Here’s What It’s Really Like To Be a Social Security Recipient in 2024
Written by
Gabrielle Olya
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Gary Dudak
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Over 50 million retired workers collect Social Security benefits in the U.S., with the average monthly benefit at $1,905, according to the latest data from the Social Security Administration. Although the program was designed to be a supplement to other forms of retirement income, many Americans rely on this benefit to provide all or most of their income in retirement — so it’s no surprise that they are finding it hard to get by.
To get a closer look at the challenges of being a Social Security recipient in 2024, The Motley Fool surveyed 2,000 beneficiaries about their experiences. Here are some of the harsh realities the survey uncovered. When you’re finished, also check out some retirement planning moves to make if you are worried about the economy.
Nearly Half of Social Security Recipients Are Considering Returning To Work
The survey found that 44% of retired Social Security beneficiaries have considered going back to work due to low benefits. For some, this might be the best financial move.
“Going back to work may be the best strategy for retirees with insufficient income, even on a part-time basis,” said Robert Brokamp, CFP, senior advisor at The Motley Fool. “With the unemployment rate still low, employers may be willing to offer flexible schedules. Plus, paychecks, on average, have been rising more than inflation, so work provides a bit of a hedge against rising prices.”
Brokamp notes that while retirees may be motivated to go back to work for financial reasons, there could be other benefits.
“Some retirees appreciate that part-time work provides some structure and social interaction to their days,” he said. “A recent study from Mass Mutual found that of the least happy retirees, almost half said that retirement has made them lonelier.”
With that said, going back to work might not be the best financial decision for certain beneficiaries, so it’s important to keep this in mind before taking on a new gig.
“If you have not reached your Social Security full retirement age — between 66 and 67, depending on the year you were born — you may lose some benefits if you earn above certain limits that change every year,” Brokamp said.
If you won’t reach your full retirement age in 2024, earning above $22,320 will reduce benefits by $1 for every $2 over that amount. If you turn your full retirement age in 2024, earning above $59,520 will reduce your benefits by $1 for every $3.
“You eventually get that money back,” Brokamp continued, “but it’s generally best for Social Security beneficiaries to stay below those limits if they go back to work before their full retirement age.”
Over a Quarter of Recipients Say Social Security Is Their Only Form of Retirement Income
According to the survey, 27% of retirees rely exclusively on Social Security benefits for income. The harsh reality is that this is not enough to sustain a reasonable quality of life for many retirees.
“The average Social Security retirement benefit is a bit under $23,000 a year per beneficiary,” Brokamp said. “That is a very low income for a single person. Married couples receive more since there are usually two beneficiaries in the household, but even that amount of income is lower than most Americans would need to live the retirement they aspire to.”
For those retirees who are reliant on Social Security for income in retirement, Brokamp recommends looking into other forms of assistance that may be available to you.
“Many government programs are available to older Americans with very low incomes,” he said. “The federal government administers the Supplemental Security Income (SSI) program. State and local governments often offer their own programs, such as property tax relief for qualifying citizens age 65 or older.”
In addition, you may consider tapping into your home equity.
“Retirees who own their home might consider unlocking some of their equity to pay the bills, perhaps through downsizing, renting out a basement or a reverse mortgage,” Brokamp said. “However, these are big decisions with associated costs and risks, so they should be made only after doing very thorough research.”
62% of Social Security Recipients View the 2024 Cost-of-Living Adjustment as Insufficient
For 2024, the annual Social Security cost-of-living adjustment (COLA) was 3.2%, based on the rate of inflation. The majority of beneficiaries (62%) view this year’s COLA as insufficient, the survey found. In addition, 66% said the Social Security COLA adjustment helped “very little” with key expenses.
However, Brokamp believes the rate is appropriate.
“The federal government provides many measures of inflation that weight items somewhat differently. The two most prominent are the Consumer Price Index for All Urban Consumers, which is currently 3.4%, and the Personal Consumption Expenditures Price Index, which is currently 2.8%,” he said. “So the 3.2% Social Security COLA is pretty much in the middle of those two, which would indicate that it’s a reasonable adjustment.”
One interesting finding of the survey is that recipients that are age 70 and older were more likely to find the COLA appropriate (37%) compared to those who are under 70 (22%).
Most Social Security Beneficiaries Have Adjusted Their Spending Habits Over the Past Year
In response to inflation, 71% of Social Security beneficiaries cut back on spending on non-essential items, 41% have delayed major purchases and 39% have reduced spending on necessities.
To find the most effective way to adjust spending, Brokamp recommends that retirees track where their money is going.
“Knowledge is power,” he said. “Tracking your spending by using a spreadsheet or an online service such as Empower, Monarch Money or YNAB will help you identify the expenses that can be reduced or eliminated.”
Nearly Half of Beneficiaries Are Confident Social Security Will Last Throughout Their Retirement
Although many beneficiaries are not satisfied with their Social Security benefits, they do have faith that the program will be in place for as long as they can collect. The survey found that 28% are “somewhat confident” that Social Security will provide benefits throughout their retirement and 19% are extremely confident.
However, as the program currently stands, it will be underfunded by 2033.
“Current taxes aren’t enough to pay all of the current benefits, so the system relies on trust funds that have been built up for decades,” Brokamp said. “Unfortunately, those trust funds are projected to run out of money in 2033. At that point, payroll taxes will only be able to cover an estimated 79% of benefits. Ideally, a future congress and president will come up with a solution before then. But there are no guarantees.”
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