Why You Can’t Rely on Social Security for Retirement


Sooner than you think, there will come a time when you can no longer work. Perhaps you have grown too tired of the daily grind, or perhaps your fading health will prevent you from maintaining lasting employment. Regardless of the reason, you will need to retire.

Unfortunately, most Americans aren’t adequately prepared for retirement. A 2019 study found that 64 percent of Americans lack sufficient retirement savings, and an astonishing 48 percent of them are apathetic about their lack of retirement plans.

Many of these Americans believe that they will be able to survive their retirement on Social Security benefits alone. Indeed, the Social Security Act of 1935 designed the program to provide for the nation’s seniors and ensure sufficient employment turnover for younger generations. Yet, Social Security has never been enough to keep the elderly in a comfortable lifestyle — and you might not be able to trust that Social Security will exist when you approach retirement age.

Social Security Isn’t Enough

Social Security benefits are calculated based on your age and your lifetime earnings, adjusted for inflation. There are a few factors that can increase or decrease your benefit, like waiting five years to take your benefits at 70 instead of 65 or working a government job with a tax-exempt pension. Additionally, supporting a dependent and having a disability can provide additional benefits every month.

Still, your benefit is closely linked to your income as a working person, which means if you lived paycheck-to-paycheck throughout your career, you won’t gain a luxurious Social Security payment every month. In fact, it is likely that your lifestyle will decrease in quality when you make the move to full Social Security support.

This is particularly true as your medical costs increase with your age. On average, adults over 65 spend more than $6,000 per year on healthcare — with the assistance of Medicare. As healthcare costs rise, seniors are forced to pay more out of pocket, and many relying entirely on Social Security are just one health crisis away from utter financial ruin.

Ultimately, Social Security benefits alone might keep you alive, but only barely. Considering that most retirees expect to have some comfort in their old age, Social Security benefits alone are not a viable retirement strategy.

Social Security Could Disappear

The Social Security Act was first signed into law in 1935 as a method for ensuring the welfare of the American people regardless of disability or age. It was an exciting social insurance program designed to provide greater comfort to seniors and allow them to retire to make room for younger generations of workers. However, despite being an element of American life for almost a century, Social Security could disappear within the next decade.

The current administration and its associated political party have long maintained a negative attitude toward most social programs. Though Trump hasn’t said definitively that he is interested in eliminating Social Security benefits altogether, he and his administration have taken shots at the program by slashing payroll taxes, which are directly responsible for funding benefits.

Prior to Trump’s tax cuts, the current savings fund that dispenses Social Security payments only had enough money to pay currently scheduled amounts until 2035; now, the fund will likely run dry in 2034, giving lawmakers less time to reform Social Security for another century.

Though most legislators believe that a new Social Security plan will be in place before the fund is fully depleted, there is absolutely no guarantee. As a result, there is a very real possibility that you might pay Social Security taxes but be unable to draw Social Security benefits when you retire.

Retirement Has Three Legs

Experts say that the strongest retirement plan has three legs: Social Security, employer contributions, and personal savings. Just as a chair cannot balance on one leg alone, you cannot expect to thrive in retirement with only Social Security to hold up your lifestyle. You should take advantage of retirement planning tools to help you better understand how much savings you need to accrue before you retire to ensure you live comfortably into seniority. You should also talk to your employer to better understand the retirement benefits available to you.

The years of adulthood fly by, which means retirement is approaching faster than you anticipate. You should commit today to developing a robust retirement plan that uses Social Security benefits as a perk.

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