Social Security is a big deal, delivering retirement benefits to more than 50 million retirees annually along with disability and survivor benefits to millions more. The retiree benefits alone total nearly $100 billion annually.

Social Security is vital, too. According to the Social Security Administration, “Among Social Security beneficiaries age 65 and older, 12% of men and 15% of women rely on Social Security for 90% or more of their income.”

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As 2025 gets rolling, here are four things we all should know about Social Security, some of which can help in our retirement planning.

1. Social Security lifts millions out of poverty

Without Social Security, more than 22 million people would fall below the poverty line, per the Center for Budget and Policy Priorities. And that’s quite a low threshold. Here are the 2024 poverty guidelines from the Department of Health and Human Services:

Data source: HHS.gov.

2. Social Security income probably won’t be enough in retirement

While Social Security benefits do keep millions above the poverty line, they may still not be far above it — because Social Security isn’t meant to replace all of your pre-retirement income. As of November, the average monthly benefit for retirees was just $1,925, or about $23,000 for the year.

If you set up a my Social Security account, you’ll be able to see estimates of your future benefits based on your earnings history. If your earnings have been above average, your benefits will be, too.

Still, a lesson here is that we shouldn’t expect Social Security to deliver a comfortable retirement by itself. But if we plan well, those benefits could be part of your comfy retirement. For most of us, it’s smart to set up multiple income streams for our future years. These could be any or several of the following, among other possibilities:

• Dividend-paying stocks
• Interest-bearing accounts
• Retirement accounts
• Pensions
• Annuities
• Rents from real estate properties

There are many ways to generate income for retirement. With a little brainstorming and/or online digging, you might spot some other good possibilities — such as perhaps a reverse mortgage or tapping a life insurance policy.

3. Don’t expect too much from cost-of-living adjustments (COLAs)

Here’s some good news and bad news about Social Security: Unlike many income streams, it features nearly annual cost of living adjustments (COLAs) — without which it would be hard to keep up with inflation. Over time, benefits that don’t get boosted by COLAs would lose a lot of purchasing power. Check out how average benefits have changed over time:

Data source: Social Security Administration, 2023 Annual Statistical Supplement.
*As of November 2024.

If you got your first Social Security benefit of $955 back in 2004 and it hadn’t risen over time, it would cover a lot less in living expenses than it used to.

The latest COLA, taking effect in 2025, is 2.5%. Here are some past ones:

Data source: Social Security Administration.

The bad news is that COLAs are often not enough — especially with healthcare costs being so high and retirees often needing a lot of healthcare. In fact, when we surveyed a bunch of retirees, fully 54% found the 2025 2.5% increase insufficient, and about a third, 31%, found it “completely insufficient.”

4. You can increase your benefits

Here’s a last bit of very good news: There are multiple ways to increase your Social Security benefits, such as strategically timing when you start collecting Social Security.

We can start collecting as early as age 62 or we can delay, up to age 70. Starting early means smaller benefit checks — though an early claimer will be collecting many more of them than someone who waits until, say, 70. (For a majority of retirees, the best strategy is to wait until age 70.) When to start receiving your Social Security benefits is a big decision, so give it a lot of thought and read up on the matter.

You can also boost your future benefits by earning as much as possible during your working life. So ask for raises more often (and aim to deserve them, too, as that might increase your odds of getting them). Consider applying for higher-paying jobs, too, or even switching into a more lucrative career if that makes sense for you.

So go ahead and look forward to retiring one day and collecting Social Security benefits — but make them part of a bigger plan.

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