Social Security plays a pretty big role in many people’s retirement planning — and with good reason. Benefits can start as young as 62; the income the benefits offer is guaranteed for life; and periodic Cost of Living Adjustments (COLAs) help ensure that seniors can keep up with rising prices.

However, while you can and should expect to rely on Social Security, you also need to be realistic about the role that it will play in funding your retirement. Specifically, there are three harsh truths you need to be aware of when it comes to these benefits, and if you don’t know these simple facts, your retirement security could be derailed.

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Here’s what you need to know to make informed choices about what Social Security is going to do to help you as a senior.

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1. Benefits only replace 40% of wages

The first harsh truth you need to know is that Social Security is only going to provide a small percentage of the income that you are likely to need as a senior.

Most retirees need to replace around 80% or more of their pre-retirement earnings to maintain their standard of living, with 70% about the bare minimum to not see a major decline in quality of life. Social Security can’t come close to doing that. Your benefits replace about 40% of what you were making, which would mean that you take a drastic pay cut if you don’t have other income sources.

The bottom line is that you need money from a 401(k), IRA, or other retirement plan to supplement what Social Security brings into your bank account each month. The sooner you realize that, the sooner you can set a realistic retirement goal and start investing to build the nest egg you need.

2. A growing number of retirees are taxed on benefits each year

There’s also another harsh truth you need to know about. You probably are not going to be able to keep all your Social Security money. You may have to give the IRS a cut.

When lawmakers first imposed taxes on Social Security benefits, the threshold at which benefits became partly taxable was $25,000 for single filers and $32,000 for married joint filers. Since this was based on provisional income, which is half of Social Security benefits, all taxable income, and some non-taxable income, very few retirees were hit with taxes.

Today, decades later, that $25,000 and $32,000 thresholds are still the same income levels at which benefits become taxable. They were not indexed to inflation, so as wages and benefits have risen, more retirees have started to owe the IRS. Plus, a second level of taxation was also added, so single filers with provisional incomes above $34,000 and married joint filers with $44,000 or more in provisional income are now taxed up to 80% of their benefits.

Unfortunately, around 50% of retirees now pay taxes on Social Security benefits, and that number is only going to grow over time. If you end up being one of the many who get stuck with this tax bill, you’ll have even less Social Security to live on.

3. Benefits have lost 20% of buying power since 2010

Finally, there’s one more troubling reality to face. COLAs aren’t really doing a good job of helping seniors maintain their buying power. In fact, the Senior Citizens League reports that benefits have actually lost 20% of their value since 2010.

COLAs are calculated by determining how prices have changed year over year. However, the consumer price index used to determine this is the Consumer Price Index for Urban Wage Earners and Clerical Workers. Those individuals spend less of their money on healthcare and housing, which seniors spend a lot on. As a result, the COLA formula is undercounting the inflation retirees actually experience since healthcare and home costs have seen rapid increases.

When benefits lose buying power, you can buy less as time goes on. Unfortunately, when you are older, your savings may be running out, and your healthcare expenses may be at their highest. It’s at this point that you’ll be left struggling to make ends meet on benefits that provide far less buying power than they did decades prior.

Understanding these harsh truths can help you make sure you are prioritizing saving for your future so your over-reliance on Social Security doesn’t leave you in a tough spot. The sooner you come to terms with these realities, the better off you’ll be since you can start investing aggressively for the retirement you deserve.

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