The Biggest Social Security Assumption That Could Backfire in Retirement
The Biggest Social Security Assumption That Could Backfire in Retirement
Maurie Backman, The Motley FoolTue, April 28, 2026 at 7:38 AM UTC
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Key Points -
Retiring on Social Security alone is a move you might sorely regret.
Even if you manage to save decently, it's important to know what role those benefits might play in your retirement finances.
The $23,760 Social Security bonus most retirees completely overlook ›
There are many retired Americans today who would struggle to cover their expenses without Social Security. And you may be planning to rely heavily on those benefits for your retirement, too.
That's a move that could cost you.
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It's OK to factor Social Security into your retirement income plans. But it's important to have a realistic sense of what those benefits will do for you.
Social Security cards.
Image source: Getty Images.
Social Security shouldn't be your only source of retirement income
One thing that tends to trip people up is the assumption that they'll be able to retire on Social Security alone. In reality, that's a dangerous move.
Social Security will replace about 40% of your pre-retirement income if you earn a pretty typical wage. If you're a higher earner, you can expect those benefits to replace even less income.
Now, think about what it might mean to live on 40% of your paycheck or less. Will you really be able to keep up with all of your bills?
Remember, most of your expenses aren't going to disappear just because you're retired. You'll still need transportation, food, medication, and clothing. You'll still have utility bills and need a phone. And even if you go into retirement with a fully paid-off home, there are other housing costs you'll continue to face, like property taxes, insurance, maintenance, and repairs.
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It may be more than possible to live on less than 100% of your pre-retirement paycheck once you stop working. But limiting yourself to 40% may be pushing it big time.
Set yourself up with multiple income streams
It's definitely not a good idea to retire on Social Security alone. It's also not a good idea to plan on having Social Security cover the bulk of your retirement expenses if you can help it.
A smaller retirement nest egg is far better than having no savings at all. But your goal should be to have your Social Security checks supplement your IRA or 401(k) plan withdrawals -- not the other way around.
In fact, the more income streams you have in retirement, the more financially stable your senior years might be. So in addition to funding an IRA or 401(k) during your working years, plan to set yourself up with investments that can pay regularly in retirement -- think bonds, CDs, and dividend stocks.
Also don't discount the benefit of working. A part-time job could provide you with not only a helpful paycheck, but serve as something to do.
Assuming Social Security will cover all of your needs could lead to serious trouble. The sooner you recognize that, the sooner you can come up with a plan to set yourself up with more options for your senior years.
The $23,760 Social Security bonus most retirees completely overlook
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