Why I’m Not Counting on Social Security, and Neither Should You

Social Security is an important income source for many current retirees, but many workers fear benefits won’t be available for them.

I’m not among those who worry about benefits running out because I know that won’t happen. Since Social Security continues to collect taxes from current workers, its funding source won’t ever run dry and payments will always keep coming.

My confidence that benefits will be there for me does not, however, mean I’m counting on Social Security as an income source in retirement. In fact, I’m specifically not factoring in my benefits when estimating how much savings I’ll need. And there’s a very simple reason why that’s the case.

There are no guarantees when it comes to your Social Security benefit amount

When I’m making my plans for retirement, I want to be absolutely sure I will have all of the money I require to cover necessities and to enjoy my newfound leisure time after I stop working. Unfortunately, if I bank on Social Security to provide some of my income, I could end up with a shortfall because the amount of benefits I’ll end up with is simply too uncertain. And there are two reasons why that’s the case.

First, and most importantly, the amount of Social Security benefits you receive as a retiree is determined based on average wages over your career and based on the age when you claim your first check. Social Security becomes available as soon as age 62, but every retiree has a full retirement age (FRA) that’s much later than that. Unfortunately, if you claim benefits ahead of your FRA, you could shrink your standard benefit by as much as 30%.

I don’t want to claim my Social Security benefits early, but I’m also aware that many people plan to work longer than they actually do. I’m not willing to count on getting a larger Social Security benefit only to find that life circumstances mean I have to start my checks sooner than I hoped, leaving me with a shortfall.

The second issue is that the government could make changes to Social Security before I am ready to retire since it will be decades before I leave the workforce. Although Social Security’s funding can’t run out, the program’s trust fund is slated to run dry well before I retire. If that happens and the government doesn’t act, a benefits cut will become necessary because the revenue coming in will only provide enough money to pay around 3/4 of the promised amount.

Since there’s a risk benefits could be cut automatically or could be cut if lawmakers take action to shore up Social Security, I’m even less certain about how much money this income source will actually end up providing to me.

Here’s what I’m doing instead of counting on Social Security

Instead of planning my retirement based on assumptions about Social Security when I can’t really control how much I’ll end up with at retirement, I’m saving enough so I can survive without Social Security.

That way, whatever amount these benefits do provide will be extra that I can use to enjoy life. I’d recommend anyone else who is serious about their retirement security follow the same approach.

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