About 69.1 million Americans currently receive Social Security. But even though this system will play a part in meeting your financial needs, it probably won't cover all of them. As a result, if Social Security is all you have, you could find yourself living on a very fixed income, which can be stressful.

Here's how you can make sure you can afford the lifestyle you want after you've stopped working. 

Senior man with hand on his chin with a thoughtful expression on his face.

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How much you'll need 

The more supplemental income you need, the more you should save. For example, if you need $50,000 in total income and Social Security provides you with annual payments that total $40,000, you only need $10,000 from your retirement assets. Studies have shown that 4% is a sustainable withdrawal rate, and $10,000 works out to 4% of $250,000 -- so that's what you'd want to target for savings.

The higher your expenses are, the more you'll need your own money for your retirement expenses. In this same scenario, if your bills are $60,000, you'll now need $20,000 in your first year of retirement, which will require a portfolio value of $500,000. If your bills increase to $70,000, you now need a portfolio value of $750,000. If your spending needs are $80,000, you will need $1 million in retirement assets.

How you can achieve this

If you have time on your side and can get a jump start on saving, it will go a long way in ensuring a comfortable retirement. Over the last 30 years, investments in the S&P 500 earned an average rate of return of 10.7% -- so investing $5,000 a year for the last 30 years would've gotten you to $1.04 million. Saving $3,600 a year while earning the same rate of return for the same period of time would've produced almost $749,000. If you saved $2,500 each year, you would be left with $520,000, and just under $250,000 if you saved $1,200 per year. 

If you don't have 30 years before you retire, you could saved a little bit more and get similar results in a shorter time span. For example, if you saved $8,300 a year for 25 years, earning 10.7% each year on average, you would have just over $1 million. If you saved $6,200 a year you'd be left with about $750,000, $4,250 a year would've grown to $514,000, and $2,100 to $254,000. 

Earning 10.7% $1,000,000  $750,000  $500,000  $250,000
30 years $5,000 $3,600 $2,500 $1,200
25 years $8,300 $6,200 $4,250 $2,100

If you can't save this much, one of the ways you can make more money while retired is through part-time work. Depending on your lifestyle, you could need around 80% of your pre-retirement income after you've stopped working. On average, Social Security will replace about 40% of your income, so you would only need to replace the other 40%. You can also work on reducing your expenses before you retire so that you need less money overall.


Inflation has grown at an average rate of 1.884% each year over the last 10 years, making the goods and services that you buy more expensive each year. Using this rate of inflation, if you grew your portfolio to $1,000,000 and withdrew 4%, or $40,000, in year 1, in year 2 you'll need $40,753. By year 10 you would need $47,316, and by year 20 that amount would increase to $57,026. It is because of this that you may need to keep investing throughout your entire retirement, and earning an average rate of return that is higher than the amount that you're withdrawing plus inflation. 

Social Security will help you with your expenses once you've retired, but it won't pay for everything. For the majority of Americans, at least half of retirement income will have to come from other sources. Planning ahead and accounting for inflation can help you avoid running out of money in retirement and let you live the kind of life you want.