"Many people tell themselves that once they retire, they'll be able to live comfortably on Social Security. But that's a joke for a couple of reasons. First, the average monthly benefit among retired workers today is a little over $2,000. If you're someone who can live on $3,000 a month today, then you may be okay living on $2,000 a month in retirement."
"Also, the more money you earn, the smaller a percentage of your paycheck Social Security will replace. That's because the program has a maximum monthly benefit it pays retirees. If you earn an average wage, Social Security might take the place of about 40% of what you're used to making. But if you're a higher earner, you may find that Social Security replaces a very small portion of your income."
Average Social Security benefits for retired workers are slightly above $2,000 per month, which often falls short of many retirees' expenses. Social Security tends to replace about 40% of pre-retirement earnings for average-wage workers, while higher earners receive a much smaller replacement percentage because of the program's maximum benefit cap. Many wealthy retirees supplement Social Security by saving aggressively during their careers and investing in assets that outpace inflation, particularly stocks and broad-market ETFs. Relying solely on Social Security can force significant lifestyle reductions or budget strain without additional retirement accounts and portfolio growth.
Read at 24/7 Wall St.
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