Can Seniors live on Social Security for the rest of their lives?

Social Security was established in 1935 and has become the primary source of income to the majority of elderly Americans, providing $1.2 trillion in benefits to 70 million people in 2021. For about half of seniors in the United States, Social Security provides at least 50% of their income and provides at least 90% of income for about a quarter of all seniors.
But Social Security should not be looked at as the sole source for anyone’s retirement income. It is more of a baseline supplement to a retiree’s savings, investments, and/or pension. The average monthly retirement benefit is about $1,500 per month which is just above the national poverty level of $1,452 for a two-person household.
Over the last decade, Social Security Cost of Living Adjustments (COLAs) have not kept pace with inflation. Since 2011, the average COLA increase has been 1.6%, while inflation during that time has risen 2%. If a retiree is living primarily on Social Security, they are not keeping ahead of inflation—and in fact are losing money. The good news is that in 2022 a COLA increase of 6% or better is expected to be announced in October—and seniors deserve a raise!

But there are some strategies to help people on Social Security get the most out of their money:

  • People qualify for Social Security at age 62—but the longer they wait to start collecting, up to the age of 70, the more they will get.
          - As of 2021, the monthly benefit level for a person who retires having paid in the maximum contributions is $2,324 if          starting at age 62, but $3,895 if starting at age 70.
  • The spouse of a deceased or divorced partner can collect a higher amount based on their ex’s benefits if they are higher than their own.
  • If a person is going to re-marry, they can still collect based on their ex-spouse—but only if they re-marry after reaching the age of 60.
  • In the case of divorce, an ex-spouse can collect up to 50% of the other’s benefit if they are 62 or older, were married at least 10 years, and are single.
  • A person can continue to generate an income while on Social Security without owing any tax penalty against their benefit as long as it is at $18,960 or lower for an individual in 2021.

Chris Orestis, CSA is President of Retirement Genius, and a nationally recognized financial, health/LTC, and retirement expert with over 25 years’ experience in the industries, and credited as pioneering the Long-Term Care Life Settlement over a decade