Older Americans Rely on More Than Social Security for Retirement Income

Main Points

• According to a Congressional Research Service report, Social Security makes up roughly 30% of household income for older Americans.

• Work income, pensions, withdrawals from retirement accounts, and investment earnings also help support their finances.

• The program’s share of income increases with age, reaching about 40% for adults age 80 and above.

Many people picture retirement as a period supported mainly by Social Security, but the data show that older adults usually draw from several income sources.

For Americans 65 and older whose households received Social Security, about 19% depended on those benefits for at least 90% of household income, according to a Congressional Research Service report based on 2019 data. The analysis found that other sources help fill the gap, including wages, pension and retirement fund payments, and income from assets. The report combined Social Security Administration records with survey responses and included people who were still working.

Overall, Social Security accounted for 30% of total household income among adults 65 and older. Earnings provided 27%, pensions and retirement fund payments supplied 24%, and asset income made up 12%, the report said. Asset income includes interest and dividends, along with money earned from renting property or running a business.

Why It Matters

Many Americans expect to stay on the job into their 60s, but health issues and other setbacks often force earlier retirement. Saving in retirement and investment accounts can help create a buffer if retirement arrives sooner than planned.

Social Security becomes more important with age, but it still accounts for less than half of total household income in every age group. It represented 19% of income for people ages 65 to 69, then rose to 40% for those 80 and older. Many people are especially likely to depend on Social Security, including lower-income households, single adults, and Black and Hispanic Americans.

Because the report uses 2019 data, it reflects income patterns from that year rather than an exact current snapshot. Even so, research has repeatedly shown that most older adults do not receive 90% or more of their income from Social Security, and that Americans often underreport income from pensions and retirement funds.

Still, many people expect Social Security to be the foundation of their finances in later life. About 70% of U.S. adults surveyed said they expect to collect Social Security benefits, and 32% said they believe the payments will be their main source of income, according to research published by the Transamerica Center for Retirement Studies.

The Social Security trustees’ latest report projects that reserves in the program’s main retirement trust fund, OASI, will run out in 2032. If lawmakers make no changes, ongoing revenue would then cover about 78% of scheduled benefits.

Americans now rank cuts to Social Security as their second-greatest retirement concern, behind the possibility of needing long-term care as health declines, according to the Transamerica Center for Retirement Studies.