfortable retirement, but don’t count on it to cover everything.

senior woman holding a note and reading it while sitting on the sofa at home
Updated May 28, 2024
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Budgeting for retirement can feel like a guessing game at best. No one really knows for sure how many years they’ll spend living on their retirement funds, which can make saving the right amount feel intimidating. 

Fewer people still can predict major financial blows like 2022’s inflation and 2020’s pandemic, both of which took a major toll on retirees’ savings.

With so many unknowns, it’s tempting to ignore retirement planning in favor of relying on the one payment you know you’ll be receiving post-retirement: Social Security. 

But for most people, Social Security isn’t close to enough to support them in retirement.

Here are eight major reasons to plan on supplementing your Social Security income once you leave the workforce.

Social Security isn't designed to replace all your income

JohnKwan/Adobe social security and retirement income

According to the Social Security Administration (SSA), Social Security wasn’t designed to replace 100% of your own retirement savings. 

Instead, Social Security payments are calculated to account for around 40% of your pre-retirement income, which leaves the other 60% up to you.

If you’re incredibly good at budgeting and don’t mind drastically changing your lifestyle, you could hypothetically manage to retire on 40% of your previous income. 

But for most people, downsizing their finances by more than 50% just isn’t practical, especially for those hoping to maintain their pre-retirement quality of life.

The SSA’s surplus will run out by 2034

wolterke/Adobe United States Social Security office

The Social Security Administration has been operating with a surplus for the last few decades, meaning its extra funds went into a trust to supplement money workers put into the system themselves. However, the surplus is set to run out in 2034.

As long as there are workers contributing to Social Security, there will be money to pay Social Security benefits, so you shouldn’t worry about the program running out of funds entirely. But once the surplus funding disappears, payments are likely to decrease or the government may make other changes to the program.

Medical costs for seniors are unpredictable

New Africa/Adobe care worker covering elderly woman with plaid

Most financial aspects of retirement are hard to predict, from the cost of gas to the state of the housing market in Florida. But few things are as hard to plan for as medical costs, which eat up a substantial chunk of retirees’ budgets.

Even with Medicare to help offset costs, half of all retirees spent $4,300 a year on medical bills in 2018 alone — well before COVID-19 put seniors at a much higher risk of major medical issues.

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Medicare doesn’t cover long-term care facilities

LIGHTFIELD STUDIOS/Adobe doctor helping a senior man get up from sofa

Most seniors end up needing long-term care at some point in their lives due to age, chronic health conditions, disabilities, or recovery from major surgery. 

In fact, if you’re 65 right now, there’s a 70% chance you’ll need long-term health care at some point in your life. 

However, Medicare plans don’t cover long-term care, so you’ll pay for a long-term stay almost entirely out of pocket or through long-term care insurance.

It’s hard to predict when or even if you’ll need long-term care, but if you do, your Social Security payments will likely fall far short of keeping up with the cost.

Your payments depend on your retirement age

fizkes/Adobe elderly woman sit on couch at home read letter

While you can apply to start receiving Social Security payments as young as 62, you’ll receive a higher monthly sum if you can keep working or not begin receiving until age 70. 

And although you might plan to retire at age 72, life events like a sudden medical condition, disability, or a grandchild in need could cause you to take an early retirement.

An unexpected early retirement could mean you haven’t saved enough by the time you retire, and your lower Social Security payments certainly won’t help compensate for that.

Social Security can’t keep up with inflation

Andrey Popov/Adobe ecommerce business growth

Every year, the SSA reevaluates Social Security benefits and decides if they should be increased to account for the rising cost of living. The answer is almost always yes. 

These cost of living adjustments (COLA) can give seniors coping with economic hardship a bit of a boost, but you shouldn’t expect your monthly payment to increase as much as the regular cost of goods.

For instance, the Social Security COLA in 2023 increased payments by 8.7%, which is the highest COLA in 40 years. But in June 2022, prices were up 9.1% compared with June 2021. 

While the 8.7% COLA increase definitely helped seniors cope with rising costs, it wasn't enough to fully offset the country’s inflation.

Prices can change unexpectedly

narawit/Adobe shopping cart with arrow graph on the coin

As we all learned in 2008 and again in 2022, the cost of goods can change in what seems like the blink of an eye. But no matter how much prices change, Social Security payments stay the same month over month. 

Yes, benefits can increase in January based on COLA changes, but Social Security benefits were the same in February 2022 as they were during the worst of the inflation in June.

Without retirement savings or a way to make extra money, retirees dependent on Social Security were stuck living on the same fixed income even as the average cost of goods went up by almost 10%.

Homes have hidden costs beyond mortgage payments

makibestphoto/Adobe house model put on laptop

A Harvard study from 2018 revealed that 80% of Americans who are at least age 65 own their homes. But even if you’re close to paying off your 30-year mortgage, your housing costs won’t completely disappear after retirement.

Homes cost money to maintain, and you shouldn’t discount the possibility of a natural disaster or other major problem that requires you to pay thousands of dollars out of pocket. 

Social Security’s fixed payments can’t help you in situations like these. If you don’t have other retirement savings to fall back on, you might not be able to afford the repairs (or the home itself) should disaster strike.

Do you dream of retiring early? Take this quiz to see if it's possible.

Bottom line

larryhw/Adobe one hundred dollar bills with social security cards

Social Security benefits are a crucial lifeline for retirees, but they shouldn’t be the center of your retirement plan. 

If you’ve entered the workforce fairly recently, now is the time to learn how to save for retirement. The earlier you start saving, the less you’ll have to rely on Social Security to get you through retirement.

And if your retirement is right around the corner, make sure you’re looking at ways to supplement your Social Security income long before you lose the safety net of your current job.

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Author Details

Michelle Smith

Michelle Smith has spent a decade writing for and about small businesses. She specializes in all things finance and has written for publications like G2 and SmallBizDaily. When she's not writing for work at her desk, you can usually find her writing for pleasure near large bodies of water.