The Average Percentage of Retirement Income That Is Social Security

Smiling retired couple out on a hike.
Smiling retired couple out on a hike. (Image: Siri Stafford/Digital Vision/Getty Images)

Established in 1935 as a social insurance program for elderly and disabled individuals impoverished by the Great Depression, Social Security has become a mainstay of Americans' retirement incomes. A Social Security study found that today's beneficiaries depend on their monthly checks for an average of 38 percent of their retirement income -- but many elderly retirees count on it for between 50 and 90 percent of their income.

Social Security Withholding

Although payroll withholding contributes to several government programs, Social Security premiums are tied to a wage earner's salary. In 1939, wage earners contributed 1 percent of each paycheck until their gross earnings reached $3,000. Today's rate, which includes survivor and disability coverage, is 6.2 percent for both employee and employer up to $90,000 gross earnings. Additional coverage, more affluent lifestyles and increased life expectancy have made changes to the system necessary but will also force decreased dependency on it.

Diminishing Returns

The stability of the system might provide a sense of security for those planning their retirement. But according to the Social Security Administration, benefits provide an average of only 38 percent of necessary income for current retirees. Baby Boomers -- those born between 1947 and 1960 -- can count on Social Security benefits to provide an average of only two-fifths of their projected family income at age 67 and will need to utilize savings, IRAs, pensions or other investments to make up the difference.

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