Is Saving Obsolete Due to Social Security?


I saw this article today stating that 65% of Americans have little or nothing saved for retirement:

Despite a low unemployment rate and increasing wage growth, Americans still aren’t saving much. That’s according to a new survey from, which found that 20 percent of Americans don’t save any of their annual income at all and even those who do save aren’t putting away a lot.

Only 16 percent of survey respondents say that they save more than 15 percent of what they make, which is what experts generally recommend. A quarter of respondents report saving between 6 and 10 percent of their income and 21 percent say they sock away 5 percent or less.


Most people in the survey said that they did not save due to expenses and this is probably true for the most part, but I often wonder how much Social Security plays a part in people no longer saving for themselves:

Social Security was designed to supplement only pensions and retirement savings. But for many, that’s no longer the case. Among beneficiaries 65 and older, 1 out of 5 married couples — and 2 out of 5 singles — receive at least 90 percent of their income from the program, according to the Social Security Administration.

The majority of people are taking SSI early and leaving the work force:

Along with stopping work early, most Americans begin collecting Social Security before their full retirement age, which is 66 for many and rises to 67 for those born after 1960, LIMRA says in a recent report.

The percentage of those claiming Social Security early is declining. That’s generally good news because monthly benefits rise by roughly 6.5% to 8% a year between ages 62 and 70. Still, in 2014, 57% of men and 64% of women took the benefit early, LIMRA says.


If most people are living only on Social Security benefits, they may not have as much incentive to save, though as the articles above point out, it is not that easy to live on benefits alone. Many people are subsidized by relatives currently but with people having smaller families, what will happen in the future to those with little or no savings?


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