Living on Social Security Alone: Can You Do It?

You can potentially retire on only Social Security with the right strategy

Social Security is typically used as a supplement to retirement savings and income. At the very end of 2023, the average monthly retirement benefit is $1,767.03. Depending on where you live and your expenses, that may or may not be enough to live comfortably.

If you're approaching retirement having saved less than you'd like, you could possibly live on Social Security alone, you'll need a game plan to make it work. Here's what you need to know to create a retirement budget that can help you meet your necessary living expenses using only Social Security income.

Key Takeaways

  • Reducing your living expenses can help you live on Social Security alone.
  • Waiting to take Social Security until age 70 will increase your benefit by 8% a year beyond full retirement age.
  • Medicare and Medicaid can help individuals pay healthcare costs in retirement.
  • Relocating may help your Social Security dollars go farther by lowering the your housing expenses.

How Social Security Is Used

People rely on Social Security income in different ways. Some use it as a primary source, while others relay on retirement accounts, pensions, or other source of income as their primary income.

In 2023, nearly nine out of 10 Americans ages 65 and older currently receive Social Security, according to the Social Security Administration (SSA). Among elderly Social Security beneficiaries, 37% of men and 42% of women rely on Social Security for 50% or more of their income.

Near-retirees may expect less from Social Security because the system's funds are predicted to run out of reserve money by 2034. At that point, if no changes are made to the system—incoming taxes will become insufficient to fully fund new payments.

However, many Americans may end up more reliant on Social Security than they expect. In the Gallup poll, for example, just 77% of respondents say they are not saving enough to live comfortably in retirement.

Living on Social Security as your primary or only source of funds takes some strategizing. Here are several tips to help you more successfully plan for living on Social Security alone as your retirement income.

Is Living on Social Security Alone Possible?

You can potentially use Social Security alone to support yourself, but you would need to plan in advance to ensure that your monthly check will cover your necessary expenses at minimum, including your food and housing. To live solely off Social Security, you will likely have to decrease your living expenses significantly and live frugally.

Housing is often the largest living expense. Others include utilities, food, clothing, insurance, and medical expenses.

For people who have paid off their homes and live in an area with lower costs of living, retiring on Social Security alone can be possible. In fact, about 12% of men and 15% of women already rely on Social Security to meet 90% of their living needs, according to Social Security Administration statistics.

Delay Taking Social Security

Full retirement age is 67 for older adults born in 1960 or later (and 66 for those born before 1960). You can begin taking your Social Security benefits as early as 62, but your benefits will be reduced for each year you take them ahead of schedule.

On the other hand, if you can put off taking your benefits past full retirement age, you'll see your monthly benefit check increase up until age 70. For someone who was born in 1943 or later and waits until age 70 to apply for Social Security, the increase is about 8% per year. After age 70, there's no benefit to continuing to delay.

Downsize Your Home

Moving to a less expensive home can have a significant impact on your monthly cash flow. Ideally, if you have a mortgage on your home, you will have fully paid it off before you start living on Social Security alone. However, you will still have other housing-related expenses like property taxes and utilities bills and, in some cases, homeowner's association fees.

Housing costs can easily demand most of your Social Security benefits if they are still a large part of your budget. The Bureau of Labor Statistics estimates that people ages 65 to 74 spend approximately 34% of their household income on housing each year. That amount climbs to 36.2% for those ages 75 and older. 

Relocate

Moving to a less expensive home in your current city can help free up cash for retirement. But in some cases, a more significant move—to a different state or even moving abroad—can be worth considering to lower other living costs.

If you live in a state with a high cost of living and high taxes, moving to one with a lower cost of living and more favorable taxes can make your budget easier to work with. By relocating, you could lower your costs for food and gas, for example.

Relocating to a place where you don't need a car, such as a city with mass transportation options, can help you save on car expenses like insurance, gas, and maintenance.

Streamline Your Other Expenses

If you've made your housing costs more affordable, the next step is reducing other line items in your budget, such as utility bills, transportation expenses, and food costs.

The key question that you must ask is: What can you live without? Consider what you need to have an enjoyable retirement. Could you ditch cable TV, for example, in favor of watching TV online? Could you swap an expensive hobby like golf for a low-budget one like gardening? If you own two cars, could you sell one? These kinds of decisions can be tough, but they can make your transition to retirement on Social Security benefits a much smoother one in the long run.

If you've got substantial debt obligations, such as credit card debt or a car loan, aim to get them paid off before retiring, if possible.

Keep Healthcare Costs Under Control

Healthcare in retirement can be extremely expensive, so you need a plan to pay for it, especially if you have an existing medical condition.

While Medicare can cover some of the costs once you turn 65, it doesn't pay for everything. If you've retired and your income is exclusively coming from Social Security, you’ll need to look beyond Medicare to pay for your medical expenses.

Medicaid, for example, is available to low-income individuals, and you can have this coverage along with Medicare. It's designed to help pay for premiums and pick up the tab for things Medicare doesn't cover, including long-term care.

Be Mindful of Inflation

The good news when it comes to inflation is the government is aware of it and recognizes it in its Social Security benefits. Each year, the government approves a cost of living adjustment to the payout amount of benefits. For example, the SSI benefits from 2023 to 2024 increased 3.2% strictly based on COLA.

One thing to be mindful of is the COLA each year may or may not equal the prevailing annual inflation rate. For example, in December 2023, the 12-month trailing index change for all items increased by 3.4%. This means that, ignoring what the underlying items were for, consumer prices grew more than the amount Social Security benefits were adjusted for.

A critical piece to think about here is how a person collecting Social Security may not be your average consumer. For example, they may spend more on medical services (which cost 0.5% less from the start of 2023 to the end). As another example, they may not spend as much on transportation as a daily commuter still working; transportation costs grew 9.7% in 2023. Therefore, though one's Social Security benefit will usually be year-over-year, this may or may not be in tandem with the prices of things these retirees are buying.

What Is a Full Retirement Age?

When you plan to take Social Security, your full retirement age is the age at which you can start taking your full benefits. You can take benefits as early as age 62, but your benefits will be reduced. You can also delay taking benefits to receive a larger benefit, up until age 70.

Can You Retire With No Savings?

To have a financially secure retirement, you should have some retirement savings, but some people retire with no savings. Living on Social Security alone is possible, but you will need to have a frugal lifestyle to make it work. You can maximize your Social Security income by delaying retirement until age 70. At that point, you should be receiving Medicare health coverage, which begins at age 65.

How Much Can You Contribute to an IRA?

The amount you can contribute to an IRA will vary each year and will depend on your age. For 2023, you can contribute up to $6,500. If you are 50 or over, you can contribute an additional $1,000 for a total of $7,500. For 2024, you can contribute up to $7,000 (with an additional $500 catch-up contribution for those who qualify).

The Bottom Line

Living on Social Security alone is far from ideal. If you've still got time before you retire, consider looking for ways to build up your savings. Start by chipping in as much as you can to your employer's retirement plan, if you have one, especially if your employer offers a matching contribution.

If you don't have a 401(k) or similar plan at work, an individual retirement account (IRA) is another way to grow your savings. The more you set aside now, the less pressure you'll feel to make your Social Security benefits stretch.

Nevertheless, if you do have to stretch your benefits, downsizing, relocating, cutting your overhead, controlling healthcare costs, and delaying taking Social Security can each make a big difference in your budget.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. Social Security Administration. "Monthly Statistical Snapshot, December 2023."

  2. Social Security Administration. "Fact Sheet: Social Security," Page 1.

  3. Social Security Administration. "A Summary of the 2023 Annual Reports."

  4. Gallup. "Americans Outlook for Their Retirement Has Worsened."

  5. Cornell University, Legal Information Institute. "22 CFR § 17.6 - Ordinary and Necessary Living Expenses."

  6. Social Security Administration. "If You Were Born Between 1960 Your Full Retirement Age is 67."

  7. Social Security Administration. "Learn About Retirement Benefits."

  8. Social Security Administration. "Delayed Retirement Credits."

  9. U.S. Bureau of Labor Statistics. "Table 1300. Age of Reference Person: Annual Expenditure Means, Shares, Standard Errors, and Coefficients of Variation, Consumer Expenditure Survey, 2020," Page 3.

  10. Medicare.gov. "Costs."

  11. Medicare.gov. "Medicaid."

  12. Social Security Administration. "Cost-of-Living Adjustment (COLA) Information for 2024."

  13. Bureau of Labor Statistics. "Consumer Price Index - December 2023."

  14. Social Security Administration. "Starting Your Retirement Benefits Early."

  15. Medicare.gov. "When Can I Sign Up for Medicare?"

  16. Internal Revenue Service. "Retirement Topics - IRA Contribution Limits."

  17. Internal Revenue Service. "401(k) Limit Increases to $23,000 for 2024, IRA Limit Rises to $7,000."

Take the Next Step to Invest
×
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.