No. Social Security will not exist for millennials.
Just kidding, I don’t really know (nobody does)…but that’s my prediction and definitely what I am planning for. If it does exist, I doubt it will have the same benefits and payouts for millennials that it currently does for boomers.
I figured I’d write this one while it was still fresh on my mind. I literally just got back from spending three hours at the local Social Security office with my wife and mother in-law. That place sucks. Big time. SUCKS.
Because we have had some things happen in our family over the last couple of weeks, I’ve unfortunately had a crash-course in our Social Security system. I think that it does help a lot of people (especially those who are truly disabled), and is a decent supplement for boomers who have worked hard and are facing retirement.
The problem is…the program spends more money than it takes in and has been since 2010. According to the Social Security website, there are sufficient funds available for their existing payouts until 2035.
What happens after 2035?
There is a major likelihood that both us and the Gen-X people will see a major (think 20% or more) reduction in benefits. In short – don’t make SSI the centerpiece of your retirement plan. If you truly believe it will still be there, I’d consider it as more of a bonus supplement than your main strategy.
Here are a few things you should be doing in case Social Security no longer exists when we retire:
Max. It. Out.
If you have an employee sponsored 401k, you need to make sure you are maxing that bad boy out every year. Employer matches are basically free money, and by maxing out your contributions you are growing your nest egg exponentially with compound interest!
Max! It! Out! (Again)
If you are self employed like me or just don’t have a 401k option, you’re screwed when it comes to the employer match. The next best thing awesome people like us can do is to open up a traditional or Roth IRA and max that out. You’ll get great tax benefits with either one, and you can trade inside the account as if it is a normal brokerage account.
Start Saving….right n-o-w.
The unfortunate reality is that some of us either won’t make it to retirement age (it could be freaking 75 for us!) or won’t be able to work for the years leading up to it. Start trying to put away money now, even if it’s a ridiculously low amount. We have TIME on our sides still, so the sooner you start stashing away $$$ the better it will be for you or your family during hard times later on.
Work Work Work Work Work
Focus on growing your career however you can. I know a lot of us personal finance bloggers constantly talk about spending less (to a fault almost), but making more money is important as hell too. Don’t get complacent, and absolutely don’t resign yourself to low paying jobs.
If you ever feel stagnant in your life or job, you’re losing. Period.
Pay down and avoid debt
Seems like a no-brainer, but you’d be surprised how many people don’t do it. Hint: that’s why this site makes money. Every time you finance a car or over-finance a house, you are basically pushing back your retirement. Old you is going to be so pissed at young you.
Give future old you a break and get aggressive with saving, investing, and paying down debt. Social Security won’t help us much.
Live differently. Your bank accounts will thank me later. ~M$M
Hi Bobby, I share your thoughts.
Social security is been a failure and can’t survive. Not only in USA but around the world.
I believe it failed because is a kind of communism system that push people to do less instead than more.
Why someone should go to work when the government send FREE cheques every month?
I like the pig! So cool
From a disability standpoint I think the system has helped a lot of people. Most of the boomers I know haven’t actually hit retirement yet so no word from them on how helpful it is. I just don’t want my people to rely on it!
And likewise, don’t expect Medicare to be around to help much either! New report out this week with an update saying the Medicare Trust Fund will run out of money in 2028 (a revision from last years report that estimated 2030). So that picture isn’t getting any better either. Word to the wise, don’t rely on the government…
That’s basically my strategy – I’ve got to be self-sufficient, no guarantees for 30 years down the road!
There are some simple and surprising things which can be done now to protect Social Security for all.
Saw the calculators you sent – very cool!
Very much in agreement with you here! I don’t think the UK state pension will be around when I’m older, or if it is it’ll be so much smaller, and you’ll need to be so much older that it isn’t worth thinking about! To be honest, with the pension age currently being nearly 70 anyway, it doesn’t form part of retirement plans as I’m hoping to have left work a long time before that!
I don’t think I would mind working at 70 if it was something I really enjoy, but who knows!
I absolutely agree that people our age cannot rely on Social Security for retirement. That would be crazy to do! Investing, paying off debt, living on less, and increasing income is the perfect recipe for a relatively secure future. Thanks for making this piece so practical.
No problem! Just not something we think about very often.