Social Security cards on clothes line © Mike Kemp-Tetra images-Getty Images

Financial advisers for years have warned about a looming shortfall between what people have saved and what they’ll need to maintain their standard of living in retirement.

And, certainly, what Americans have put away for retirement is paltry. Unless we all start saving like crazy, the pundits say, we’ll have nothing to live on during our so-called golden years. Or we’ll all have to work into our eighties — if they let us.

But maybe we should look at it another way. For most Americans, Social Security will be their primary source of retirement income. Everything else — IRAs, 401k’s, even some old-fashioned defined-benefit pension plans — will be icing on a not-very-rich cake.

The reasons are clear. Tens of millions of Americans don’t have access to 401k’s or other retirement plans at work. And millions of families are barely earning enough to cover their current needs, let alone save for retirement.

Suggesting that Social Security will be Americans’ main source of retirement income may seem surprising; after all, the average monthly benefit is only $1,294, according to the Social Security Administration.

But it’s no surprise at all to Dallas Salisbury, president of the Employee Benefit Research Institute (EBRI), a Washington, D.C.-based group that publishes tons of research on the topic.

When I put the question to him in a phone interview this week, he said matter-of-factly: “That’s what all kinds of pensions have always been. The system always has been designed to supplement Social Security for individuals who have had continuous attachment to the labor force.”

That was true, he said, even during the so-called Golden Age when everyone supposedly clocked in for 30 years, then got a gold watch and a platinum pension check every month.

“For some people, a defined-benefit pension was Nirvana; for other people, it was terrible,” Salisbury told me. He pointed to EBRI data that showed individuals 65 and over who were in the lower 60 percent of incomes got 10 percent or less of their retirement income from traditional pension-benefit plans. That same group also depended on Social Security for up to 88 percent of income in 2010.

Indeed, the Social Security Administration reported that 64 percent of Americans ages 65 and older get more than half their income from Social Security. That’s nearly two-thirds of retirees.

It’s not difficult to see why.

Take the average monthly Social Security benefit, $1,294, and multiply it by 12 to get annual income of roughly $15,500.

How much would you have to save or invest to get that “annuity”?

Assuming a 4 percent annual withdrawal rate, I multiplied $15,500 by 25 and got $387,500. And remember, that’s per person. With an average benefit per couple of over $2,000 per month, those households would have to stash away more than $600,000 to surpass their Social Security benefits.

Unfortunately, the average U.S. household had retirement assets of $167,800 in June 2013, according to the Investment Company Institute, the trade association for the nation’s mutual fund companies.

Sarah Holden, the ICI’s senior director of Retirement and Investor Research, pointed out that Americans from 60 to 64 have on average nearly $360,000 in their defined-contribution accounts and IRAs combined.

That’s encouraging, but it still doesn’t top the average Social Security threshold.

In fact, more than 80 million U.S. workers (including part-timers and self-employed contractors) aren’t covered by a retirement plan at all, according to EBRI. It’s hard to save if your company doesn’t even have a plan.

And the nearly three-quarters of Americans who take their Social Security benefits before reaching full retirement age are leaving a lot of money on the table.

But the biggest obstacle may be that in an era of stagnating incomes, many people just don’t make enough money to build retirement nest eggs.

The table below is a rough approximation of what a typical American household earns and spends.

Courtesy MarketWatch

When you subtract food, health care, mortgage payments, taxes, utilities and other necessities, not much remains for retirement saving. I estimate well under $10,000 a year for everything else, including movies, restaurants, family vacations, car expenses, child care, braces for kids, tutoring or counseling, and saving for college.

Maybe that’s why the average working household has virtually no retirement savings, according to the National Institute on Retirement Security.

“There are different forms of saving at different points in the life cycle,” Holden explained. “As they get to middle age, they begin to focus on retirement.”

True enough, but at that point they’ll have a lot of catching up to do. Holden points out that for lower-income households, “Social Security is going to give them a high replacement rate.” That’s because they’re used to living on less.

But those who aren’t face a rude awakening when they try to live primarily on their Social Security benefits. As Holden said at a conference last weekend, “Just because you have income for life doesn’t mean it’s adequate.”

“We can never insure 100 percent of the population against 100 percent of the hazards and vicissitudes of life,” President Roosevelt declared after signing the Social Security Act in 1935, “but we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age.”

Some measure of protection indeed. FDR could hardly have foreseen that eight decades later, Social Security would be the lion’s share of most Americans’ retirement income, and for many the only game in town.

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