The median amount that U.S. workers have saved for retirement is just $50,000, according to a recent report from the Transamerica Center for Retirement Studies. Even among baby boomers — the generation that is currently in the midst of retiring — the median worker only has about $144,000 socked away. For many, that amount of money likely will be depleted after just a few years in retirement.

Fortunately, Social Security benefits will provide retirees with a steady income stream to supplement whatever they have saved. Unfortunately, many people underestimate just how much they’ll wind up depending on those monthly checks in retirement.

Social Security’s role in retirement

Half of America’s pre-retirees expect Social Security benefits to be a major source of income for them in retirement, a 2019 survey by the Society of Actuaries found. However, among those who actually are retired, 64% say Social Security provides a major share of their income. In other words, a significant fraction of them overestimated the amount that other sources would contribute to their budgets. If you’re not smart about planning for retirement, there’s a fair chance that you too may end up depending on your benefits more than you expect to.

There are two main problems with relying too heavily on Social Security, however. First, the program is only designed to replace around 40% of your pre-retirement income — it’s not meant to cover the lion’s share of your budget in retirement. Additionally, there’s a chance that benefits could be reduced for everyone in the not-so-distant future.

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