While many workers look forward to retirement, it's a financially daunting prospect. Suddenly, you're going from a steady paycheck to a fixed income, and if you're like many seniors today, Social Security will be a key piece of your financial puzzle. In fact, 21% of older married couples and 44% of older singles count on their benefits to provide 90% of their income, if not more.

A better bet, however, is to take the opposite approach to Social Security: Assume it won't play a substantial role in your retirement, and take financial matters into your own hands instead. It might seem counterintuitive, but you'll be much happier for it.

A middle-aged man sits on a sofa, looking at a phone, with a collection of papers on his knee.


Social Security falls short

Many people assume that Social Security will cover all of their living expenses when they retire, but that's far from true. Those benefits are only designed to replace about 40% of your pre-retirement income, and that's if you were an average earner. If you were a higher earner, they'll replace an even smaller percentage. Most seniors, however, need roughly 80% of their pre-retirement earnings to live comfortably, which means that Social Security clearly isn't equipped to foot the bulk of your bills.

But that's not all. Right now, Social Security is facing a serious shortfall that, if left unaddressed, could force a cut in benefits for all recipients as early as 2034. Right now, that benefits cut is projected at 21%, but that number could change as that dreaded deadline gets closer. In other words, there may very soon come a time when Social Security replaces even less income for the average worker -- and that's not good news.

Take Social Security out of the equation

Chances are, Social Security will be around in some shape or form once you kick off your retirement. But whether it'll provide a meaningful amount of income for you is a different story. A smarter bet, therefore, is to save aggressively for your golden years, invest your savings wisely, and use Social Security as gravy -- money to travel, pay for more hobbies, or perhaps spoil your grandkids.

And the best part? You don't necessarily have to part with a ton of your earnings to build substantial savings. You just need to save consistently over a long period of time, and invest in a manner that's likely to fuel your savings' growth -- namely, stocks.

The stock market has historically delivered around a 9% average yearly return on investment. Now let's assume you invest heavily in stocks and score an average annual 7% return -- a slightly more conservative figure to work with. Here's what your total savings value might amount to if you were to sock money away over a 40-year period:

Monthly Savings Amount

Total Accumulated Over 40 Years
(Assumes a 7% Average Annual Return)








$1.19 million


$1.43 million


$1.67 million


$1.91 million


The lower down the table you get, the more impressive those ending balances start to look. And while it obviously takes more sacrifice and discipline to part with $800 a month as opposed to $200 or $300, there's a lot to be gained by pushing yourself to do as well as you can on the savings front.

Retirement will cost more than you think

If you're still skeptical about the need for personal savings in retirement, look at it this way: Most of the expenses you're forced to bear during the latter part of your working years will still exist in retirement.

You might have your mortgage paid off, but rising property taxes and home repair costs could easily offset that. You might not have to pay to commute, but if you own a car, the bulk of that expense will come in the form of a monthly auto loan, insurance, and maintenance -- not fuel. You'll still need to pay for heat, electricity, water, cable, phone service, food, and clothing. And there's a good chance your healthcare and leisure costs will climb in retirement, since medical issues tend to creep up as we age, and you'll have more free time on your hands that you'll need to pay to occupy.

The point, therefore, is to fall back on your own savings more so than Social Security, and use those benefits as a means of supplementing an already healthy stream of income. Take the opposite approach, and there's a good chance you'll wind up cash-strapped in retirement, and miserable because of it.