If you've heard the rumors that Social Security is on the verge of bankruptcy, you should know that they're grossly exaggerated.

Yes, Social Security is facing some financial challenges. In the coming years, it's expected to owe more money in benefits than it collects in revenue, largely due to a mass exodus of baby boomers from the labor force. And while the program has trust funds it can tap to bridge that gap for a limited period of time, Social Security's cash reserves are expected to run dry by 2035.

Now, this doesn't mean that Social Security will have to stop paying benefits completely in 2035. Rather, it may need to reduce benefit payments to the tune of around 20%.

A person at a laptop.

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That's a huge deal for seniors who are very reliant on those benefits right now. But it's worlds better than having benefits disappear completely.

However, while Social Security is not actually going bankrupt, pretending it is could work to your advantage. So you may want to tell yourself to write off your benefits completely -- and take retirement savings matters into your own hands.

The push you need to focus on savings

Many people don't make an effort to build a nest egg for retirement because they assume they'll just fall back on Social Security instead. But doing so could mean facing a massive financial shortfall.

Social Security is only designed to replace about 40% of your preretirement wages if you're an average earner. And that's before benefit cuts potentially come into play.

But most seniors need a lot more income than that to cover their costs in full. And if inflation continues at its recent pace, retirees who get most or all of their income from Social Security will definitely feel the pain.

That's why it's actually a good idea to assume the worst about Social Security -- even if benefits aren't going away. That way, you're more likely to be motivated to build savings of your own. And the earlier in life you do, the better.

Let's say you start setting aside $400 a month for retirement at age 27, with the goal of wrapping up your career at age 67. If you're able to score an average annual 8% return on your investments (which is actually a bit below the stock market's average), you'll end up with over $1.2 million. That's a nice return, given that you're only putting in $192,000 of your own money.

But look what happens if you wait 10 years to start contributing that $400 a month. If you shrink your savings window to 30 years instead of 40, you'll only be looking at a nest egg worth around $544,000. That's a lot of cash to bring with you into retirement, but it's certainly not $1.2 million.

Though Social Security is by no means on the cusp of going bankrupt, pretending that's the case might serve you well. And it could act as the push you need to focus on building savings through the years.