Social Security Doesn't Cover It All -- 3 Strategies to Close the Income Gap

Key Points

• Social Security is a vital source of income for most retirees.

• The program isn't likely to cover all of your retirement costs.

• There are concrete steps you can take to help stretch your Social Security dollars.

• The $23,760 Social Security bonus most retirees completely overlook ›

According to The Nationwide Retirement Institute^® 2025 Social Security Survey, Americans are deeply concerned about Social Security. That makes complete sense, given that most retirees rely on its payments to cover a significant portion of their retirement expenses.

But this vital government program doesn't cover all of them, which is just a painful fact. Here are three ways you can close the gap between your expenses and your Social Security check.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

How bad is the problem?

The institute's 2025 survey found that "More than half of U.S. adults receiving or expecting to receive Social Security say they could not financially survive missing even half of a monthly payment." That's a huge statement, because with the average monthly benefit around the $2,000 mark, it means that just $1,000 could be the difference between getting by and financial hardship for a large number of people.

Image source: Getty Images.

It makes sense, then, that the survey also found that "More than four in five Americans express concern about the long-term viability of the program." If losing half of a monthly payment is all it takes to bring on financial hardship, Social Security is clearly of vital importance to retirees, so the reliability of the program is a constant concern.

Three solutions

That said, the problem is already hitting home thanks to the impact of inflation, which has dramatically increased living costs. Indeed, retirees are already cutting back, with three key approaches. You could use these too if you need to.

1. Cut back on spending

The most obvious way to handle a shortfall on the income front is to simply spend less. That is, in fact, the most common adjustment for those collecting Social Security. That said, there are two different numbers to consider here.

Roughly half of all of the people surveyed in the Nationwide survey said they had reduced spending on discretionary things, a list that includes activities like eating out and traveling. That's a logical move, and you can easily do the same if you're facing a cash crunch.

But there's another, more difficult choice, too. Roughly a third of respondents also said they were cutting back on necessary items, like groceries and medicine. It's easy to buy store-brand potato chips instead of a name brand, but if you need a medication there may not be a cheaper generic option.

2. Move to a smaller place

That's where another strategy might make sense. Notably, about 18% of survey respondents said they downsized to help close the gap between their cash needs and Social Security.

Prior to retirement, many people have families or responsibilities that mean larger homes. In retirement, however, you hopefully don't have the same housing needs. A small condo could easily replace a four-bedroom home, leading to two potential benefits.

The most obvious plus of downsizing is that a smaller home will likely involve lower ongoing costs: less maintenance, lower taxes, and less emotional stress. That last perk has nothing to do with money, but don't overlook the time and energy needs that maintaining a home requires. If you're already worried about money, worrying about your home won't make anything better.

The second benefit of downsizing will only help you if you're an owner with home equity. But the logic is pretty simple: Selling a large home will likely generate more money than you need to buy a smaller home. The difference can be saved and invested, used to buy an immediate annuity (effectively creating a new income stream), or put into a bank account and used directly to pay for living costs.

Image source: Getty Images.

3. Go back to work

One last option, which 15% of the survey respondents used, is to go back to work part-time. When faced with a shortfall, these people increased their incomes instead of cutting costs. That's clearly a solution for many, but your ability to work may be limited by health concerns. So counting on this avenue is a risk.

Working isn't the ideal outcome for someone who wants to be retired, but it is a viable strategy. That said, there's an alternative here that may be easier. If you have the opportunity to work longer before you retire, you can build more savings. Those additional savings can help to cushion you against any Social Security shortfalls you may face after you retire.

The big one that you need to think of before retirement

If you're already retired and facing a gap between what Social Security provides and what you need to spend, your options are a bit limited. Cutting costs, downsizing, and working part-time are relatively easy solutions. But all these are temporary fixes. Working longer (if you can) before retirement is more preventive, creating a cushion to protect you from future cash shortfall risks.

But the biggest thing you can do to protect yourself before retirement is to save as much as you can as early as you can -- and, of course, to have a good investment plan for your savings. If you have time to build wealth before you retire, Social Security won't end up being as big a concern when you retire. Nearly 30% of the survey's respondents were able to tap savings more to make up for the gap between their Social Security and their spending needs. Plan ahead and you, too, could have that valuable safety valve.

The $23,760 Social Security bonus most retirees completely overlook

If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income.

One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these strategies.

View the "Social Security secrets" »

The Motley Fool has a disclosure policy.