Social Security is a key source of income for many retirees, but if you’re a millennial or Gen Zer, you might be concerned about whether the program will still be available when it’s your turn to retire.
This worry is common among younger generations, as discussions about Social Security running out of funds have been ongoing for years.
Former President Donald Trump’s proposed plan to cut Social Security taxes could accelerate this issue. While current retirees may benefit in the short term, such changes could leave future generations at risk.
As a financial coach and author of Crush Your Money Goals, I remind my clients that Social Security alone is rarely enough to cover all expenses in retirement. Constance Craig-Mason, a National Social Security Advisor, shares this perspective:
“Financial well-being isn’t just about the numbers—it’s about stability and peace of mind. This uncertainty highlights why Social Security should be viewed as a foundation, not the sole pillar of retirement planning.”
Regardless of what happens with Social Security, you shouldn’t rely on it as your only source of retirement income. Here’s how Social Security works and what you can do to secure your financial future.
How Social Security Earnings Work?
Social Security is a government program funded by payroll taxes. Employees contribute 6.2%, their employers match it, and self-employed individuals pay the full 12.4%.
However, the money you contribute isn’t stored in a personal account for you. Instead, your contributions go toward paying benefits to current retirees. When you retire, your benefits will come from the taxes paid by the next working generation.
Your benefit amount depends on several factors, including your earnings over your 35 highest-earning years, your marital status, and the age at which you retire.
While you can begin collecting benefits at 62, waiting longer can increase your monthly payout. You can use the Social Security benefits calculator to estimate your future payments.
Will Social Security Still Exist When You Retire?
Yes, but potentially with reduced benefits. According to the Social Security Administration’s 2024 annual report, the program can fully fund benefits until 2035. After that, benefits may be reduced to 83% of their current levels.
For example, the average Social Security payment in January 2025 is $1,976 per month. If future benefits drop to 83%, that amount would decrease to about $1,640 per month.
Is Social Security Enough for Retirement?
Social Security is an important part of many retirees’ budgets, but it’s rarely enough on its own. Even if you live frugally, an average payout of $1,976—or $1,640 after 2035—may not be sufficient for housing, healthcare, and other expenses.
To ensure financial security, you need additional sources of income. Here’s how you can start planning now.
Steps to Secure Your Retirement
Instead of worrying about Social Security’s future, take action now. Even small steps can make a big difference over time. Here are strategies I used to retire early in my forties:
1. Set Up a Retirement Account
If saving money seems difficult, start by setting up a retirement account so it’s ready when you can contribute. Research your options and speak with retirees to learn how they prepared for their future.
2. Max Out Your Employer-Sponsored Plan
If your job offers a 401(k) or similar retirement plan with an employer match, contribute enough to get the full match. This is essentially free money that helps grow your savings faster. Due to changes from the SECURE 2.0 Act, some part-time employees may also be eligible for these plans.
For 2025, you can contribute up to $23,500 to a 401(k). If you’re 50 or older, you can add an extra $7,500.
3. Open an IRA
After maxing out your 401(k), consider an Individual Retirement Account (IRA). The 2025 contribution limit for an IRA is $7,000.
A Roth IRA allows you to contribute post-tax dollars, while a traditional IRA is funded with pre-tax dollars and taxed upon withdrawal. Choosing the right one depends on your current and future tax rates. Many of my clients mistakenly invest in taxable brokerage accounts instead of IRAs, unknowingly losing money to taxes.
4. Pay Down Your Mortgage
Lowering your expenses helps stretch your retirement savings. Owning your home outright can significantly reduce your monthly costs.
I paid off $300,000 in debt, including my mortgage, in three years. If you receive a tax refund, bonus, or other windfall, consider using it to pay down your mortgage. Every extra payment reduces your balance.
5. Reduce Housing Costs
Relocating to an area with lower taxes and housing expenses can help you save more for retirement. My husband and I moved from New York City to Charlotte, North Carolina, which lowered our living costs dramatically.
If a major move isn’t feasible, consider downsizing or looking for a more affordable neighborhood. Renting instead of owning may also free up extra money for savings.
6. Use a Health Savings Account (HSA)
Healthcare is one of the biggest retirement expenses. Tax-advantaged accounts like Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) help cover medical costs while reducing taxable income.
FSAs are employer-sponsored, but anyone with a high-deductible health plan can open an HSA. These accounts make it easier to afford check-ups, prescriptions, and medical procedures, ensuring you stay healthy while saving money.
Focus on What You Can Control.
While the future of Social Security is uncertain, you can take control of your finances today. As Craig-Mason says, “When you combine Social Security benefits with smart saving strategies, intentional money management, and a focus on aligning finances with your well-being, you’re building a retirement plan that’s sustainable and fulfilling—no matter what uncertainties lie ahead.”
The worst mistake you can make? Assuming Social Security will cover all your needs. Start planning now to build a secure financial future.
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