The golden years of retirement are when we envision spending time with family, traveling, and enjoying hobbies. No longer are we constrained by the stress of a 9 to 5.

For many Americans, this period will be supported by Social Security payments.

Nearly 8 out of 10 retirees in the country will leverage the benefit. That number climbs to more than 9 out of 10 for Americans aged 65 and older.

But with interest rates at 5.5% and inflation still well above the Fed’s target rate, many retirees or soon-to-be retirees are concerned about their financial health. This is especially true for those individuals who rely, or will rely, exclusively on Social Security.

Given the state of the market, can you truly retire and live comfortably on Social Security alone in 2023? What’s changed this year, and what factors must you consider?

The current landscape

The pandemic, resulting supply chain disruptions, and liquidity infusion helped push inflation to levels not seen since the 1980s. While it’s slowed a bit, at 3.7%, annual inflation remains nearly twice as high as the Federal Reserve's target rate of 2.0%.

Pensioners relying on a fixed income are acutely aware of rising prices. The majority (85%) of retired Americans noted the effect of climbing inflation on their daily expenses.

To tame accelerating prices, the Fed initiated an aggressive tightening campaign that has seen rates balloon from nearly zero to 5.5%, all in less than two years time.

How much money does Social Security provide?

As of February 2023, the average Social Security benefit was $1,781.63 per month.

Of course, this is an average. One factor that impacts the payout is how early or late you initiate the benefit.

  • The full retirement age for Social Security is 67
  • If you retire five years earlier at 62, you’ll receive a payout 30% lower than full retirement age
  • Each year you delay Social Security above the age of 67 entitles you to an 8% higher monthly payment

How much money do you need to live in retirement?

At a bare minimum, you need enough money to cover housing, food, and medical expenses each month. This is to say nothing of the money you might want to enjoy travel or take your grandkids to an amusement park.

For now, the focus is on the necessities.

  • Housing: the average retiree spends $1,573 per month on housing
  • Food: the average retired individual spends $541 on food each month
  • Health care: American seniors' average monthly out-of-pocket health expense is $586

Although some people can live on far less, housing, food, and medical expenses, on average, cost $2,700 per month.

However, in reality, most people will spend far more than that. In 2021, the average American over 65 spent $52,141 per year, or $4,345 per month, according to the Bureau of Labor Statistics. And this was before inflation and interest rates skyrocketed.

That means the average retiree spends nearly two and a half times the typical social security amount. Put another way, to liveor rather, surviveoff Social Security alone, you’d need to live well below the means of the average American retiree.

Other typical sources of retirement income

While a substantial number of Americans rely solely on Social Security in retirement, many have other sources of income.

The average retirement income is $55,335 yearly or $4,611 monthly, far above the average Social Security payment.


More than half of all retired Americans enjoy a pension. For those 65 and over, the number climbs to 68%.

Pensions can offer substantial additional income but vary widely. The amount of your payment will depend on several factors, including:

  • The company you worked for and your position within it
  • The number of years you were employed with the company
  • Your salary during your employment
  • Your age at retirement

There are two primary types of pensions.

  1. Defined benefit pension: With a defined benefit pension, you are guaranteed a set payment during retirement. This amount is fixed, regardless of the performance of your pension assets managed by the employer. These pension plans are becoming increasingly rare, especially in the private sector. In fact, only 4% of workers in the private sector have access to a defined benefit plan. In the early 1980s, 60% did.
  2. Defined contribution pension: You make a recurring predefined contribution amount to your retirement fund. In many cases, an employer will offer matching benefits. However, unlike a defined plan, the payment at retirement is not guaranteed. Instead, it depends on the performance of the retirement account leading up to the retirement date. How these funds are invested is the responsibility of the employee.

Investments and savings

Many supplement their income with investments and savings that they’ve built up for years and decades before departing full-time employment. Because these investments can be critically important to a retiree's ability to cover monthly expenses, they are often less risky or less volatile.

There are three popular ways people in retirement pad their income. In fact, nearly one out of every two American retirees relies on at least one of the following:

  • By receiving regular interest payments from fixed-income securities, like bonds
  • By collecting recurring dividends off equities, like banking stocks
  • By obtaining consistent income derived from rental properties

Side hustle

For some Americans, retirement doesn’t necessarily mean not working. Instead, it means dropping a conventional corporate 9-5 for some kind of part-time employment like tending to gardens in your neighborhood.

And it’s not uncommon, either. Roughly a quarter of all “retired” folks generate income through part-time work or a side hustle, like baking cookies or petsitting.

Can you retire on Social Security alone in 2023?

Some estimates put the percentage of American retirees relying solely on Social Security as high as 40%. So, yes, you can retire on Social Security alone in 2023. But that doesn’t mean it’s easy, nor does it mean it's recommended.

Here are some ways people manage to retire solely on Social Security.

  • Choose to live in a low cost of living town or state
  • Reside in a property with no mortgage
  • Live rent-free with family
  • Adhere to a strict budget (i.e., infrequent meals in restaurants)
  • Delay taking Social Security

Before deciding to live on Social Security alone, it’s imperative to factor in everything: from your expected expenses to potential revenue streams.

For that reason, consult with a financial advisor who can help test your assumptions and ensure you’re not missing any critical details.