Not Counting on Having Social Security? Here Are 3 Money Moves You Should Make

Every day the increasing weight of years admonishes me more and more,
that the shade of retirement is as necessary to me as it will be welcome.
-- George Washington 

Everyone needs money to get through their retirement years. Some people are independently wealthy, while many millions depend on their savings, along with Social Security. What do you do if you don't have Social Security income in your future? Well, you have some options.

Image source: Getty Images.

First off, though, note that you might actually get Social Security benefits! If you're assuming you won't because you worked mostly in the home, or you just never received the paychecks or taxable income that could qualify you for benefits, you're not necessarily out of luck. If you're married, divorced, or widowed, you may be able to claim benefits based on your current, ex-, or late spouse's earnings record -- generally between 50% to 100% of the spouse's benefit. (Divorcees will need to have been married for at least 10 years and not have remarried.)

If you're thinking you won't get any Social Security benefits because the program will be dead when you retire, think again. It's true that, if no changes are made to bolster Social Security, its trust fund is projected to be depleted by 2034. If that happens, payment checks won't disappear, but they'll likely shrink by about 25%, leaving beneficiaries with about 75% of what they were expecting. That's not ideal, but 75% is far better than the 0% some people expect. Fortunately, there's a decent chance that the system will be shored up, one way or another.

But let's go back to assuming that you won't be receiving Social Security income in retirement. What should you do? Here are three smart moves.

Image source: Getty Images.

Get financially healthy

Without Social Security, which replaces about 40% of the average worker's pre-retirement income (and less than that for those with above-average earnings), you'll have to rely on yourself more than ever for your retirement security. Thus, you should get financially healthy and stay that way -- as soon as possible.

That means you need to get any high-interest rate debt, such as credit card debt, off your back, pronto. It can be hard to pay off thousands or tens of thousands of dollars, but getting out of debt can be done -- ideally with a good plan and a lot of perseverance.

Being financially healthy also means living below your means, so that you're not overextending yourself. A bigger, fancier house is certainly worth drooling over, but if the mortgage payments will make your life a bit difficult, settle for the smaller, less costly house.

Aim to have as much money as possible left over from your paycheck after your obligations are covered. This might require brown-bagging some lunches and driving your car for a few more years. There are many other ways to save money that aren't even too painful, such as shopping around for less expensive insurance policies for your car and home, cutting the cable and landline telephone cords in favor of streaming TV and mobile phones, and perhaps quitting the gym membership that you never use.

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Save and invest

Next, aim to save aggressively for retirement and to invest that money effectively. The more you sock away, and the sooner you start doing so, the bigger a retirement nest egg you can build. (Remember -- your earliest invested dollars will have the most time to grow for you.) Here's how much you might amass over several time periods if your money grows by an annual average of 8%:

Calculations by author.

Clearly, big sums can be yours if you set your mind to it. How should you invest that money effectively? Well, with your long-term dollars, it's hard to beat stocks.

You might simply use an inexpensive, broad-market index fund such as the SPDR S&P 500 ETF (SPY +1.01%), which distributes your assets across 80% of the U.S. stock market and requires little expertise or oversight. Even Warren Buffett recommends such index funds for most investors.

Image source: Getty Images.

Consider annuities

Finally, while you might not enjoy regular and dependable Social Security benefit checks, you can buy yourself regular and dependable income, via annuities. In exchange for a big bundle of money, fixed annuities -- as opposed to the more problematic variable or indexed variety -- can start paying you immediately, or on a deferred basis. Below are examples of the kind of income that various people might be able to secure in the form of an immediate fixed annuity in the current economic environment. (You'll generally be offered higher payments in times of higher prevailing interest rates.)

Source: Immediateannuities.com.

Another great thing about annuity income is the peace of mind it offers. As we get older, many of us will be less interested in managing our investments and even less able to do so.

Keep in mind, too, that even if you do have Social Security income headed your way, it won't support you in great comfort on its own. The average monthly Social Security retirement benefit was recently $1,365, which amounts to $16,380 per year. If your earnings have been above average, you'll collect more than that -- up to the maximum monthly Social Security benefit of $2,687 for those retiring at their full retirement age. That's still only about $32,000 for the whole year. Consider learning about strategies to get the most out of the Social Security program.