Retiring can be an intimidating prospect, given the many financial unknowns involved. And there's just something unsettling about giving up a steady paycheck and living on savings and Social Security instead.

The latter has older workers especially worried. In fact, 59% are concerned that Social Security won't have adequate funds to pay their benefits, according to a recent Nationwide survey.

If you share this concern, you should know that it's valid. But you should also know that there's one important step you can take to alleviate it.

Closeup of older man with serious expression, resting his chin on his hand


Save for your own future

The latest Social Security Trustees Report painted a somewhat bleak picture about the program's financial future: Once its trust funds run out, which could happen as early as 2035, recipients could see as much as a 20% reduction in scheduled benefits. That's bad news for current seniors, but it's also bad news for those who expect to rely on those benefits once they retire.

The solution? Don't rely too heavily on those benefits. Rather, save for your own future instead. You can do so by contributing steadily to an IRA or 401(k), and the sooner you start, the better.

Currently, IRAs max out at $6,000 a year for workers under 50, and $7,000 for those 50 and over. Annual contribution limits are much higher with 401(k)s -- $19,000 for workers under 50, and $25,000 for those 50 and older. But you don't have to max out a 401(k) to build a sizable nest egg for the future. You just need to save consistently from a young age, and invest your savings in a manner that lends to reasonably aggressive growth. For the most part, that means loading up on stocks, especially when you're younger.

Let's assume you're able to sock away $500 a month for retirement in either an IRA or a 401(k), and that your savings generate an average annual 7% return on investment, which is a couple of percentage points below the stock market's average. Here's what your savings balance will look like, depending on the length of time during which you make contributions:

Years of Saving $500 a Month

Ending Balance With an Average Annual 7% Return


$1.2 million










As you can see, the more time you give yourself to save for retirement, the less reliant you'll need to be on Social Security. Of course, if you're already older, you may need to set aside more than $500 a month to have a shot at some of the numbers above. But if you're 50 with no money saved, and you max out your 401(k) at today's $25,000 limit for 17 years, you'll end up with $771,000, assuming that same 7% return.

Keep in mind that to max out a 401(k), you'll need to make some serious lifestyle adjustments, which could include downsizing your home, cutting back on leisure, or even getting a second job. But in exchange, you'll buy yourself more financial security for your golden years.

Though it's too soon to tell whether Social Security will actually be forced to implement cuts, one thing's for sure: Those benefits aren't designed to sustain you in the absence of other income. Social Security will only replace about 40% of your pre-retirement income if you were an average earner, and most seniors need roughly double that sum to live comfortably. If you want to enjoy your retirement, focus less on Social Security, and concentrate more on building savings and investing that money wisely for added growth.