Can Social Security Still Cover Your Housing Costs in Retirement?
By Allaire Conte | June 27, 2025
As retirement approaches, many Americans count on Social Security benefits to maintain their lifestyle and cover essential expenses—chief among them, housing. However, a recent report from the Social Security Board of Trustees signals a looming challenge: the program’s main trust fund is projected to be depleted by 2033. This development threatens retirees’ financial security, with benefits potentially reduced to roughly 77% of scheduled payments by 2034. For millions of retirees, these changes could mean that Social Security no longer stretches far enough to cover rising housing costs, including mortgages, property taxes, insurance, and utilities. Understanding this evolving landscape is crucial for anyone planning for retirement or already navigating it.
Social Security’s Financial Outlook and Its Impact on Retirees
Social Security remains a cornerstone of retirement income for many seniors. According to the Senior Citizens League (TSCL), approximately 39% of seniors rely on Social Security as their sole income source, while nearly 73% receive more than half of their income from it. Yet, with the median monthly benefit hovering around $1,900, many retirees already face tight budgets.
The outlook grows more precarious as forecasts warn that, absent policy reforms, Social Security may only cover 81 cents on the dollar within nine years. This could severely affect the purchasing power of fixed incomes in an era marked by rising expenses.
Particularly concerning is housing—the largest monthly cost for many retirees. Realtor.com® analysis reveals that in some U.S. cities, property taxes alone can consume more than 25% of a retiree’s monthly benefit. For those with outstanding mortgages or living in high-cost areas, the financial squeeze intensifies.
The New Pressures of Selling a Home
Traditionally, downsizing or selling a longtime home has been a strategy to alleviate financial strain in retirement. However, changes in the capital gains tax exclusion now pose unexpected hurdles.
The capital gains tax exclusion, initially designed to protect homeowners from paying taxes on profits from selling their primary residence, has remained unchanged since 1997. Meanwhile, home values have surged by more than 260%. This disparity means many middle-class seniors could owe taxes on substantial profits when they sell, transforming what was once seen as a nest egg into a taxable liability.
Consequently, some retirees feel trapped: unable to keep up with housing expenses yet hesitant to sell and face a significant tax bill.
Who Is Most at Risk?
While not all retirees face the same financial pressures, certain groups are particularly vulnerable:
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Retirees with Outstanding Mortgages: Nearly 20% of all mortgages are held by someone 65 or older. Many seniors have carried mortgage balances into retirement due to purchasing homes later in life, refinancing to extract equity, or moving during recent housing booms.
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Those Relying Solely on Social Security: Seniors without pensions, significant savings, or other income sources may find their budgets especially tight as benefits reduce and costs rise.
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Homeowners Facing Rising Taxes and Fees: Property taxes, homeowners insurance, HOA fees, and utility bills often increase faster than fixed incomes, further challenging retirees.
Without alternative income streams to buffer these shocks, these retirees may face housing insecurity.
Steps to Protect Your Housing Future
Despite the challenges, retirees and future retirees can take several proactive steps to safeguard their housing security:
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Early Financial Planning
Assess your retirement income against projected housing costs as early as possible. Account for mortgage payments, property taxes, insurance, utilities, and HOA fees. Online calculators and financial advisors can assist in creating realistic projections that include inflation and potential Social Security benefit changes. -
Consider Downsizing or Relocating
Moving to a smaller, more affordable home in areas with lower property taxes or cost of living can free up equity and reduce monthly expenses. Age-friendly communities with features to support “aging in place” may also offer long-term benefits. -
Aim to Eliminate Mortgage Debt
Entering retirement mortgage-free can significantly ease financial stress. If possible, prioritize paying off your mortgage through lump-sum payments or refinancing into shorter terms. Alternatively, selling an expensive home and purchasing a less costly property outright can remove monthly payment obligations. -
Stay Informed on Policy Developments
Social Security reform is an evolving political topic. Monitoring legislative proposals and understanding potential impacts will enable you to adjust your plans accordingly. Younger retirees and Generation Xers, in particular, may face more significant changes depending on policy outcomes.
Looking Ahead
With Social Security’s future uncertain and housing costs rising, relying solely on this program to cover retirement housing expenses is increasingly risky. Thoughtful planning and informed decisions are essential to maintaining financial stability and preserving the ability to remain in your home during retirement.
Allaire Conte is a senior advice writer specializing in real estate and personal finance trends. She holds an MFA in Nonfiction Writing from Columbia University and a BFA from Emerson College. When not writing, she enjoys biking across Brooklyn and baking for her friends.
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