Here’s the average monthly Social Security check today — and what your retirement might look like if it’s your only income

As of 2022, Americans ages 65 to 74 had an average retirement savings balance of $200,000, according to the Federal Reserve. But many older Americans are approaching retirement with no savings at all and are instead relying on Social Security to cover their living expenses.

Doing so, however, could lead to a pretty miserable retirement. That’s because Social Security could end up paying you a lot less money than you think.

Image source: Getty Images.

What the average monthly Social Security benefit looks like today

The average retired worker now collects $1,920.48 per month in Social Security. That’s a little more than $23,000 a year.

If this number is shocking to you, well, you’re probably not alone. It’s a big misconception that Social Security replaces most workers’ retirement income. If you earn an average salary, you can expect your monthly benefits to replace more than 40% of what you earn.

Now, most seniors can manage a 20% to 30% pay cut in retirement, especially since certain expenses tend to decrease in the absence of commuting. But there is a big difference between a 20% to 30% pay cut and a 60% pay cut.

If you’re only retiring with Social Security, the latter is what you might be looking for. And that could mean living a very simple lifestyle when you’d rather be enjoying retirement to the fullest.

How to prepare for a more financially sound retirement

If you don’t want to spend most of your retirement worrying about money, you’ll need income in addition to Social Security. And you have different options there.

One is to save well for retirement during your working years — or catch up if you’re nearing the end of your career and aren’t very happy with your 401(k) or IRA balance. The good news is that workers over 50 can make catch-up contributions to these accounts to help make up for lost time.

It’s also a good idea to set up investments that will continue to pay you in retirement. Municipal bonds fit the bill because they are generally less risky than stocks by nature, and the interest they pay is always exempt from federal taxes. But it might also be a good idea to hang on to dividend stocks in retirement for extra income.

You can also look into working part-time as a retiree for a supplemental income. And collecting Social Security won’t stop you from being able to earn money from a job.

In fact, once you reach full retirement age for Social Security purposes, you can earn any amount of money without risking having some of your benefits withheld. However, if you file for Social Security before full retirement age, you will be subject to an earnings test limit.

And if you don’t like the idea of ​​having to take on a traditional part-time job in retirement, join the gig economy instead. This could result in you doing something you love in a schedule that works well for you.

Just because the average monthly Social Security benefit today is $1,920.48 doesn’t mean that’s what you’ll get in retirement. Your monthly benefit will depend on your lifetime salary and the age at which you join. But no matter what your personal Social Security check looks like, it’s a good idea to plan to supplement it with outside income to avoid financial worries.