As Social Security Heads Toward Insolvency, What Percentage of Retirees Have Pensions, Investments or Other Means To Fall Back On?

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If the trust fund for Social Security continues on its current trajectory, it could run out of money by 2034. At that point, reports say, employee withholding taxes will only cover roughly 78% of the required money for Old Age and Survivors’ Insurance benefits.

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Anyone planning to retire 10 or more years from now should consider other ways to fund their later years. Social Security only replaces roughly 37% of the typical American’s prior earnings, according to a report from the Center on Budget and Policy Priorities. Yet, many retirees rely on Social Security as their sole source of income.

A new report from the Federal Reserve analyzing the economic well-being of U.S. households found that 79% of retirees have another source of income. Of that group, 56% have a pension, 42% receive interest, dividends or rental income and 32% earn income from labor, such as a part-time job or freelance gig. Many had a working spouse.

Of retirees whose families had earned income, 36% said they had worked for pay or profit in the month prior, even though they identified as “retired.” The median age of retirees with earned income was four years younger (65) than the median age of all retirees (69).

Not surprisingly, retirees who had other forms of income besides Social Security were more likely to say they were “at least okay” financially compared to those who only collected Social Security in 2022. Of those who had earned income wages, 83% said they were doing at least okay. Seventy-eight percent of those collecting a pension said they were okay, and 87% with income from interest, dividends or rents said the same.

The best odds for doing “okay” in retirement may be combining multiple forms of passive income, based on the survey results. Of those who collected a pension plus interest, dividends, or rents, 96% said they were okay. Only 53% of retirees with no income besides Social Security said they were okay financially.

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If Social Security really does become insolvent by 2034, Americans without other forms of retirement income may find it even harder to make ends meet. If the structure and amount of Social Security benefits change in order to stretch the money — a strategy that has been discussed by Republicans in Congress — retirees will also need to plan ahead to maintain the lifestyle they want in their later years.

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This article originally appeared on As Social Security Heads Toward Insolvency, What Percentage of Retirees Have Pensions, Investments or Other Means To Fall Back On?