Can You Actually Retire on Social Security Alone? Real Budget Breakdowns from 3 Retirees

The question is not whether people can retire on Social Security alone—they can—but how they do it, and whether that lifestyle is one you’re willing to accept. The average monthly benefit in 2024, according to the Social Security Administration, was $1,907, or $22,884 a year. For 21% of married couples and 45% of single retirees, this constituted at least 90% of their income.

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The Geographic Arbitrage Reality: Where Your Benefits Go Furthest

Margaret, 68, receives $1,845 a month and lives in rural Tennessee. Her fixed expenses amount to $1,520: $650 for a modest rent, $180 for electricity, $425 for a Medicare supplement plan G, $95 for car insurance, and $170 for taxes on a small lot she owns.

Compare this to David, 71, who lives in a suburb of Phoenix and receives $2,040 a month. His studio apartment costs $1,100, his health care costs $510 (he chose a Medicare Advantage plan with higher out-of-pocket costs), his utilities are $140 in the summer because of air conditioning, and he has $290 left over for everything else, although he receives $195 more than Margaret.

Geographic arbitrage is not an option for most, it is survival math. Retirees who own outright have a huge advantage, those renting in high-cost areas face an arithmetic problem that cannot be solved with Social Security alone. The median home price in Q4 2024 was $426,900, up 4% year-over-year.

David, anchored by family, makes sacrifices that Margaret doesn’t have to make. She chose her location after calculating her estimate of benefits at age 65. The average rent in her Tennessee county is 62% below the national average.

Healthcare Costs: The Variable That Breaks Most Budgets

The budgets that fail have one thing in common: unexpected medical expenses.

Her planning worked until a knee replacement required $2,100 in out-of-pocket costs over six months, which depleted the $4,800 emergency fund she had built up over three years. She allocated $380 for Medicare Supplement Plan N (lower premiums than Plan G) and Part D.

I’m back to zero savings and one health crisis away from credit card debt.” “I thought I had it all figured out. The supplementary insurance covered most of it, but the co-payments, the physical therapy, the prescriptions during the recovery period, they added up faster than I could keep track.

The total U.S. credit card debt topped $1.17 trillion in Q3 2024, and retirees increasingly contribute to that total when medical bills arrive. The three retirees I studied allocated 20-25% of their social security to health care when they were healthy, and during health crises that percentage jumped to 35-45% for a period of three to six months.

Here is what separated the surviving budgets from those that collapsed:

• Before retiring, have at least three thousand dollars in emergency funds (only Margaret has achieved this).
• During the six-month open enrollment period, you can buy Medigap Plan G or N without medical underwriting.
• Annual review of prescription coverage during the Medicare Part D open enrollment period.
• Dental and vision care deferred or accessed through community health programs.
• Generic medications requested proactively, with GoodRx price comparisons for out-of-pocket costs

David has a high-yield savings account at Vanguard for his $1,200 emergency fund, earning 4.50% APY as of late 2024 (the Marcus by Goldman Sachs account offered 4.75% APY in mid-2024, but the $500 minimum he could not maintain). Margaret uses a Charles Schwab checking account for its ATM fee reimbursement worldwide, a small detail that saves her $8-12 monthly in rural areas with limited bank access.

The Budget Categories That Actually Matter

The budgets of real retirees on social security only are not like that. The generic advice about retirement is based on percentages: 30% housing, 15% transport, 10% health.

Here is the breakdown of the three pensioners’ expenditures over the year:

1. – Housing and utilities: 38-46 % (impossible to reduce further without relocation) –
2. Healthcare: 22-28% (non-negotiable for anyone with chronic conditions)
3. – Food: 14-18% (the lowest I’ve seen is $280 a month, through strategic shopping) – –
4. Transportation: 8-12% (car ownership required in their locations)
5. Everything else: 4-10% (clothing, household items, phone, internet, entertainment)

This budget has no flexibility. Do you notice what is missing? Savings. Travel. Gifts for grandchildren. Meals in restaurants. Home repairs beyond the bare essentials.

David spends $290, relying heavily on canned goods, dried beans and reduced-price bakery items. Janet allocates $380, but regularly exceeds it by $40 to $60. Margaret spends $340 a month, shopping at Aldi, buying specials at Kroger and using a small garden for tomatoes and peppers.

The term “fixed income” obscures the reality: fixed expenses that meet or exceed fixed income. The 65% of Americans living paycheck to paycheck in early 2024 (up from 57% in 2019) include retirees in this situation.

What The Success Stories Won’t Tell You

The financial planners at Vanguard and Charles Schwab build retirement plans assuming multiple income sources. The typical projection includes Social Security, a 401(k) or IRA, and perhaps a pension. The software doesn’t have a retirement plan based on Social Security alone because the math doesn’t work in most cases.

A $400 car repair would require installments or credit. A $1,000 emergency would be a real crisis. Margaret’s budget works because she owns her land outright (inherited), has no debts, and accepts extreme restraint in her spending.

He is already researching food banks and utility assistance for the future. Without it, his budget would fail. David supplements his income with $180 a month from a small annuity, which he does not consider “real income” because it is temporary—it expires in 18 months.

She is terrified of what will happen when the grandchildren start school full-time. This informal income keeps her budget viable. She receives $140 a month from her son for “helping with the grandchildren” – she looks after them one day a week.

Remove any one of these elements and the budget collapses. Those who manage on social security alone have certain characteristics in common: no debt, own home or very low rent, no dependents, good health, and either a modest supplementary income or family support which they do not acknowledge formally.

Robo-advisors like Betterment and Vanguard Digital Advisor (part of the $1.8 trillion in robo-advisor assets under management in 2024) cannot model this reality. Their algorithms assume that you will save more, spend less, or retire later. For people already retired and dependent on social security, these options do not exist.

Sources and References

Social Security Administration. (2024). Monthly Statistical Snapshot, December 2024.

— Federal Reserve Bank of New York. Quarterly Report on Household Debt and Credit, Q3 2024.

The U.S. Bureau of the Census. Quarterly Residential Vacancy and Homeownership Report, Q4 2024.

The Institute for Research on the Income of the Elderly. 2023. Analysis.