What percent of retirees live on Social Security alone?

‘I can’t live on $709 a month’: Americans on social security push for its expansion

Nancy Reynolds, age 74, of Cape Canaveral, Florida, works as a cashier at Walmart while struggling to make ends meet on her work income and social security benefits of just $709 a month.

“I can’t live on $709 a month, so I have to work. I have no choice, even though my body says you can’t do much more,” said Reynolds.

She explained her benefits are lower due to years where an abusive husband didn’t allow her to work, and she had also taken time off to care for her father before he died. Reynolds relies on Medicare insurance, though she still has to pay co-pays for doctor visits, and receives only $19 a month in food stamp assistance.

Reynolds is one of millions of Americans who are either senior, disabled or survivors of a deceased worker, and rely on social security benefits for the majority of their income, but the average benefit of just over $1,500 a month doesn’t provide enough income to cover basic necessities.

“The government is failing all of us seniors. We have to choose whether we eat or we go to the doctor, do we eat or do we buy medicine? The struggle is out there even though I’m working,” added Reynolds. “I’m wondering how long am I going to have my home, how long am I going to be able to pay for it? Should I buy a tent now and store it, because if I lose my job, I’ll be homeless because no one wants to hire a 74-year-old.”

Approximately 65 million Americans receive a monthly social security benefit, with the majority of payments going to retired workers and their dependents.

Senior citizens and disabled Americans who rely on benefits for the majority of their income are pushing for expansion of social security. Calls for reforms include increasing benefits in line with the cost of living, as employers are providing fewer retirement pensions to workers and the US population at retirement age of 65 is expected to grow from 56 million to 78 million in 2035.

“The nation is really facing a retirement income crisis, where too many people aren’t going to be able to retire and maintain savings to live on,” said Nancy Altman, president of Social Security Works, an advocacy organization for expanding the program. “It’s a very strong system, but its benefits are extremely low by virtually any way you measure them.”

Altman argued an expansion of the program is long overdue, noting that payouts haven’t increased since 1972.

Public opinion polls on social security demonstrate there is strong bipartisan support for the system and opposition to cuts. Congressman John Larson of Connecticut introduced a bill last legislative session to expand social security, along with 209 co-sponsors, and Altman expressed optimism social security legislation could move forward after the Biden administration finalizes the bipartisan infrastructure deal.

Currently, social security benefits in the US are lower than in the majority of developed nations, compared with the percentage of earnings the benefits provide to the average worker. The benefits are also taxed and Medicare costs are deducted as well.

Susan Aubrey Wilde, 74, of Sacramento, California, lives alone in an apartment for seniors on fixed incomes, but her social security benefits of $1,122 a month barely covers little more than her rent of $794. After paying for utilities, internet, phone and the costs to upkeep and insure her car, there is little left to survive. She’s concerned that she won’t be able to afford to stay in her apartment amid rising rents.

Wilde has dental issues, but cannot afford recommended treatment, and she struggles to carry heavy loads up the two flights of stairs to her apartment. Her washing machine is currently broken and she can’t afford to fix or replace it. In 2004, she was diagnosed with breast cancer and still experiences ongoing issues from treatment. She also suffers from chronic obstructive pulmonary disease.

“I keep a tent by the door because if the rent goes any higher, I may soon be in the street. So much for retiring with dignity,” said Wilde. “I worked all my life until the cancer diagnosis. I raised two children alone on clerical wages and I did my best.”

Nearly 10 million disabled Americans and their dependents rely on social security benefits for their income. The majority of applicants for social security disability benefits are denied, with only 20-25% of applicants awarded benefits from their initial claims.

It took one year for Rocky Giammatteo, 49, of Las Vegas, to receive her disability benefits for multiple sclerosis in 2016.

“I had lost my life savings and was evicted before they finally reached a decision a year later,” said Giammateo. “If it hadn’t been for friends pitching in to help me out those last couple of months, so I could stay in a dive hotel and avoid being homeless, in Vegas’ 110-degree weather, with my poor health, I would’ve been dead.”

After she was awarded benefits and backpay, Giammateo decided to move to Mexico, where the cost of living is much lower than in the US. The benefits she receives barely covered her rent in Las Vegas.

“Moving abroad to a country with a lower cost of living was my only realistic option to survive,” concluded Giammatteo. “I’m basically a medical refugee. It’s painful, but I’m alive to tell you this tale now, so it was the right decision.”

Factcheck: Do 40 Percent of Retirees Rely on Social Security for Their Entire Income?

Americans are concerned and even afraid for their retirement security. And the news headlines often don’t make them feel better. The latest is a claim from the National institute for Retirement Security that “A plurality of older Americans, 40.2 percent, only receive income from Social Security in retirement.” If true that’s very worrying. But does this frightening factoid hold up?

The National Institute for Retirement Security (NIRS) is the research and communications arm of the defined benefit pension industry. NIRS regularly produces reports on various aspects of retirement savings and incomes, and these reports usually generate favorable media coverage.

NIRS’s new report is no exception. “Retirement Security Is On A Treacherous Path, New Report Warns,” writes my fellow Forbes contributor Ted Knutson. The Washington Post’s Helaine Olen cited the report, arguing that because Social Security “is the only income source for 40 percent of retirees over the age of 60,” Democratic politicians who favor Social Security benefit cuts are vulnerable to President Trump, who opposes Social Security reductions. CNBC and others also repeated the claim that 40% of retirees have nothing except for Social Security.

But is the NIRS report correct? Do 4-in-10 retirees truly have no income other than Social Security?

The NIRS report’s data source is the Census Bureau’s Survey of Income and Program Participation (or, the SIPP). The SIPP surveys households by asking them a wide variety of questions, including the sources of their income. From the SIPP, NIRS declares that 40.2 percent of retirees receive all of their income from Social Security.

And yet, a 2017 study by researchers at the Social Security Administration, also using the SIPP, found that only 19.6% of Americans 65 and over received at least 90% of their total incomes from Social Security. That’s less than half the share of retirees than NIRS claims and SSA measures dependence using a lower bar – 90% of total income rather than NIRS’s 100%. Clearly, there’s a conflict. And, from a policy perspective, one-fifth of retirees being heavily dependent on Social Security’s isn’t a huge problem: the poorest fifth of workers are indeed quite poor, and Social Security was designed to provide a retirement benefit for workers who can’t easily save on their own.

Moreover, a second 2017 study, from two Census Bureau economists, analyzed retirement incomes using IRS tax records, which are more accurate than households’ responses to a survey. The Census Bureau study found that only 12% of Americans aged 65+ received 90% or more of their income from Social Security. Again, it’s not clear how that is compatible with NIRS’s claim that over 40% of retirees receive all their income from Social Security.

The Census Bureau study shows that even if you combine Social Security benefits with Supplemental Security Income (SSI), a means-tested welfare benefit paid to very low-income retirees, retiree households in the bottom 40% of the income distribution – the ones the NIRS report would have you think are receiving pretty much all of their incomes from Social Security – received only 79% of their total incomes in combined Social Security and SSI benefits. As we move up the income distribution, dependence on Social Security/SSI declines further and reliance on other sources of income increases.

Based on these findings alone, I think it’s fair to give NIRS’s claim that 40% of retirees receive all their income from Social Security a failing grade on the Biggs Factcheck.

The more interesting question is why: How did NIRS produce such a figure? Without recreating NIRS’s data from scratch it’s hard to say.

One difference between NIRS’s calculations and those from the SSA, the Census Bureau and others is how NIRS defines “retirees.” Most studies of retirees’ dependence on Social Security look at all Americans aged 65 and over. Instead, NIRS looked at Americans age 60 and over who work less than 30 hours per week. Obviously, anyone who is working has income other than Social Security, so NIRS’s definition of retirees does reduce the number of retirees with non-Social Security income. But from my quick look at Current Population Survey data for 2013, only about eight percent of American aged 60 and over worked more than 30 hours per week. So I doubt that’s the driving factor.

Another factor may be NIRS’s reliance on SIPP’s pensions and retirement supplement, where survey respondents report whether they receive various types of retirement income. In theory this should increase the accuracy of NIRS’s report, but other studies have found that retirees aren’t great at reporting their difference sources of income. For instance, they might claim not to be receiving a pension benefit even if tax data show they are. The Census Bureau study found that 28% of Americans 65 and over claimed not to receive income from a private retirement plan even when tax records showed they did. Only four percent of retirees said they have private retirement plan benefits when they didn’t. So errors from household surveys tend to make things look worse than they really are. That’s a big reason studies have increasingly relied on administrative data from the IRS or the SSA rather than households surveys.

But we can still safely conclude that NIRS’s claim that “A plurality of older Americans, 40.2 percent, only receive income from Social Security in retirement” is incorrect. Analysis by government agencies conclude that only about half that amount receive even 90% of their incomes from Social Security.

5 Awesome Places to Retire on $3,000 a Month or Less

The average Social Security benefit was just $1,503 per month in January 2020. However, for someone earning at least $137,700 (adjusted for inflation) over the course of her 35-year career and claiming benefits at age 66, the maximum payout is $3,011 a month. Plus, many of us have savings: The average retirement savings for someone ages 65 to 69 is $206,819.53, according to Federal Reserve SCF data. That means that even if you’re not one of those lucky few who have $1 million or more socked away, you can still retire well, so long as you keep your monthly budget under $3,000 a month.

When considering where to settle, Christopher Totaro, an agent at Warburg Realty in New York, suggests taking into account local costs such as taxes, health care, transportation and food. “It is very important to make sure that the city or town has the infrastructure to support your needs as you age,” he says. He also suggests considering the air quality index and the number of days with sunshine, as well as proximity to other retirees. Gerard Splendore, another agent at Warburg, adds that you should consider recreation and proximity to family.

Below, we round up five fabulous places to retire on $3,000 or less a month. Whether you love arts and culture or the outdoors, or you just want to be close to a transportation hub for your grandchildren, we have the place for you.

If You Want to Be Near the Beach: Gulfport, Fla.

Gulfport, which is right near Tampa, is renowned for being welcoming not only to retirees, but also to artists, artisans and the LGBTQ community. The trees in Gulfport are draped in Spanish moss, and it’s not uncommon to see manatees and dolphins in the waters. Even better, the temperature typically stays between 56°F and 89°F, and there are 245 days of sun per year, on average. Imagine Key West, only more affordable. The median housing price in Gulfport is $245,756, and the cost of living is 7% lower than the national average. Even better: Florida has no state income tax. Just be aware that the area is hurricane prone.

If You Desire Access to Arts and Culture: Duluth, Ga.

Located in Gwinnett County, part of suburban Atlanta, Duluth recently dedicated millions of dollars to creating multigenerational gathering places, including a new city hall and town green. With just under 30,000 people, the town is one of the most diverse in the Southeast—10% of residents are Korean American. Duluth also has a number of major music venues, including the Infinite Energy Center and the Red Clay Music Foundry, which attract talent ranging from Paul McCartney to James Taylor. Located within a half-hour drive are Atlanta cultural institutions such as the High Museum of Art and the National Center for Civil and Human Rights, as well as Emory University. Best of all, Duluth is affordable. The median home price is $289,950, health care costs are lower than the national average and the state does not tax Social Security benefits.

If You Want to Be Close to a Transportation Hub: Alton, Ill.

Located on the banks of the Mississippi River, just 23 miles north of St. Louis, Mo.—which has an international airport—Alton is home to a plethora of rose gardens and outdoor biking trails, as well as a bustling Main Street. With a population of just over 28,000, the small city, with its surrounding bluffs and dense forests, is great for birding. Best of all, it’s extremely affordable. The median home price is just $93,000, the average cost of living in Alton is 24.8 points below the national average, and the Wellness Center at Senior Services Plus, a local agency for the city’s aging population, offers memberships for $100 a year. It’s a great place to consider if you want your grandchildren to visit frequently—and if you’d like to have a little something left over in your budget to help them with their education. Illinois does not tax retirement income, including Social Security and pensions.

If You Crave the Outdoors: Coeur d’Alene, Ind.

Located 30 miles east of Spokane, Wash., Coeur d’Alene is a little like living in the Swiss Alps, only with a small-town-America feel. The city, which has just over 50,000 residents, is located on the banks of Lake Coeur d’Alene, an alpine lake more than 25 miles long and with 109 miles of shoreline. A plethora of outdoor activities are available, including fishing, hiking, boating and birding, as well as skiing and snowmobiling in the winter. The median home price is $390,108, and there are no state taxes on estates or Social Security, although Idaho does tax pensions. Though the cost of living is 6.2 points higher than the national average, according to Sperling’s BestPlaces, that is largely due to expensive housing along the lake. Move away from the shoreline to save.

If You Want to Live Someplace Totally Foreign: Malta

Located in the Mediterranean ocean between Sicily and the North African coast, Malta is an archipelago of five islands with roots dating back to the Roman empire. Because the country was ruled for 150 years by Great Britain, most residents speak English. The cost of living is affordable—a recent article in International Living said that expatriates can easily live on the islands for less than $2,600 a month. Malta also has affordable public transportation and one of the best health care systems in the world—a recent survey by Eurofound ranked Malta as the most trusted health care network in Europe. Malta also boasts something American cities can never compete with—historical sites dating to medieval times and earlier, all located within walking distance of the aquamarine ocean. Any foreign-sourced bases of income—including Social Security and retirement benefits—are taxed are taxed only if they are remitted to a Maltese bank account. The website Numbeo estimates that the cost of living in Malta is, on average, 10% cheaper than the cost of living in the United States.

Brienne Walsh is a writer based in Savannah, Ga. She contributes to Forbes, Rangefinder and MarketWatch, among other publications.