I am not counting on Social Security to help fund my retirement. I know I will get benefits, but I'm not making them a key part of my retirement plans.
To the contrary, I'm assuming I'll need to fund retirement for many years without even $1 from the Social Security Administration, and I'm taking steps to do just that. Here's why that's the case.
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I'll have no Social Security income for years
The biggest reason I'm not counting on Social Security to help support me is because I plan to rely on my savings for years without getting any benefits.
See, I don't want to keep working until I am 70 years old. In fact, I'm hoping for early retirement. But I also want to put off claiming my Social Security benefits until age 70. I'm aiming for that because that will give me the largest monthly payment and the greatest statistical chance of earning more benefits over the course of my lifetime.
If I retire at, say, age 60 and I don't end up claiming Social Security until age 70, I will have to support myself for a full decade without any benefit checks coming in. I need to make sure I have plenty of money to do that. So I'm building a retirement nest egg that doesn't rely on Social Security benefits at all.
My benefits could end up smaller than anticipated
There's another big reason why I'm not planning on relying on Social Security: There's a chance I could end up with less money than anticipated from these benefits.
I don't worry about Social Security paying me nothing -- although I know many people my age have this fear. The reality is, Social Security is in some potential future financial trouble because the trust fund for the program is slated to run dry in the coming years. But even if it does, tax revenue will keep coming. The current workers paying into the system will generate enough money to pay around 3/4 of the benefits seniors have been promised.
There's a chance I'll end up getting hit by a benefits cut if the trust fund runs out or if lawmakers take steps to fix the issue that also result in a reduced benefit. There's also a chance I might have to claim my benefits before my desired age of 70, which could also result in a smaller check than I'm anticipating.
Since there are multiple possible scenarios in which I end up with less Social Security money than planned, I'm not counting on getting the benefits promised to me. If I do end up with all of the retirement income my Social Security earnings statement suggests I'll have, that will be a bonus for me that allows me to spend more in retirement. But I'm not going to assume I'll have these funds and then struggle to live without them if things don't work out as planned.
Counting on Social Security means putting your fate in the hands of politicians to do the right thing -- and assuming you'll be able to get the amount of benefits you anticipate at the age you hope to claim them. Since you can't guarantee that will happen, don't count on Social Security. Focus instead on saving enough money so you won't have to worry about what happens to these benefits in the end.
