Social Security turns 90 in 2025, and tens of millions of Americans still depend on the program's funds to support them financially in retirement.
A recent Bankrate report noted 78 percent of U.S. seniors “are reliant on Social Security to pay necessary expenses.”
According to the report, Americans are highly likely to rely on Social Security benefits after they retire. 56 percent say they are “very reliant,” Bankrate noted.
That news comes at a time when Social Security funds appear to be thinning out. The Committee for a Responsible Federal Budget expects program benefits to be cut by 24 percent by 2032, amounting to a roughly $18,100 annual loss for the average middle-class married households.
“With each year that elected officials fail to address Social Security’s funding shortfall, the options for solutions narrow, increasing the likelihood of more difficult choices ahead,” said Mark Hamrick, senior economist at Bankrate, in a statement. “Fortunately, we do possess control over our own personal financial decisions and planning.”
US Retirees Need to Find Alternative Income Channels Beyond Social Security
With Social Security’s financial future very much up in the air, U.S. retirees (and future retirees) shouldn’t count on a full SSA payout, although they may still get one. The smart move is to begin developing income pipelines that fall outside of the Social Security realm.
“Social Security was never meant to last,” Kristin Thompson, a financial adviser with Cetera Advisor Networks LLC., told NTD. “When you factor in how many individuals can benefit from Social Security, including ex-spouses and children of certain ages, it’s no surprise it may run out.”
The first piece of retirement savings education Thompson provides to her clients is clear and direct. “It’s on you to save for your retirement if you want that retirement to resemble your quality of life you have now,” she said.
These retirement savings tips should help get the job done.
Generate outside income on your own.
To reduce reliance on Social Security to meet basic needs, older Americans should get busy earning some cash.
“Retirees should cultivate other streams of income such as performing a part-time job, freelancing as a consultant in an area of expertise, and/or monetizing a hobby,” Thomas Brock, CFA, CPA at Annuity.org, told NTD.
Create a serious household-income-generation plan beyond just working.
Simultaneously, retirees can downsize to a smaller home and pay down high-interest debt. “Additionally, implement a conservative budget that enables you to maintain some flexibility in the face of rising costs and unexpected developments,” Brock advises.
Build emergency savings.
Retirees should consider setting aside a separate emergency fund of $500 to $ 1,000.
“This can cover those smaller but stressful surprises,” Devin Miller, CEO at SecureSave in Spokane, Washington, told NTD. “Once you have this set up, you don’t have to pull money out of your retirement fund to replace tires or handle an unexpected dental bill.
Automate payments to yourself.
If you’re still working part-time or have access to workplace benefits, check for automatic savings accounts that you can set up that take money straight from your paycheck.
“Automation makes all the difference,” Miller said. “When you don’t see the money, you don’t miss it, and it helps you build the habit without thinking about it. This same idea works in retirement too: set up a monthly transfer to a separate savings account and forget about it.”
The views and opinions expressed are those of the interviewees. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. NTD does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. NTD holds no liability for the accuracy or timeliness of the information provided.