April 11, 2025 Retirement

What is Social Security? Is it Enough to Retire With?

Written by:
Baylor Cox
Reviewed by:

When You Think About Social Security, What Comes to Mind?

Understanding Social Security is a key part of creating a retirement plan that sets you up for success. Even though Social Security is important, many people find it confusing and aren’t sure how it works or what it’s really for.

Are you worried if Social Security will still be around for you when you retire? Do you wonder how much you can expect to receive each month? Are you aware of when you can start taking your benefit, or what you can do to maximize it?

If you feel confused or unsure about Social Security, you’re not alone.

40%

of people know what
their full retirement
age is

40%

aren’t sure how much their
monthly Social Security
benefit will be

30%

overestimation of monthly
retirement by workers within
10 years of their retirement

Knowledge is Power

While reading this article is a good way to learn the basics, you’ll want to check out the Social Security Benefits Planner for more comprehensive information. The website has numerous links to helpful pages within the site, including calculators, publications, and life expectancy estimates. To get warmed up, complete the knowledge check for Social Security benefits by taking this quick quiz. Click the questions to reveal the answers!

On average, what percentage of income
does Social Security currently replace?
a) 100%
b) 70%
c) 40%
d) 25%

40%


Social Security is only intended to provide a portion of your retirement income. Most experts suggest you will need to replace 70 to 90 percent of your income to live comfortably in retirement. Careful retirement planning is necessary to fill in the gap not covered by Social Security.

In 2024, the average monthly Social Security
benefit was:
a) $1,461
b) $1,782
c) $2,223
d) $2,517

$1,782


Social Security benefits are calculated based on your date of birth, the type of benefit you apply for, and most importantly your lifetime earnings. In addition, benefits receive a cost-of-living increase in most years, to allow for inflation. In 2024, the maximum benefit for a worker retiring at full retirement age is $3,822.

If you were born after 1959, at what age are
you scheduled to receive your full Social
Security benefit?
a) 62
b) 65
c) 67
d) 70

67


Your full retirement age is when you are eligible to receive your full Social Security benefit. The year you were born determines your full retirement age. You can start taking it as early as age 62 (although your benefit will be significantly reduced) or you can delay it and wait until, say, age 70 — and get a significantly higher benefit.

Are Social Security benefits taxed?
a) Yes, all benefits are subject to taxation.
b) Maybe, taxation depends on your income.
c) No, Social Security is exempt from taxation.

Maybe, taxation depends on your income.

Whether or not you are taxed on your Social Security benefit depends on your income from other sources. Up to 85% of your benefit is subject to taxation, but the actual percentage taxed will vary according to your adjusted gross income.

Will Social Security Still Be There for You When You Retire?

There are many pessimistic news stories out there about Social Security’s future. “Going Bankrupt” and “Running Out of Money” are common headlines. You’re not alone if you are wondering about the future of Social Security — 73% of Americans say they worry about it either ‘a great deal’ or ‘a fair amount.’

Here’s what’s happening:

Social Security benefits are considered a “pay as you go” system. This means that Social Security taxes collected from today’s workers go to pay today’s retirees. 

For many years, workers paid more in taxes than the system needed to pay retirees at the same time. For years, Social Security collected more money than it paid out, building up a trust fund that reached $2.83 trillion — about $8,700 for every person in the U.S. — by early 2023. 

But now, due mostly to the large number of Baby Boomers who will continue to retire over the next several years, the worker-to-retiree ratio has started to shift. Soon, we’ll reach a point where there is not enough money coming into the system to pay all the people claiming benefits. To make up this shortfall, the Social Security Administration will begin pulling money from the trust fund. 

The Social Security Administration projects the current trust fund balance will only last until 2035. Once it’s depleted, benefits can only be paid directly from Social Security taxes collected from the current workforce. The projections show that it will only generate about 75% of what is needed to pay for all the benefits. 

The Social Security Board of Trustees believes the most likely adjustments will come from a reduction in benefits or an increase in taxes (or some combination of both). But Social Security will not go away. 


Social Security should not be considered your primary source of retirement income. It’s important to save as early and as much as you can in a 401(k) or IRA account to help meet all your retirement income needs.


When can you claim benefits?

When it’s time to begin receiving Social Security benefits, you have a range of options. You can begin receiving benefits anytime between the ages of 62 and 70. 

Your full retirement age is the age at which you can begin receiving 100% of your primary insurance amount (PIA), also known as your full retirement age benefit. Your full retirement age depends on your year of birth. For example, for those born in 1960 or later, the full retirement age is 67. 

Birth YearFull Retirement Age
195566 + 2 months
195666 + 4 months
195766 + 6 months
195866 + 8 months
195966 + 10 months
1960 and later67

What Are the Trade-Offs if You File Earlier Versus Later?

If you file at an age other than your full retirement age, your benefit amount will be reduced or increased. Filing earlier gives you a reduced benefit. Filing later gives you an increased benefit. For someone with a full retirement age of 67, here is what you can expect based on the age you actually file for benefits. 

Should you take benefits earlier or later? Everyone’s situation is unique, so it’s important to look closely at the trade-offs before making your decision. 

Here are some reasons you might want to claim benefits earlier:
• You need the money to help pay living expenses
• You cannot work longer due to health reasons
• You have caregiving responsibilities for a family member
• You have been laid off or lost your job through downsizing or other action

Here are some reasons you might want to claim benefits later:
• You don’t need the money right now, or have income from other sources to tide you over (such as a pension or 401(k) plan)
• You believe you have a longer life expectancy, during which higher payments would be helpful
• You plan to work at some level during retirement
• You like the idea of getting higher benefits over the long term

Age FiledSocial Security Benefit
6270%
6375%
6480%
6586%
6693%
67100%
68108%
69116%
70124%

Moving Forward with Your Social Security Planning

When it comes to planning for Social Security, there’s a lot to know and understand — and many details are bound to change over time. Here are some tips to help you stay on top of Social Security and prepare yourself to make the best decisions for your financial future. 

Continue to increase your knowledge
Be sure to check out these valuable resources to help increase your knowledge about Social Security:
AARP’s Social Security Resource Center
Social Security Planner
Social Security Basics: 9 Essentials that Everyone Should Know, by Devin Carroll
Social Security Made Simple, by Mike Piper, CPA
WeStreet Wealth Management’s Imagine the Potential Podcast

Keep a big picture perspective
According to the Social Security Administration, Social Security benefits will replace about 40% of an average employee’s pre-retirement income after retirement. This replacement percentage will be lower for people in upper income brackets and higher for people in lower income brackets.

Most financial advisors say that a typical person will need about 75–80% of their pre-retirement earnings to comfortably maintain their pre-retirement standard of living. That means Social Security will provide about half of what the average person will need. How can you make up the difference?


• Make sure you are saving as much as you can in any 401(k) or other employer-sponsored retirement plan available to you. Aim to save at least enough to receive the maximum employer matching contribution (if available).
• If you are self-employed, save as much as you can in an SEP IRA account.

Consider Working with a Financial Professional

You may want to consider working with a financial professional to help you prepare to make the best decisions when it comes to Social Security. Your LPL Financial Professional can be a valuable resource for this and other financial planning issues.

Here’s how they can help you:
• Work with you to develop financial goals based on your needs and desires
• Develop an investment strategy to help you fund your goals
• Help you better understand what’s happening in the market and how it can affect your investment strategy
• Meet with you on a regular basis to track progress and make adjustments as necessary


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