According to HHS guidelines, the poverty income for a couple is $17,240. If that amount is ones income at age 67 retirement, the monthly Social Security benefit would be about $865.00, and $1,297.50 for a couple compared with a working income of $1,436.00 or a 90% income replacement.
A low income individual earning $30,000 at age 67 would have a monthly Social Security benefit of about $1098 or $1647 for a couple which is equal to $19,764 per year or an income replacement of 66%
We tend to look at the Social Security benefit and conclude that living with that income is not possible and yet the gross income replacement percentages are not out of line with the general recommendation for average people of between 70% to 80%.
In addition, individuals at low income levels are eligible for other forms of assistance. In both the above examples the households would be eligible for SNAP food assistance, and Medicaid as dual eligible with Medicare. They likely pay no federal or state income taxes and no longer payroll taxes. In some states they would be eligible for property tax relief and other unique programs such as prescription drug assistance and housing subsidies and tax rebates.
Clearly living at these low income levels is often a struggle and stressful, but retirement does not necessarily change much for the worse.
We can’t just look at average Social Security benefits and uniformly apply some standard of adequacy. Even as the sole source of income, Social Security does not by itself provide a clear picture of total income when the social services and tax policies are considered. Geographic differences also pay a part because living costs vary greatly across the U.S.