Social Security Is Not Going Broke, but I’m Writing It Off Anyway

American workers seem to be losing their faith in Social Security. An estimated 41% worry about the program "a great deal," according to data from Gallup compiled earlier this year.

But despite the rumors that abound about Social Security's impending doom, I'm here to tell you that the program isn't going broke to the point where it won't be around for future retirees. Rather, Social Security is facing a revenue shortfall that, if left unaddressed, might result in a substantial reduction in benefits for future retirees. And that's a reasonably scary prospect on its own.

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The date at which seniors might see a benefits cut isn't set in stone. Last year, the Social Security Trustees predicted that benefits would be slashed as early as 2034, but in this year's Trustees Report, that unwanted milestone was pushed back to 2035.

Either way, future retirees can't discount the possibility that they won't end up collecting the full benefits they're entitled to. That's one reason I've decided to take Social Security out of my personal retirement equation. But the main reason I've done so is that those benefits were never designed to sustain seniors by themselves, and relying on them seems like a move that could backfire.

Taking savings matters into my own hands

It's not that I don't think I'll get any income from Social Security in retirement. Rather, there are so many variables that will dictate what that income entails, and the unpredictable nature of that setup makes me uneasy. For example, right now, the Social Security Trustees are projecting a potential 20% reduction in scheduled benefits starting in 2035, but if the program's finances take a turn for the worse, that reduction could increase.

Even without a reduction, however, Social Security will only replace about 40% of the average earner's pre-retirement income. But most seniors need roughly double that amount to live comfortably, and frankly, I have no reason to believe I'll be an exception. The things I enjoy doing now, like traveling, dining out, and trying different local activities, are things I'd like to continue doing when I'm older. I also want the option to live in a comfortable home, buy groceries without waiting around for my favorite items to go on sale, and have access to a car if I so choose.

Social Security won't buy me all of those things, even if benefits aren't reduced. That's why I'm not really counting on it to support myself in retirement. Instead, I'm aiming to save enough money to cover my future expenses. If anything, I hope to use the money I get from Social Security to buy myself more options for leisure.

Now, because I'm self-employed, I can save for retirement in a Solo 401(k) or SEP IRA, both of which have higher annual contribution limits than the traditional and Roth 401(k)s and IRAs that salaried workers are limited to. For the past number of years, I've been contributing as much as I've been eligible to put into my retirement account and investing that money in the hopes that it will grow over time.

Meanwhile, I'm not really planning to retire in the traditional sense. Sure, I'll hopefully cut back my working hours when I'm older, but my goal is to continue working in some capacity to not only continuously generate income, but keep myself occupied. (Remember, it doesn't cost money, save for a few cents' worth of electricity, to type on a computer.)

My hope is that between my aggressive approach to savings and my desire to keep working, I'll be able to enjoy retirement without having to concern myself with Social Security in any shape or form. This isn't to say that you shouldn't factor those benefits into your retirement plan if you're working and paying into the system, because again, you'll receive some income from Social Security. Rather, your takeaway here should be to not rely on those benefits too heavily, because if you do, you may be in for a world of financial stress and disappointment.

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