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