Living on Social Security? Study says it could backfire without this smart income backup

Core Insights - Millions of Americans depend primarily on Social Security for retirement, which poses significant financial risks due to potential shortfalls and benefit cuts in the future [1][2] - The average Social Security benefit in 2025 is projected to be $2,015 per month, equating to approximately $24,000 annually, which only replaces about 40% of pre-retirement income [1][2] Social Security and Financial Risks - As baby boomers retire, the Social Security program may face funding issues, leading to potential benefit reductions if Congress does not intervene [2] - Cost-of-living adjustments (COLAs) intended to protect seniors from inflation often fall short, as they are based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which does not accurately reflect the expenses faced by retirees [3][6] Need for Supplemental Income - To maintain a comfortable lifestyle, retirees require income beyond Social Security, with high-yield ETFs being a viable option for generating steady income through dividends [7][11] - A well-planned ETF portfolio can provide significant supplemental income over time, especially if investments are made early [7][8] Retirement Planning Strategies - Effective retirement planning should focus on generating reliable income rather than merely accumulating wealth, with high-yield ETFs complementing Social Security benefits [8][11] - It is crucial to model different retirement scenarios and calculate monthly income needs to adjust investments accordingly, utilizing tools like retirement calculators [9] Risk Management and Tax Planning - Market downturns during early retirement can severely impact withdrawals, making diversified high-yield ETFs a suitable choice to reduce volatility while providing steady dividends [9] - Strategic withdrawals from various account types can maximize income and minimize taxes, ensuring that Social Security and ETF income are optimized [10] Importance of Regular Reviews and Professional Guidance - Regular portfolio reviews are essential to adapt to changing market conditions and personal circumstances, ensuring that income aligns with retirement needs [12] - Working with a financial advisor can help refine retirement strategies, balancing risk, income, and long-term growth for a secure retirement [14]