The Average Social Security Check Is $1,771: How Experts Break Down Spending This Amount
Written by
Crystal Mayer
Edited by
Molly Sullivan
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According to the Social Security Administration, the average monthly benefit was $1,771 in January 2024. For someone relying solely on their Social Security benefits, this means that they only make around $21,252 each year. While the amount varies slightly depending on certain factors like how much money you made, your age, and more, the reality is that the benefits are modest at best. Without adequate planning, you could end up living beyond your means throughout your retirement.
At GOBankingRates, we asked experts to discuss the best ways to use Social Security benefits. We had them break down nearly every category, including how much you should put toward necessities, nonessentials and whether you should still be investing. Here is how our experts recommend budgeting your Social Security benefits each month.
Where To Start
“Budgeting your Social Security check is similar to how you would budget any other kind of income. You have to start by assessing your financial needs, then go from there,” said Jake Hill, CEO of DebtHammer Consolidation. “Assess your bills — mortgage, insurance, phone bill, etc. — and budget for those necessary payments. Then, consider the other important budget categories like an emergency fund, savings goals, travel expenses, etc. Of course, you’ll also want to budget for your fun or miscellaneous spending, but prioritize the important stuff first so that you don’t overspend.”
Prioritize Needs Over Wants
Whether you have a lot or a little coming in from Social Security, you’ll always want to prioritize needs over wants.
“Given the wide variance in Social Security benefits, based on one’s earnings record and the age at which they choose to start receiving payments, a one-size-fits-all approach doesn’t apply,” said Mike Kojonen, founder/owner of Principal Preservation Services LLC. “However, a fundamental principle I advocate for is the prioritization of needs over wants, with an emphasis on creating a buffer for unexpected healthcare costs, which tend to rise as one ages.”
Allocate for Essential Living Expenses
If you’re only living on your Social Security check, you’ll need to make sure you correctly bookmark where your money is going.
“A reasonable guideline is to allocate up to 50% of the Social Security check toward essential living expenses, including rent or mortgage,” Kojonen said. “This percentage might be higher for those residing in areas with a higher cost of living, but the goal should be to live as comfortably as possible within the constraints of a fixed income.”
David Brillant, a full-service tax and trust and estate lawyer and founder of Brillant Law Firm, said, “A prudent starting point when budgeting Social Security income is to prioritize essential costs. Housing, whether it’s rent or mortgage, should not consume more than 30% of your income.”
“This is a standard guideline across financial planning, ensuring there’s ample room for other expenses. However, this can vary slightly depending on your location due to the cost of living differences. Adjusting this percentage may be necessary, but keep it as low as feasibly possible to maintain flexibility in your budget,” he added. “For other expenses, it’s wise to categorize your budget into essentials (utilities, healthcare, groceries) and nonessentials (entertainment, dining out, hobbies). Allocating about 20%-25% of the Social Security check to essentials other than housing can help ensure that you cover your basic needs comfortably. It’s also beneficial to earmark around 10% for savings, if possible. Although it might be challenging on a fixed income, having a cushion for unexpected expenses is crucial.”
Plan For Discretionary Spending
You don’t have to do away with spending on fun if you make sure to plan for it.
“For ‘fun money’ and discretionary spending, I recommend limiting this to 5%-10% of the monthly Social Security benefit,” Kojonen said. “This acknowledges the importance of enjoying life and engaging in hobbies without compromising financial stability.”
Brillant explained, “‘Fun money’ for entertainment and hobbies is also important for a balanced life; about 5$-10% of the check can go towards this. Yet, this should be the most flexible part of your budget, adjusted based on your essential expenses and savings goals.”
Invest Wisely
And while you’re at it, don’t forget to invest, if you can. One of the best ways to use your money is in a way that will make it grow.
“Saving or investing a portion of a Social Security check isn’t always feasible, given the limited nature of these funds, but if there’s room in the budget, aiming to save at least 5% can contribute to a sense of financial security and provide a safety net for unforeseen expenses,” Kojonen said. “In practice, these percentages may need adjustment based on individual circumstances, but they provide a starting framework for balanced, realistic budgeting in retirement.”
Brillant noted, “Investing a portion of your Social Security check might not always be advisable due to the risk and fixed income nature, but if there’s an opportunity to safely invest in low-risk options which won’t jeopardize your financial stability, it can be considered.”
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