It’s smart to be thinking about and planning for retirement long before it arrives. Social Security benefits are likely part of your plan, but you shouldn’t be expecting too much from them.

Here’s why you shouldn’t rely too much on Social Security and a look at three solid dividend-paying stocks you might consider. Investing in them or other dividend payers can help your portfolio generate much-needed income for your later years.

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Reason 1: Social Security simply isn’t enough

This might be a bit of a wakeup call for some. As of September, the average monthly retirement benefit was $1,922 — or only about $23,000 per year. The current maximum benefit is $4,873 — but hardly anyone qualifies for it.

To get a more precise estimate of how much you can expect based on your earnings history, set up a my Social Security account at the Social Security Administration (SSA) website. Then, you can pop in any time to see the latest estimates of your future benefits.

Reason 2: Social Security increases are often insufficient, too

A wonderful thing about Social Security benefits is that in most years, they receive cost-of-living adjustments (COLAs). The latest one, for 2025, was 2.5%. These COLAs are meant to help seniors keep up with inflation, but the way they’re calculated is suboptimal.

That’s because they’re based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which is calculated by the Bureau of Labor Statistics based on changes in the average prices of household goods such as food, housing, and transportation. However, this measure is focused on costs borne by workers more than retirees.

A better measure for calculating Social Security COLAs is the Consumer Price Index for the Elderly (CPI-E), which counts categories such as healthcare and housing more heavily. Thus, it’s been estimated that retirees routinely get a lower COLA than they should.

Reason 3: Social Security benefits may be reduced

Finally, as you might already know, Social Security is facing some big challenges. More money is being paid out of its coffers than is coming into them, so the program’s surplus is shrinking — and is expected to be depleted in 2035.

If nothing is done to shore up the program, its trustees estimate that beginning in 2035, beneficiaries will receive only 83% of what they’re due. Yikes. Fortunately, there are lots of ways to fix this problem — if Congress takes action. I’m counting on that, but legislators should feel some pressure from their constituents.

Stocks to the rescue!

So, if Social Security is only going to provide a somewhat small portion of your retirement income, what can you do? Well, aim to set up multiple income streams for your retirement. One good income source is dividends. Here are three dividend payers to consider.

Stock 1: Western Union

Western Union (NYSE: WU) has been struggling, with its shares down by more than half over the past few years. A company’s dividend yield is simply a ratio, with the current annual dividend divided by the current stock price, so a depressed stock will result in a boosted dividend (as long as the dividend isn’t reduced) — and Western Union’s has risen to a fat 8.4%!

The company is working on turning its fortunes around while it faces competition from the likes of Wise.

Stock 2: Pfizer

Pfizer (NYSE: PFE) is another depressed stock, due in part to declining demand for its Covid-19 vaccines. But there’s much more to Pfizer than that vaccine. It has a robust pipeline of more than 110 drugs in development, including an anti-obesity drug. Its 2023 acquisition of Seagen for $43 billion is adding multiple cancer-fighting medicines to its portfolio and pipeline.

Pfizer’s dividend recently yielded 5.9%, and CEO Albert Bourla has said that “I want to reinforce our commitment to maintaining and growing our dividend over time.” One thing to watch, though, is a new interest in Pfizer by an activist investor. That’s not necessarily a bad thing, though, if it results in changes that further growth.

Stock 3: Verizon Communications

Then there’s Verizon Communications (NYSE: VZ), recently yielding 6.6%. Verizon has been struggling to increase its revenue, but its profitability has been improving and it does generate plenty of free cash flow, which can be used to pay dividends, pay down its considerable debt, and invest in growth. Verizon isn’t likely to be a fast grower, but as it expands its fiber and 5G networks, it should grow — while rewarding income-seeking shareholders.

Note that you can easily invest in a wide range of dividend-paying stocks via exchange-traded funds (ETFs) such as these solid possibilities:

• Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD)
• iShares Core Dividend Growth ETF (NYSEMKT: DGRO)
• Vanguard Dividend Appreciation ETF (NYSEMKT: VIG)

So don’t count on Social Security to be enough for your retirement, and start thinking about what kinds of income streams you can start building now that will pay off handsomely in the future.

The $22,924 Social Security bonus most retirees completely overlook

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View the “Social Security secrets” »

Selena Maranjian has positions in Pfizer, Schwab U.S. Dividend Equity ETF, Verizon Communications, and Western Union. The Motley Fool has positions in and recommends Pfizer and Vanguard Dividend Appreciation ETF. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.