Right now, in 2020, the national average monthly amount collected for Social Security is $1503. If a married couple retires, and both have paid in enough to receive the full amount, they could have around $3,000 per month coming in. If one spouse did not pay in enough, they are able to collect one-half the amount of their spouse at age 67, or one-third the amount at age 62. Could you survive on Social Security?

Most Likely to Survive Scenario

Let’s say we have the full payout of $1500 for you and $750 for your spouse. Worst case scenario, you reach age 67 with zero retirement savings and $2250 per month Social Security to live on. Can you do it?

Bare Bones Budget

I would say, yes, of course you can! But, it really depends on so many other factors. DId you buy a house and live in it for 30 years and pay it off? Are your cars fairly new and paid for? Are you carrying any debt?

Let’s say that you own your home and car, and you don’t have any credit card bills or loans. Essentially, you are debt-free. Congratulations! You may have messed up by not saving for retirement, but you definitely are way ahead of other people in the debt department. 

Your budget may look something like this. 

Property taxes/insurance  $200
Car insurance                            $100
Utilities/heat/A/C                   $250
Cell phones                                 $100
Internet                                            $75
Giving                                             $225
Food                                                $500
Gas                                                   $150
Clothes/misc.                             $100
Home or car repairs               $100
Entertainment                           $200
Short-term savings                 $250

Total                                              $2250

Not too bad. Better off than some people, but certainly not going on a cruise every month. But, by saving up, maybe a nice little trip every year. Your entertainment category might cover some golf in the summer and other hobbies in the winter. 

If your car doesn’t need many repairs, you could save that money towards eventually replacing the car. Your short-term savings could be used to build up a nice emergency fund before using it for other things like travel.

Less Likely to Survive 

You can see that by adding a house or car payment and other bills to the mix, it’s not going to work out very well. Let’s revisit the budget with a different scenario. You have the same $2250 per month coming in, but you don’t own a home. You have been renting a house. You still owe on your car and your payment is $275 per month. And, you have one credit card with a $3,000 balance and a monthly payment of $50. After adding all your expenses up, you can only squeeze out $800 to rent a small apartment that includes utilities, but not heat. Here is your new budget.

Rent                                                 $800
Renter’s insurance                     $25
Heat                                                    $75
Cell Phones                                 $100
Internet                                            $75
Giving                                             $225
Food                                                $475
Gas                                                   $150
Credit card                                     $50
Car payment                               $275

Total                                              $2250

Are you surviving? Just barely. Notice that all of the wiggle room has left the budget. Gone are the clothing, miscellaneous, car repair, entertainment, and savings funds. Food has been reduced to cover renter’s insurance to protect what little you have. You might decide to give up the internet for a little more spending money, but you probably need to keep at least one cell phone for emergency purposes. Maybe after the car and credit card are paid off you will be able to have a little more fun. But, you are only one small crisis away from a catastrophe. If your car dies, you might be taking the bus for a while.  

So, can you survive on Social Security? Yes! Can you thrive? Maybe, maybe not. It all depends on how you enter the game. 

I hope that if you are still years away from from retirement age this will convince you of two things:

1. You need to start saving for retirement now. As you can see, any amount is better than none. But as long as you are still able to work, you have the option to squeeze a little out of each paycheck to add to your retirement fund. The closer you are to retirement age, the more you need to squeeze out. If you are young, you have time on your side. Learn to invest wisely and watch your nest egg grow.

2. Make a plan to enter retirement debt-free, including your house. It will make such a difference in the amount it takes to live on each month. Let your retirement income be used for enjoying life, not just more years of paying the bills. You’ve worked long and hard all your life and now it is time to relax and do all of those things you never had time for while you were working and raising a family. 

Learning to make and live on a budget now will help you plan for your future. And when you retire, you will be an expert on budgeting, making your money go a long way. Maybe even 30 years if you live to be 97!

So, start now.