Planning for retirement can feel overwhelming — especially when so many Americans assume Social Security will cover most, if not all, of their income needs. But the truth is, Social Security was never designed to be your sole source of retirement income.
And for those who depend too heavily on it, that assumption could lead to serious financial stress in the years ahead.
What Social Security Was Meant to Provide
Social Security provides a foundational level of income in retirement. But according to the Social Security Administration, more than 1 in 3 retirees rely on it for over half their income. Even more concerning, over 12% of men and 15% of women age 65 and older count on Social Security for 90% or more of their retirement income.
That level of dependence puts retirees in a vulnerable position — especially given the uncertainty surrounding future benefit levels.
Funding Concerns and the Future of Benefits
The Social Security Trust Fund is currently projected to be depleted by 2034. If Congress doesn’t enact reforms, that could trigger a 20–25% cut in benefits across the board.
While it’s unlikely Social Security will disappear altogether, receiving only 75% of your expected benefits could significantly impact your quality of life if you haven’t built other income streams.
Why One Source Isn’t Enough: You Need a Multi-Layered Retirement Income Plan
A solid retirement strategy typically includes at least three distinct income sources:
Stable income to cover daily living expenses
Inflation-adjusted income to keep up with rising costs
Health care reserves to manage increasing medical expenses
Social Security offers some protection against inflation, but its cost-of-living adjustments often lag behind the real cost increases retirees face — especially for healthcare.
So it’s important to ask yourself:
If you stopped working today, how much consistent, reliable income would be coming into your account each month — aside from Social Security?
Retirement can last 30–40 years. Without proper planning, you may find yourself running short during the very years meant to be your most fulfilling
Understanding the Retirement Income Gap
Let’s say your retirement lifestyle requires $7,500 per month. But your projected Social Security benefit provides $5,000. That’s a $2,500 monthly gap, or $30,000 per year, that must be filled by other income sources.
Unfortunately, many retirees focus solely on building a “magic number” in savings — like $500,000 or $1 million — rather than planning how to convert those savings into reliable monthly income.
The key isn’t just how much you’ve saved — it’s how effectively that money can be used to generate income for life.
Strategies to Build Retirement Income Beyond Social Security
Dividend-Paying Stocks
Dividend-focused investments can provide ongoing income without having to sell off shares. Unlike growth stocks, which rely on price increases, dividend stocks offer regular cash payments that can supplement your retirement income while maintaining ownership.
Major corporations — like Coca-Cola and others — have paid consistent dividends for decades. While dividends are not guaranteed, this strategy can add stability and predictability to your portfolio.
Annuities
Annuities are often used to create a guaranteed income stream for life — similar to a pension. You contribute a lump sum to a highly rated insurance company, which in turn promises to pay you a set monthly amount, often regardless of market conditions.
Properly structured annuities may also include:
Lifetime income guarantees
Optional inflation protection
Death benefits for loved ones
Limited access to principal in emergencies
While not appropriate for everyone, annuities can bring certainty to a part of your income strategy — especially if you’re concerned about market volatility.
Real Estate Income
Income-generating properties can provide monthly cash flow — and in some cases, rental income may keep pace with inflation. This asset class can diversify your income while offering both appreciation potential and consistent cash flow.
Some investors use strategies like 1031 exchanges to defer taxes and reinvest in larger, income-producing properties over time. As with any investment, real estate has risks, but for the right retiree, it can be a powerful tool.
Social Security Optimization Still Matters
While Social Security isn’t enough on its own, how and when you claim it still has a major impact on your lifetime benefits.
In fact, up to 96% of Americans claim Social Security at the wrong time, which could mean missing out on tens or even hundreds of thousands of dollars.
The Social Security Administration can tell you what your benefit is at different ages — but they won’t give personalized advice. That’s why it’s critical to integrate Social Security decisions into a holistic retirement income plan.
At Financial Services of America, we use our CARES Planning Process to help retirees make confident, informed decisions about the timing and coordination of benefits.
Retirement Success Starts with a Plan
Your retirement shouldn’t rely on guesswork — or one income source. Whether you’re retiring in five years or five months, now is the time to build a strategy that answers questions like:
What is my income gap — and how do I fill it?
How long will my money last?
How do I protect myself from inflation and rising medical costs?
What happens to my income if something happens to me or my spouse?
Take the First Step Toward Reliable Retirement Income
If your current income strategy starts and ends with Social Security, now’s the time to explore alternatives. You don’t need to figure this out alone.
Our team can help you assess your current income sources and build a customized plan using the tools best suited to your needs and values.