Even though Social Security does not provide sufficient retirement income on its own, you should plan to maximize your benefits as one means of building your retirement income.
Public opinion surveys have long confirmed that Social Security is wildly popular with the American people.1 At the same time, an overwhelming majority of Americans (83%) who have not yet retired are deeply skeptical that Social Security will provide them with the current level of benefits.2 Half of those not-yet-retired skeptics believe that Social Security will provide them with no benefits.3
If there were no basis in fact for these worries, we might dismiss them as an expression of generalized worry about how we will support ourselves in retirement. Sadly, the facts lend some support to the skeptics. According to the Social Security Trustees’ 2018 annual report, Social Security will be able to pay scheduled benefits on a timely basis only until 2034. Then, the fund’s reserves will be depleted and continuing tax income will be sufficient to pay only 76 percent of scheduled benefits.4
I am an optimist about the future of Social Security. Or, more precisely, I believe our elected leaders in Washington will not risk their political futures by allowing retirement benefits beloved by their constituents to be cut or lost entirely. The funding and political challenges are real, and it likely will not happen before the 2020 election, but I expect Congress and the President will save and strengthen Social Security.
Social Security is Only a Partial Retirement Income Solution
If my prediction is correct, then where will we be? Social Security alone does not provide Americans with a secure retirement. In 2017, it lifted more than 15 million out of poverty, more than any other government program.5 That’s critically important. Yet, Social Security always was intended to replace only a portion of your pre-retirement income. As the Social Security Board wrote in its 1939 report proposing amendments to the original Social Security Act,
[i]t is impossible under any social insurance system to provide ideal security for every individual. The practical objective is to pay benefits that provide a minimum degree of social security—as a basis upon which the worker, through his own efforts, will have a better chance to provide adequately for his individual security.6
Today, on average, Social Security benefits replace about 40% of beneficiaries’ pre-retirement earnings,7 with a higher rate for lower income workers and a lower rate for those with higher incomes.8 While there is a lot of debate about how much pre-retirement income we must replace to continue our lifestyles in retirement, we can all agree that 40% or thereabouts is not likely to be enough. Fortunately, many of us have additional sources of retirement income or retirement savings we can draw down. For more than a third of Social Security beneficiaries, however, their Social Security benefits constitute at least 90% of their total income. This percentage rises as beneficiaries age and lose their spouses or outlive their savings.9 So, an inadequate amount of money can become increasingly important as we age in retirement, even if we started with retirement savings.
Maximize Your Social Security Benefits
Even though Social Security does not provide sufficient retirement income on its own, you should plan to maximize your benefits as one means of building your retirement income. There are three steps you can take that will make a meaningful difference:
- Wait until you reach age 70 to claim your benefits. You are permitted to claim your own Social Security retirement benefits at age 62. Don’t, if possible. If you are currently age 60 or younger and you retire between ages 62 and 67 (your “full retirement age”), your benefits amount would be reduced by as much as 30 percent. So, at a minimum, wait until age 67 and collect your full benefits. But you can do better. Social Security will increase your benefits for every month after age 67 you wait to claim, up to age 70. This is additional, reliable, and protected income that will last the rest of your life. Take the extra income, if you can wait for it.
- Make sure all your Social Security payroll taxes are being paid. Every year, the Social Security Administration sends you a statement estimating benefits you would receive at various retirement ages. Much more important, the statement includes your earnings record. Review your earnings record closely. Your eligibility for Social Security benefits and the amount of those benefits are based, in part, on how much you’ve earned. Confirm that Social Security has the correct information going as far back in your work history as you can. If anything in the earnings record is wrong, call Social Security at the number on your statement and correct the information.
- Think carefully about survivor or spousal benefits. This issue is especially important for some women, although it’s also relevant for some men. In brief, spouses and survivors may be able to get larger benefits by relying on two Social Security programs.
First, at their full retirement age, spouses can claim “spousal benefits” worth one-half of their husband’s or wife’s Social Security benefit (less if you claim earlier). When you apply, you will get the larger of your own benefit or the spousal benefit. So, if you have not worked a great deal for compensation and your spouse did, or you were paid much less than your spouse, the spousal benefit may offer more retirement income.
Second, “survivor benefits” are provided to some family members (e.g., widow or widower, child) of current and future Social Security beneficiaries. The rules include thresholds based on several criteria, so contact the Social Security Administration to discuss your situation if you have lost a loved one who provided income to your family. You may be entitled to these benefits, so do not hesitate to claim them.
Conclusion: Supplement Your Social Security Benefits
Think of Social Security as the foundation of a secure retirement, just like a strong foundation is needed for a secure house or office building. . You want Social Security to be as substantial and reliable as it can be. But you can’t live or work on a bare foundation no matter how solidly it is built. You need to build higher. The same is true in retirement: Social Security is necessary and important, but not sufficient. You will be better able to continue your pre-retirement lifestyle with some additional retirement income that supplements your Social Security benefits.
If you are one of the small and declining number of Americans enrolled in a pension plan, you already have a second source of protected lifetime income to supplement the lifetime income Social Security provides. The only question is how much money you will receive from your pension and, based on your spending and your retirement plans, whether it will be enough.
If you have retirement savings, think about how you will translate those savings into retirement income that will last for the rest of your life alongside your Social Security benefits. One of the defining characteristics of annuities is that they can provide regular and reliable protected income that lasts for a lifetime just like Social Security and pensions. Figuring out how to “decumulate” retirement savings can be almost as challenging as accumulating retirement savings.
If you do not have retirement savings, if possible, start saving now. It’s best to start saving for retirement as early in your work life as possible. More time typically means a larger amount of savings, an opportunity to escalate your savings as your income grows, and more options to invest in order to grow those savings. But any time spent saving for retirement is better than never, and some savings are better than none.
1. "Public Opinions on Social Security," National Academy of Social Insurance
2. "Retirement, Social Security and long-term care," Kim Parker, Rich Morin and Juliana Menasce Horowitz, March 2019
3. Parker, Rich, and Menasce Horowitz, 2019
4. "A Summary of the 2020 Annual Reports," Social Security Administration,
5. "Social Security Lifts More Americans Above Poverty Than Any Other Program, Center for Budget and Policy Priorities," Kathleen Romig, February 2020
6. "Historical Background and Development of Social Security," Social Security Administration
7. "Replacement Rates For Retirees: What Makes Sense for Planning and Evaluation?," Stephen Gross, Michael Clingman, Alice Wade, and Karen Glenn, Social Security Administration, July 2014
8. "Replacement Rates for Hypothetical Retired Workers," Michael Clingman, ASA, Kyle Burkhalter, FSA, and Chris Chaplain, ASA, Social Security Administration, April 2019
9. "Social Security Benefits are Modest,Center for Budget and Policy Priorities," Paul N. Van De Water and Kathy Ruffing, August 2017
About the author
Seth D. Harris, Former Acting U.S. Secretary of Labor, Attorney at Seth D. Harris | Law & Policy
Seth D. Harris is a nationally recognized expert in labor, employment and retirement law and policy. He is an attorney in Washington D.C. and a Visiting Professor at Cornell University's Institute for Public Affairs. He also served as Acting U.S. Secretary of Labor for the Clinton Administration, and Deputy U.S. Secretary of Labor from 2009-2014.
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