Why You Shouldn’t Rely Solely on Social Security for Retirem

While Social Security is an important part of many retirement plans, depending on it as your main source of income could be risky. With ongoing concerns about the program’s future and the potential for benefit reductions, it’s wise to consider other ways to help secure your financial well-being in retirement. Being proactive and diversifying your income sources can help protect you from the uncertainties surrounding Social Security.

The Future of Social Security Is Uncertain

There’s no denying that Social Security faces challenges. According to recent reports, by 2033, the Social Security Trust Fund could be depleted, meaning the program might only have enough money to pay about 79% of scheduled benefits.¹While Congress may take steps to strengthen the program, there’s no guarantee that benefits will stay the same. If you’re planning for retirement, it’s important to take these uncertainties into account and make sure Social Security is just one piece of a broader financial strategy, rather than the foundation of your retirement plan.

Why You Shouldn’t Depend on Social Security Alone

Social Security was never meant to fully fund your retirement, and with potential benefit cuts on the horizon, it’s more important than ever to plan for alternative sources of income. For most people, Social Security provides only a portion of the money needed to maintain their lifestyle after they stop working. Relying on it too heavily could leave you vulnerable if benefits are reduced or don’t keep up with the cost of living.

Consider creating a retirement plan that doesn’t depend solely on Social Security. Think about the lifestyle you want in retirement, and make sure you’re saving enough now to supplement any Social Security benefits you might receive. This could include building up savings, contributing to retirement accounts like 401(k)s or IRAs, or investing in other income-producing assets.

Explore Alternative Income Sources for Retirement

To build a more secure retirement plan, consider a variety of income streams. Here are a few ways you can prepare for retirement without relying too much on Social Security:

Employer-sponsored retirement plans: Contributing to a 401(k) or similar plan is one of the most common ways to save for retirement. Make the most of any employer matching contributions to boost your savings.

· IRAs: Traditional and Roth IRAs provide tax-advantaged ways to save for retirement. Consider maxing out your contributions each year.

· Investments: Diversifying your portfolio with stocks, bonds, or real estate can create additional income streams during retirement.

· Annuities: For those looking for guaranteed income, annuities can offer a reliable stream of payments over time.

By focusing on these other income sources, you’ll be less dependent on Social Security and more likely to achieve your financial goals in retirement, even if the program undergoes changes.

Work with a Financial Advisor to Strengthen Your Plan

It can be helpful to work with a financial advisor to create a comprehensive retirement plan that goes beyond Social Security. An advisor can help you evaluate your current savings, explore different income options, and create a strategy tailored to your individual goals. Whether you're just starting to save or nearing retirement, having a well-rounded plan in place can make all the difference in helping ensure a comfortable and more secure retirement.

Take Control of Your Financial Future

While Social Security will likely continue to play a role in retirement planning, it’s best not to count on it as your primary source of income. By diversifying your income streams and saving strategically, you have more control over your financial future. The earlier you start planning, the more options you’ll have to help ensure a stable and more fulfilling retirement, no matter what changes may come to Social Security.

¹- Ameriprise Financial: “Did You Know...” May 8, 2024.Compiled by Russell T. Price, Chief Economist