Jul 24, 2024
Amanda and Andrew Meindl of Wauwatosa, Wisconsin, went to their financial adviser with an unusual request. The couple asked for help to prepare for a retirement with no Social Security benefits.
“We’ll plan like we’re going to get nothing," Amanda told The Wall Street Journal.
Advertisement
Andrew commented that their financial adviser "thought I was a nutjob" when the couple, who are in their mid-30s, made the request.
They’re not alone in their concerns about whether Social Security will be available for them by the time retirement age rolls around.
Gallup polling has found that 47% of non-retirees don't expect to receive a benefit from the Social Security Administration (SSA), while a comprehensive study from the SSA covering 50 years showed Americans have long been skeptical about their prospects of receiving payments.
But are those concerns justified and, if so, how should would-be retirees prepare for a future with this government lifeline depleted?
Is a future without Social Security a reality?
While non-retirees have reason to fear for the future when it comes to Social Security, the idea that seniors will get no benefits whatsoever is simply unrealistic.
The bulk of Social Security is funded by payroll taxes, and so as long as there are workers there will be money coming in. The problem is there’s a gap between that amount and the benefits going out. This is normally covered by a pair of trust funds, and if these funds were combined, they would be expected to run dry by 2035.
Advertisement
But that doesn't mean benefits would run out. It’s projected there would still be enough funding at that time to pay out 83% of scheduled benefits. Lawmakers also have time to shore up the program, so hopefully any shortfalls will be addressed before cuts occur.
Still, future retirees like the Meindls may prefer not to count on getting benefits when the future of Social Security is out of their control.
Preparing for life without Social Security income isn't the worst idea, not because you're likely to end up with nothing, but because doing so will encourage you to save more for retirement. As Amanda said, while the couple plans for no benefits, they'll also "hope we get something and then maybe we’ll have enough."
Must Read
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and the simple steps to fix it ASAP
- Robert Kiyosaki begs investors not to miss this ‘explosion’ — says this 1 asset will surge 400% in a year
- Vanguard reveals what could be coming for U.S. stocks, and it’s raising alarm bells for retirees. Here’s why and how to protect yourself
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
Plan for a future without retirement benefits
The Meindls decided to take their future into their own hands when their adviser couldn't help them — the financial-modeling software apparently wouldn't allow for a scenario that didn't include Social Security. Instead, the couple told the Journal, they've chosen to invest in mutual funds, gold and cryptocurrency.
While mutual funds are a standard part of many people's retirement portfolios, both gold and crypto are considered alternative investments — and they're considered risky because they don't have a proven track record of consistent returns.
If you're set on investing in these assets and are OK with a lot of volatility and risk in exchange for a higher potential upside, you’ll also need to learn how to invest in them, as it's not always straightforward.
Advertisement
You can buy physical gold like bars or coins, but they can be costly and expensive to store. You also have the option to open an IRA that deals in precious metals, to purchase gold stocks or to purchase gold ETFs.
When it comes to crypto, you can purchase different coins from tailored exchanges and keep them in a digital wallet.
Because these are volatile investments, be sure you understand what you're doing before you dive in. You can also take a simpler approach and put money into index funds that track the performance of the stock market. You can invest after contributing to your company's 401(k) or an IRA account.
Whatever you choose to invest in, saving enough to get by without Social Security can open doors for you, including retiring while delaying your Social Security claim, as putting it off until age 70 results in bigger checks. You also won't face hardship if an automatic benefits cut happens, or if lawmakers make changes that shore up Social Security but leave you with less money than anticipated.
You can put your retirement security back in your own hands instead of leaving it in the hands of the government, which you may not trust to provide.
You May Also Like
- Turning 50 with $0 saved for retirement? Most people don’t realize they’re actually just entering their prime earning decade. Here are 6 ways to catch up fast
- This 20-year-old lotto winner refused $1M in cash and chose $1,000/week for life. Now she’s getting slammed for it. Which option would you pick?
- Warren Buffett used these 8 repeatable money rules to turn $9,800 into a $150B fortune. Start using them today to get rich (and stay rich)
- Here are 5 easy ways to own multiple properties like Bezos and Beyoncé. You can start with $10 (and no, you don’t have to manage a single thing)
Christy Bieber has 15 years of experience as a personal finance and legal writer. She has written for many publications including Forbes, Kilplinger, CNN, WSJ, Credit Karma, Insurify and more.
