This is why you shouldn’t count on Social Security

Many Americans rely on Social Security benefits to see them through retirement, but how much should they really be depending on those checks?

Not very much, experts said.

Social Security is not being used as it was intended, said Ric Edelman, executive chairman and co-founder of Edelman Financial Services in Fairfax, Va. and author of “The Truth about Your Future.” When Congress and President Franklin D. Roosevelt created the system in 1933, the program was designed to be a safety net for Americans — for those who had no financial support. Now, “a great many Americans are relying heavily on Social Security to maintain their lifestyle in retirement.”

More than 66 million people received Social Security and/or Supplemental Security Income in August, more than 46 million of which were Americans 65 and older. Social Security makes up a majority of cash income for 61% of elderly beneficiaries, and a third rely on this benefit for 90% or more of their income, according to the Center on Budget and Policy Priorities, a governmental budget policies think tank based in Washington, D.C. The average monthly retirement benefit under the Old-Age and Survivors Insurance was $1,326, according to the Social Security Administration. Retired workers received an average of $1,371 while spouses of retired workers received $714 and children of retired workers received $659. “Social Security is funding as last resort, and if it goes away there is no government program to serve as a fall back,” Edelman said. “This is the fall back.”

How did Americans get here?

Unfortunately, it’s a familiar story: many Americans just haven’t saved enough for retirement, either because of poor planning or an inability to put money away for their futures. Most Americans have access to some sort of workplace savings account, such as a 401(k) plan or 403(b) plan, but there are still 40% who don’t, said Robert Reynolds, president and chief executive officer of Boston-based investment management firm Putnam Investments and author of “From Here to Security: How Workplace Savings Can Keep America’s Promise.” The good news? Employees are starting to take retirement saving more seriously, as financial services see an uptick in opened employer-sponsored accounts and contributions, as well as more engagement between employers and employees on financial well-being. There are also other sorts of retirement accounts available outside of work, such as traditional or Roth individual retirement accounts.

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