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4 Steps to Surviving Retirement Without Social Security

By Katie Brockman – Aug 17, 2020 at 11:33AM

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Social Security is on shaky ground, but it's still possible to enjoy a comfortable retirement without it.

Social Security has been in the headlines a lot lately, and not necessarily for good reasons. As President Donald Trump continues to push for payroll tax cuts -- or eliminating payroll taxes altogether -- many experts are voicing their concerns about how that will affect the future solvency of Social Security.

They have reason to worry, too. Payroll taxes are the primary source of income funding the Social Security program, and without them, benefits could potentially disappear. Even if payroll taxes are reduced and not eliminated, that could still result in benefit cuts for retirees.

That's especially concerning to the 20% of baby boomers who have no other retirement income besides Social Security, according to a recent survey from Nationwide, but it can spell trouble for all retirees. While nobody knows for sure what the future holds for Social Security, it may be a good idea to plan for retirement under the assumption that you won't get much financial help from the program. Here are four steps that can help you to do that.

Older woman sitting behind a laptop looking at documents

Image source: Getty Images.

1. Calculate your retirement number without accounting for Social Security benefits

As you're planning for retirement, one of the first steps is to estimate how much you'll be spending each year. With that number in mind, you can break that down into how much will have to come from your retirement fund versus other income sources, such as a pension or Social Security benefits. From there, you can run your information through a retirement calculator to determine your retirement number -- or the amount you should have saved by the time you retire.

Because of the uncertainty surrounding Social Security, it may be best to leave your future benefits out of the equation. You'll likely need to save more, which may be a challenge if you're getting close to retirement age, but it's better than finding out during retirement that benefits are disappearing and your savings aren't enough to cover your basic expenses.

2. Consider making budget cuts to save more

If you suddenly need to save more than you'd planned, it may be tough to find that extra money in your budget. Money is especially tight right now for millions of Americans, and saving more for retirement might feel impossible.

Do your best to save whatever scraps you can, though. Start tracking your expenses, if you don't do so already, and see if there are any areas in your budget where you can cut back. Saving even a little now will add up over time, so no amount is too small to stash in your retirement fund.

3. Brainstorm ways to cut back on expenses in retirement

Saving more is challenging, so to make it easier, try to think of ways you can reduce your expenses in retirement so you won't need to save quite so much.

If you're open to making major life changes, you may consider moving to a more affordable city or neighborhood in retirement, for example, or downsizing to a smaller home. For less drastic changes, you might think about finding new inexpensive hobbies or changing your travel plans to destinations that are less costly.

4. Adjust your investment strategy to maximize your savings

Stashing more in your retirement fund is only half of the equation; it's also important to ensure your investments are allocated properly to maximize your savings.

When you're still decades away from retirement, your portfolio should be allocated more toward stocks. This is inherently riskier, but your savings will grow faster and you have plenty of time to recover from market downturns. As you get older, though, your investments should shift toward the conservative side and more of your portfolio should be allocated toward bonds. You'll still want to invest some money in stocks so your investments continue to grow, but by investing more conservatively overall, your money will be more protected against market downturns.

Social Security benefits are an integral part of many Americans' retirement plans, but there's a chance they won't be as dependable as they once were. If payroll tax cuts are in the future, it could have an impact on your retirement. By planning for it now, though, you'll be prepared no matter what the future holds.

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