Millennials Aren't Counting on Social Security. So Why Aren't They Saving More?

The looming demise of Social Security as we currently know it is definitely on millennials' collective mind. According to T. Rowe Price's recent Retirement Saving & Spending Study, a good 60% of millennials anticipate that Social Security will indeed be bankrupt by the time they're set to retire. (For the record, Social Security is not disappearing anytime soon, despite many Americans' fears.)

While it's a good thing that millennials are aware of Social Security's precarious long-term standing, what's disturbing is that many aren't taking steps to compensate for that expected loss of retirement income. According to a 2015 study by The Insured Retirement Institute (IRI) and the Center for Generational Kinetics (CGK), only 29% of millennials are actively planning and saving for retirement.

This doesn't just come down to laziness and financial irresponsibility. Many millennials want to save for retirement but feel they simply can't. Factors such as high living costs, student debt, and limited job mobility have kept many millennials from maxing out their retirement savings.

On the other hand, while some millennials' retirement plans are rooted in reality, others are far from it. The IRI and CGK study found that 15% of millennials are actually hoping to win the lottery to fund retirement, while 11% are banking on an inheritance that will give them the wiggle room to save. Furthermore, 70% of millennials expect to spend less than $36,000 a year in retirement, which is 30% less than the current national average for folks aged 65 to 74.

While the retirement picture may seem bleak, millennials have one powerful weapon in their arsenal: time. With retirement decades away, millennials can take steps to change their fate, even on the off chance that Social Security is indeed out of the picture by the time they reach retirement. Millennials should also remember that Social Security is only supposed to replace about 40% of pre-retirement income in the first place, so even if it's wiped out within the next couple of decades, there are still ways to retire in comfort.

Save enough to max out on employer matching dollarsIf your company offers any sort of matching contribution to your 401(k), you'd be a fool not to take advantage of it. An employer match is free money, no strings attached. Let's say you make $80,000 a year and your company offers a 50% match up to 4% of your salary. All you have to do is allocate $3,200 a year to your 401(k) for your employer to hand over an extra $3,200 to help you build your retirement savings.

Get aggressiveIf you're decades away from retirement, now's the time to put some money into riskier investments with larger payoffs. Let's say you put $10,000 into a 401(k) plan each year but keep your money in relatively conservative investments that only give you a 5% return. Over the course of 30 years, you'll have saved about $700,000. Now let's say you opt for more aggressive investments that deliver an 8% return. After 30 years, your retirement portfolio will be worth upward of $1.2 million.

Don't keep your raisesWhether your pay increases are performance-based or your company doles out a standard cost-of-living raise each year, don't keep that extra money for your day-to-day living expenses. Instead, make a point of automatically allocating each raise you get toward your retirement savings. If you set up an automatic savings plan and adjust it each year before your pay increase kicks in, then you won't miss that extra money while it's hard at work building your retirement fund.

Yes, there's a possibility (however remote) that millennials may have to tackle retirement without Social Security as an underlying safety net. But if you're committed to a financially stable retirement and take steps to prioritize saving now, then you can more than make up for those missing government paychecks. Any Social Security benefits you may receive will just be icing on the cake.

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