Quick Read
Social Security replaces only 40% of pre-retirement income, leaving median workers needing a high-six to seven-figure portfolio to cover the rest.
The personal savings rate fell to just 3.9% in Q1 2026, far below what retirement calculators require to build an adequate portfolio.
Higher earners face a larger shortfall since Social Security replaces a smaller share of their income, requiring proportionally bigger invested portfolios.
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The Social Security Administration has long estimated that its retirement benefit replaces roughly 40% of a typical worker’s pre-retirement earnings. That figure is a national average, and it varies by lifetime income (lower earners get a higher replacement rate, higher earners get less). For a worker at the median, the other 60% has to come from somewhere. Usually, that means an invested portfolio built over decades of work.
The starting point is what the median full-time worker actually earns. Median usual weekly earnings for full-time workers reached $1,235 in the first quarter of 2026, up from $1,139 in the first quarter of 2024. Annualized, that translates into gross wages of approximately $64,220. A 40% Social Security replacement rate on that income works out to roughly $25,688 annually, leaving a significant shortfall to be covered by other sources.
The 60% Gap
The remaining 60% is where invested savings come into play. For a median-income worker, this gap covers the difference between Social Security and pre-retirement earnings. While that assumes the goal is matching gross income, many retirees can maintain their standard of living on 70% to 80% of their pre-retirement net earnings. Even so, the rising cost of essential categories like housing and healthcare makes a robust, dedicated retirement portfolio more critical than ever.
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Consumer Expenditure Survey data helps ground the number. Average annual household expenditures were $78,535 in 2024, up from $72,973 in 2022. Retirement households generally spend less than the all-ages average, but the direction of travel is clear: essential categories keep getting more expensive. In May 2026, U.S. consumers spent an annualized $3,950.3 billion on housing and $3,716.0 billion on healthcare, the two categories that tend to grow fastest in retirement.
