The Average Social Security Benefit Is Way Lower Than You Would Expect. Here's Why.

Social Security provides crucial financial support for elderly Americans. However, it’s really important that you don’t overestimate what these benefits will do for you in your retirement.

Unfortunately, many people assume Social Security will provide more income than it actually does. A quick look at the average benefit will show you the truth.

And, while the number may shock you, it’s far better to know early on that the program isn’t going to be enough to live on than to discover this once you reach retirement age and hope to start relying on your payments.

According to the Social Security Administration, the average monthly retirement check in 2025 totals $1,976. That means any senior who receives the average benefit will have an annual income from Social Security of $23,712.

Considering that retirees are typically told to try to replace at least 70% of pre-retirement earnings (and ideally closer to 80% or 90%), an annual check of $23,712 simply is not going to cut it for the majority of Americans. That’s especially true when you consider the Bureau of Labor Statistics data shows that full-time workers earned a median income of $1,192 per week in the fourth quarter of 2024.

So living off $23,712 per year isn’t sustainable, not just because it doesn’t replace enough pre-retirement income, but also because of the high out-of-pocket costs many retirees face. Older Americans have more debt than past generations, and they face high healthcare and housing costs.

And projections for future investment returns are lower, which has prompted experts from Morningstar to now suggest that a safe withdrawal rate from retirement accounts is now just 3.7% compared to the 4% rule that applied in the past.

Sadly, many people also earn less than this average monthly benefit. And those who earn more will still find themselves facing a significant funding shortfall compared to their pre-retirement wages.

That’s especially true for higher earners, as Social Security benefits are progressive. Those who make more money get less of their income replaced when their benefit is calculated.

If you assumed the program’s benefits provided more income to live on than this, you aren’t alone. Many people plan for Social Security to be a primary source of retirement funds.

Unfortunately, the program wasn’t designed to ensure seniors wouldn’t need other retirement savings. When Social Security was created, it was intended to be one of three legs on a “stool” that supports older Americans. A pension and retirement savings were the other two legs.