Social Security Becomes Primary Retirement Plan for Many Americans, But It's Rarely Enough

Social Security pays, on average, roughly $25,000 per year in retirement benefits — a sum that falls short of comfortable living and sits near the federal poverty guideline for a single-person household. Yet according to a newly commissioned survey, more than four in ten workers aged 55 and older expect the program to serve as their primary source of retirement income.

The growing reliance on Social Security coincides with a decades-long decline in employer-sponsored defined benefit pensions, which guaranteed workers a set monthly payout in retirement. As pensions have largely given way to 401(k)-style plans, the burden of funding retirement has shifted from employers to individuals — leaving those who could not save enough increasingly dependent on the federal safety net.

"What surprised us wasn't just the number of employees expecting to rely primarily on Social Security during retirement," said Steve Jans, wealth management national practice leader at NFP, the benefits firm that commissioned the survey. "It was what this expectation suggests: Many workers may not have a clear understanding of how Social Security fits into a retirement plan — an education gap as much as a savings gap."

Workers Falling Behind on Savings

More than seven in ten surveyed workers report being off track with their retirement savings goals, and 46% say they are either "deprioritizing" retirement savings or are unable to save at all.

"Employees are not necessarily giving up on retirement, but instead they're prioritizing today's financial pressures over tomorrow's goals," said Jans. "Inflation, rising living costs like auto payments, and competing financial demands are reasons retirement savings are being postponed rather than abandoned."

Workers are channeling their paychecks toward essential expenses such as housing and healthcare rather than setting aside a portion for long-term retirement accounts. While that present-day reality is understandable, relying on Social Security as a financial fallback raises serious concerns for future financial security — concerns compounded by the fact that the program's combined trust funds are projected to run short of reserves around the mid-2030s, after which, absent congressional action, scheduled benefits could be reduced by roughly 20%.

Expectations vs. Reality

The size of a Social Security check depends on work history, lifetime earnings, retirement age, and the year benefits are first claimed.

Following a 2.8% cost-of-living adjustment (COLA) in 2025, the average Social Security retirement benefit stands at approximately $2,083 per month as of May 2026 — equivalent to just under $25,000 per year — according to Social Security Administration data.

For women, those checks are often leaner — roughly one-quarter less than the average man's — due in part to lower pay over working years, time out of the workforce for caregiving, and more part-time work.

For many retirees, rising out-of-pocket medical costs consume a significant portion of monthly benefits. Even with Medicare coverage, and excluding long-term care, retirees face premiums, copays, and a wide range of uncovered medical services.

"Retirees get this because they're writing the checks now, but those nearing retirement need to realize that this is coming up," economist Matthew Rutledge previously told Yahoo Finance. "It's a rude awakening for people once they get to retirement."

On average, a 65-year-old leaving the workforce this year may need approximately 185,500 dollars in savings to cover out-of-pocket healthcare expenses throughout retirement, not including potential costs for assisted living and long-term care.

Heavy Reliance on Social Security

Despite those daunting figures, many seniors already depend heavily on Social Security. For approximately half of seniors, monthly benefits provide at least 50% of their income. For about one in four seniors, benefits account for at least 90% of income. For more than a quarter, Social Security is their sole source of income.

The Case for Delaying Benefits

One strategy to increase monthly benefits is delaying claims. Most Americans do not — or cannot — wait until age 70 to begin collecting, but doing so meaningfully boosts payouts.

According to research from the Center for Retirement Research at Boston College, more than a quarter of Social Security beneficiaries begin claiming at age 62, the earliest point of eligibility, even though monthly benefits may be reduced by as much as 30% compared to what they would receive at full retirement age. For anyone born in 1960 or later, the full retirement age is 67.

Delaying benefits beyond full retirement age until age 70 earns delayed retirement credits, amounting to roughly an 8% increase for each year, at which point the credits stop accruing.

An Education Gap

Confusion about how Social Security works — along with limited understanding of basic 401(k) mechanics — compounds the problem, according to Jans.

"People struggle because they feel overwhelmed and don't understand fundamental retirement concepts," he said.