Things aren't looking particularly rosy for Social Security. According to the latest Trustees Report, the program's trust funds targeting retirement and survivor benefits are set to run dry in 2035. Once that happens, the program will only have enough money to pay 80% of scheduled benefits unless Congress intervenes with a fix.
For seniors who get the bulk of their income from Social Security, this clearly isn't good news. Furthermore, it's a problem for workers today without retirement savings -- and there are plenty of them. An estimated 42% of U.S. adults aren't setting money aside for retirement, which means that any sort of hit on the Social Security front could be disastrous.
But while it's easy to start panicking over the fact that Social Security may be deep in the throes of an unsolvable financial crisis, the fact of the matter is that those benefits by themselves were never designed to sustain retirees in the first place. So while Social Security is in a bit of trouble, today's workers can ramp up their savings game to avoid getting hurt.
Save for your own future
Even if Social Security benefits aren't reduced in the future, they still won't suffice in buying you a comfortable retirement. Right now they're designed to replace about 40% of the average earner's pre-retirement income. Most seniors, however, need somewhere in the ballpark of 70% to 80% of their former earnings to live comfortably.
And when you think about the expenses you'll face in retirement, that makes sense. Most of your living costs won't go away once your career comes to an end. You'll still need somewhere to live, a means of transportation, healthcare, and clothing. You'll still have to pay for utilities, and you'll still need to eat. To live on 40% of what you're used to, therefore, would require you to make some serious changes -- and sacrifices -- that could render you miserable when you're older.
For seniors who get the bulk of their income from Social Security, this clearly isn't good news. Furthermore, it's a problem for workers today without retirement savings -- and there are plenty of them. An estimated 42% of U.S. adults aren't setting money aside for retirement, which means that any sort of hit on the Social Security front could be disastrous.
But while it's easy to start panicking over the fact that Social Security may be deep in the throes of an unsolvable financial crisis, the fact of the matter is that those benefits by themselves were never designed to sustain retirees in the first place. So while Social Security is in a bit of trouble, today's workers can ramp up their savings game to avoid getting hurt.
Save for your own future
Even if Social Security benefits aren't reduced in the future, they still won't suffice in buying you a comfortable retirement. Right now they're designed to replace about 40% of the average earner's pre-retirement income. Most seniors, however, need somewhere in the ballpark of 70% to 80% of their former earnings to live comfortably.
And when you think about the expenses you'll face in retirement, that makes sense. Most of your living costs won't go away once your career comes to an end. You'll still need somewhere to live, a means of transportation, healthcare, and clothing. You'll still have to pay for utilities, and you'll still need to eat. To live on 40% of what you're used to, therefore, would require you to make some serious changes -- and sacrifices -- that could render you miserable when you're older.
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