While Social Security was never meant to fund the entire lifestyle of retirees, many American seniors unfortunately find themselves in that very position. According to a recent study from Nationwide, 21% of Americans now rely on Social Security as their sole source of retirement income, up from 13% in 2014.
Technically, the average Social Security check is enough to keep Americans above the federal poverty level, but there are two problems with this type of analysis. First, in spite of the technical definition, the federal poverty line is far below the standard of living most Americans would want. Second, seniors who are living in poverty are likely earning far below the average Social Security check.
In other words, it’s extremely difficult to live a comfortable retirement for seniors in poverty who are living off just their Social Security checks. To see how tough it is, here’s a quick look at the relationship between federal poverty levels, seniors living in poverty and the size of their Social Security checks.
Federal Poverty Levels for 2023
Federal poverty levels are used to calculate eligibility for a wide range of government programs, from Medicaid and the Children’s Health Insurance Program to Affordable Care Act subsidies and more. As such, they are administrative levels more than actual estimates of what it means to be living in poverty.
For example, the federal minimum wage remains at just $7.25 per hour, which is technically enough to keep you above the poverty line. But there aren’t many Americans who would agree that earning $15,000 per year amounts to anything but living in poverty.
Nevertheless, the poverty levels are what they are — $14,580 for individuals and $19,720 for two-person households. From there, the poverty line increases by just $5,140 for each additional person in a household, meaning a family of six, for example, would have a poverty line of $40,280.
Average Social Security Checks as of Sept. 2023
According to IRS data, the average Social Security payout for retirees as of Sept. 2023 was $1,841.27. Spouses of retired workers drew an average check of $888.03.
This means that the average retiree household in which a spouse was also drawing benefits received a total of $2,279.30 per month, or $32,751.60 per year. That amounts to $13,031.60 above the poverty line for a two-person household.
Average Social Security Checks of Retirees Living in Poverty
The SSA doesn’t break down Social Security payouts by income level. However, an estimate can be made by comparing average U.S. incomes with the average Social Security benefit for retirees.
According to U.S. Census data, Americans in a nonfamily household (meaning they lived alone or with unrelated others) has a median income of $45,440 in 2022. Meanwhile, the average Social Security benefit for an individual retiree as of Dec. 2022 was $1,775.81, or $21,309.72 per year. Lastly, in 2022, the federal poverty level for individuals was $13,590 in income per year.
If you put this all together, an individual living in poverty earned about 30% or less in income than the median nonfamily household. Applying that ratio to the average Social Security payment results in an estimated monthly check of $532.74, or just $6,392.88 per year.
This is by no means a scientific analysis, but it’s a fair estimate of what a poverty-level earner could expect in terms of a Social Security retirement benefit. Bear in mind that there are plenty of ways for lower-earning retirees to get additional support, including the Supplemental Security Income (SSI) program and numerous health and food security assistance programs.
Ways To Boost Your Social Security Check
There are only two ways to boost the amount you receive in your Social Security check. The first is to increase your earnings. The SSA uses your 35 highest-earning years to compute the amount of your check, so maximizing your earnings for at least 35 years is the best way to raise your payout.
The second way is to delay when you file. Although you can legally claim Social Security as early as age 62, by waiting until age 70, you can increase your benefit significantly. If you’re due a $1,000 monthly benefit at your full retirement age of 62, for example, that would be reduced to $700 if you claim at age 62. However, if you wait until age 70, that benefit would jump to $1,240, 77% higher than if you filed at 62.
If you’re struggling to get by, it might be hard to wait until age 70. However, if it’s at all possible, you’d enjoy much higher Social Security checks for the rest of your life.
Supplemental Sources of Retirement Income
It’s clear that Social Security alone isn’t usually enough to cut it for most retirees. With this in mind, it’s important to start saving and investing as early as possible to supplement your Social Security income in retirement.
Even a modest $100 investment per month that earns 10% per year would be worth a whopping $632,405 after 40 years, thanks to the power of compound returns. If you could earn even 5% interest on that money in retirement, that would provide you with an additional $31,620.25 per year in income. Coupled with the average annual Social Security benefit of $22,095.24, you’d be pulling in $53,715.49 per year in income without having to lift a finger — and that doesn’t even include any potential spousal benefits or other income.
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