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Here's Why I'm Not Counting on Social Security -- and What I'm Doing Instead

By Maurie Backman – Mar 4, 2018 at 6:04PM

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The future of Social Security is uncertain, and this Fool isn't banking her retirement on it.

Countless seniors rely on Social Security to pay the bills in retirement. But today's workers may be losing faith in the program. In fact, 77% are concerned that those benefits won't be available to them once it's their turn to retire, according to Transamerica.

Frankly, I can see where they're coming from. Though Social Security can never truly go broke, since much of its funding comes from payroll tax revenue, there will come a point when the program's trust funds run out, thus causing benefits to potentially get slashed. What sort of cuts are future recipients in for? At present, it looks like roughly 23%, but that figure is subject to change over time.

Social Security card


And that's just one of the many reasons I'm not counting on Social Security to pay the bills in retirement. As a worker in my 30s, I'm not planning to leave my full-time career for a number of decades, which means I have no idea what those benefits will look like by the time it's my chance to claim them.

But here's another reason I'd prefer to write off Social Security: Those benefits were never designed to sustain retirees in the first place. These days, so many workers make the mistake of not saving for retirement and falling back on Social Security instead. But even in a best-case scenario (meaning, no eventual cuts), those benefits will only replace about 40% of the typical worker's pre-retirement income. Most folks, however, need about double that amount to pay the bills in retirement, and that assumes a fairly modest lifestyle. If your goal is to live it up, you'll need a lot more.

Now at this point in my life, I have no idea what I want my retirement to look like. But I do know this: I'm not counting on Social Security to fund it. Rather, I'm taking savings matters into my own hands. And you should, too.

Securing my own financial future

Because the future of Social Security is shaky, and it's hard for me to estimate my benefits at this point in my career, I'm aiming to save enough money on my own so that I don't come to need those benefits later on. Ever since we've been married, my husband has been maxing out his 401(k) at work, which has allowed us to build up a decent nest egg to date. This year, we're aiming to have him contribute $18,500 to his company plan, which is the annual limit for workers under 50. Those 50 and over, however, can contribute up to $24,500 this year.

As a self-employed writer, I don't have the option to contribute to a 401(k), so what I plan to do is fund a SEP IRA instead. A SEP IRA works just like a regular IRA, only it's designed for self-employed workers and comes with a much higher annual contribution limit. With a traditional or Roth IRA, workers under 50 can put in up to $5,500 this year, while those 50 and over can contribute up to $6,500. A SEP IRA, on the other hand, allows you to contribute up to 25% of your net business earnings, up to a maximum of $55,000.

Now let's be clear: I will be contributing far less than the maximum this year. But I'm hoping to do just a bit better than last year in terms of what I set aside.

How are my husband and I able to put away all of this money? Frankly, by living below our means and committing to our future. Rather than eat at restaurants every weekend or order in three nights a week, we grocery shop and cook. Instead of owing an extravagant home, we bought one that was below our budget to leave ourselves ample wiggle room. Neither of us drive fancy cars, and when we encounter unplanned bills that force us to tap our emergency savings, we cut back on other expenses to replenish those funds.

Of course, I realize that even with prioritizing, not everyone has the option to max out a 401(k) or even get close. But what most folks can do is cut corners to free up room for savings, and invest the difference wisely.

Speaking of investing, my retirement savings is heavily invested in stocks, because I need that money to grow. And since I'm not planning to touch that cash for a number of decades, I have time to ride out the market's ups and downs. In fact, I'm hoping that my savings will generate at least a 7% average annual return between now and retirement, which is actually a couple of points below the stock market's average.

But enough about me -- let's talk about you. Imagine you have quite a bit of time between now and retirement, and that you start setting money aside each month immediately and invest that cash in the stock market. Here's what your nest egg might grow to over a 30-year period:

Monthly Savings Amount

Total Accumulated Over 30 Years (Assumes an Average Annual 7% Return)








$1.1 million


$1.7 million

Data source: AUTHOR.

How's that for growth?

Now keep in mind that while $340,000 is a lot of money, it may not be enough to let you forget about Social Security completely. But $1.7 million is a much different story.

Of course, I have no idea what my nest egg will eventually grow to, but my plan is to put Social Security out of my mind, save aggressively, and use those benefits as fun money, so to speak. Ideally, I'll be able to rely on my savings to pay the bills, and my Social Security income will fund my travels, hobbies, and gifts to the hypothetical grandchildren I may or may not have.

None of this is meant to discourage you from factoring Social Security into your long-term savings plan. What it is meant to do, however, is highlight the limitations of those benefits and stress the importance of independent savings. Writing off Social Security, for me, is a good way to take control of my future. And what can I say? It helps me sleep better at night knowing that if those benefits face deeper cuts down the line, I won't necessarily have to worry about it.

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