Here's Exactly How I Plan to Spend My Social Security Checks in Retirement

There's no denying the United States' Social Security program is on the defensive. Without any changes to how -- or how well -- it's funded, experts anticipate a roughly 20% reduction to benefits sometime in the mid-2030s.

I'm still hopeful, however, and even if a cut to payouts is possible, I'm still planning on receiving most of my expected benefits in the future. In fact, I'm even budgeting for them.

This optimism raises an important question. What will my spending look like in retirement? Will my Social Security be enough to cover all my expenditures?

Here's exactly how I plan to spend my Social Security checks in retirement. I'm willing to bet your budget will look rather similar.

Breaking down the average retiree's spending

First things first: My Social Security benefits won't be my only retirement income. I doubt it will even make up the majority of my income, presuming there are no major setbacks for the long-term growth of my retirement savings. My intended budget reflects both sources of future income the best I can predict them. It's all going into the same pot, so to speak.

Regardless, whatever the future holds, I expect my budget's percentage-based breakdown to be about average. This average is laid out in the graphic below.

Data sources: Bureau of Labor Statistics, Boldin, Canvas Annuity, Alliance for Lifetime Income, Western & Southern Financial Group. Chart by author.

For additional perspective, the U.S. Census Bureau reports the average U.S. retiree's annual income stands right around $75,000, while the median is just under $48,000. This, of course, includes a combination of Social Security and income from Americans' personal retirement savings. The Social Security Administration says its average payments are only putting a tad less than $23,000 in retirees' pockets this year. Also, bear in mind these numbers are per-person figures. The average household income is at least slightly higher, reflecting the lifetime earnings and savings of two or more individuals.

These are just averages, though. Your actual spending may differ a little, or even a lot. For instance, although spending on clothing might be about the same regardless of how much retirement income you have access to, housing costs can vary widely. If you've been a lifelong renter rather than a home owner, you'll likely continue paying rent in retirement with more of your income going to housing. If instead you purchased a home, it's likely paid for by the time you enter your golden years. Although you'll still owe taxes and pay for utilities, at least the mortgage is paid off.

Perhaps the most disappointing data nugget in the budgetary breakdown above, however, is how little the average retiree is spending on entertainment. People have worked hard to reach this stage in life where they have leisure time, but they're putting little money towards it.

Help yourself

The thing is, you don't have to be quite so budget-minded or stressed out about whether or not Social Security benefits will see cuts. The best thing you can do is take matters into your own hands by saving for retirement on your own, even if your efforts seem modest. With enough time, even a little bit of savings now can grow into a surprisingly sizable nest egg later.

Don't believe it? A little number-crunching might change your mind.

Let's say an investor can come up with an extra $300 per month to tuck away for retirement. Assuming it's invested in the stock market and earning an average of 10% per year, their investments would be worth somewhere in the ballpark of $62,000. If you can up the monthly contribution to $500, that nest egg grows to more than $100,000. And if you can commit $500 per month for 20 years, the account swells to an incredible $380,000. Putting $500 into the market each month for 30 years will likely leave you with over $1.1 million. Earning a 4% yield on this amount of money would generate annual income of more than $40,000, nicely supplementing any other income you're due in retirement.

There are tax considerations, of course, and you may not want to be wholly invested in the stock market as your retirement date approaches. Many people dial back their risk as they near retirement by transitioning to assets with more stability.

The key point here is that time is money, and a modest but consistent savings habit can go a long way when given enough time.

Just start somewhere, even if it's small

Whatever you decide to do or change about your spending and savings plan, know this: While I'm counting on at least some Social Security income -- and at the same time have every reason to believe my retirement spending budget will be quite typical -- I also know that Social Security alone isn't going to cut it. I have to keep saving on my own, and you should as well.

Of course, if you're going to bother saving at all, you'll also want to optimize your returns. For most, that means investing in the stock market.

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