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

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

Social Security was established in 1935. It has become the primary source of income for 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. Additionally, it 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 of 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. It 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 (COLA’s) has not kept pace with inflation. Since 2011, the average COLA increase has been 1.6% while inflation during that time has risen by 2%. If a retiree is living primarily on Social Security they are not keeping ahead of inflation. In fact, they are losing money. The good news is that in 2023 a COLA increase of over 8% is expected to be announced in October. Seniors deserve a raise!

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

1. People qualify for Social Security at age 62. However, 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.

2. 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.

3. 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.

4. 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.

5. 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 for an individual in 2021.

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