For America’s retirees, Social Security is a vital safety net. But it was never intended to be our only source of income after leaving the workforce.

In reality, Social Security is only designed to replace about 40% of pre-retirement income.¹ This leaves a big gap for everyday costs like housing, groceries, and health care—expenses that don’t suddenly evaporate once our paychecks stop. Since today’s older adults are living longer than any generation before them, closing that gap takes thoughtful planning and, in many cases, additional income streams.

Will Social Security be enough?

For most of us retiring in the next few years, the honest answer to whether or not Social Security is enough is “probably not.” According to Kiplinger, the average monthly Social Security check for retired workers was $2,002.39 in May 2025.¹

While that may sound like a decent amount, it does not consider the rising costs of rent, utilities, groceries, and health care. And when everyday expenses outpace annual cost-of-living adjustments (COLAs), a once-comfortable budget can quickly start to feel tight.

Take this real-world example of MC, a 77-year-old New Jersey resident. MC lives on less than $20,000 per year in Social Security income. Even with careful budgeting, she struggles to pay for rent, utilities, and food. Plus, her degenerative vision loss means she must pay for rides to attend medical appointments, do errands, and take part in social activities.

MC’s story is not unique. NCOA's research with the LeadingAge LTSS Center @UMass Boston shows that about half of households with adults age 60 and older don't have enough income to cover their basic needs—even after counting Social Security benefits.

What living expenses do I need to plan for in retirement?

Below are the core expense categories to build into your retirement budget. Think of them as your “non-negotiables”—costs that will show up every month.

Consider the kind of retirement you want

Budgeting just for survival can leave you with limited options in retirement. That’s why it’s important to think about the quality of life you wish to have during your later years—not just what you need to get by.

This may include:

• Travel: Do you want to roam the country (or the world)? Bucket-list cruises, visits to distant family, or annual beach weeks all require cash in hand.
• Legacy: Do you hope to leave money, real estate, or cherished heirlooms to family?
• Hobbies: Whether it’s pickleball or painting, pursuing your interests can help you stay fit, engaged, and socially connected. But these activities may also come with extra costs.

Putting a dollar figure on these goals helps clarify how much income you need in addition to Social Security to live the retirement you envision.

How can I build a more secure retirement plan?

Social Security should be viewed as just one piece of a comprehensive financial plan. Below are three common ways older adults fill the gaps of their retirement strategy:

1. Personal retirement savings: Employer-sponsored plans like 401(k)s, 403(b)s, and 457(b)s offer growth potential and control of your investments. But balances tend to rise and fall with market swings, and required minimum distributions (RMDs) can create taxable income even if you don’t need the cash.

2. Protected retirement income options: These include standalone annuities or in-plan lifetime income funds. A lifetime income fund can be a target-date fund available in some employer-sponsored 401(k) and 457(b) plans. It helps your savings grow—and when the time comes—convert them into a steady stream of income you can’t outlive.

Here's an example: Joe and Carly, age 49 and 50, wanted to ensure they'll have a stable income that lasts as long as they do. They know Social Security won't be enough, and they're worried about how market volatility could impact their current investments. Through a 401(k) plan offered by his employer, Joe was able to transfer some of his assets into a lifetime income fund that acts like insurance for their retirement income. This fund offers a simple way to ensure steady monthly payments—even if Joe and Carly run out of retirement savings. This type of fund also has an income protection feature that protects Joe’s income from a market downturn.

In a Nationwide survey, more than a third of workers age 55 to 65 said an annuity or investment with lifetime income would be most helpful in preparing to live to 100.²

3. Part-time work: Remaining in (or re-entering) the workforce can help you supplement your Social Security income. But continuing to work means giving up leisure time—and it may not be possible to work if your health changes.

Improving your financial security for retirement

Even if your retirement is several years away, there are a few things you can do today to improve your financial outlook:

1. Run the numbers: Free online retirement calculators, like this one on the Social Security Administration website, can help you estimate:

• Your future Social Security benefits at different filing ages
• Your expenses in retirement
• The income gap you’ll need to fill

2. Set up a budget (and stick to it): Keeping a close eye on your spending can free up more cash for savings or debt payoff. “For many older adults, the path to financial stability begins with basic money management,” said Jessica Johnston, Senior Director for NCOA's Center for Economic Well-Being. Get budgeting tips for older adults.

3. Consult a professional: A qualified financial counselor can help you explore your options for supplementing Social Security, such as a lifetime income fund or other protected retirement solutions.

4. See if you qualify for benefits programs: Use NCOA’s BenefitsCheckUp tool or contact one of our Benefits Enrollment Centers (BECs) to learn about public and private benefits programs that can help stretch your retirement income further.

5. Consider delaying Social Security: Each year you postpone claiming benefits, your monthly payment grows by a certain percentage until age 70. If you can cover expenses through part-time work or savings for a few years, delaying can significantly increase your lifetime benefits.

6. Plan for unexpected health care costs: Even if you’re healthy and independent now, life can change on a dime. For example, if you become ill or develop a chronic disability, you may need long-term care—and that can be expensive. Purchasing a long-term care insurance policy can help protect your retirement income and assets if you eventually require extra assistance.

Take action now—your future self will thank you

Social Security provides an invaluable foundation for life after work. But expecting it to shoulder all your retirement costs can set you up for hardship, especially when you consider out-of-pocket health care costs and other rising living expenses. By understanding the limits of your Social Security benefit, and exploring smart strategies to fill the income gap, you can transform that foundation into a stable, future-proof retirement plan.

Sources

1. Kiplinger. Average Social Security Check Hit a New Record High in May. Found on the internet at https://www.kiplinger.com/retirement/social-security/average-monthly-social-security-check

2. Nationwide. Century Club Insights Report. March 2025. Found on the internet at https://news.nationwide.com/download/1336bb23-705e-4084-907d-745617316d90/centuryclubsurveydeck.pdf