Should I Count on Social Security?

Concerns over the size of the U.S. debt and budget deficit, along with growing numbers of baby boomers retiring, are causing many people to ask whether Social Security will still be around when they need it.

And while there may be changes made to ensure its long-term viability – like potential changes to the benefit age or the payroll tax – we believe Social Security will likely remain an important part of a retirement income strategy. With that said, focus on what you can control when it comes to your future income.

You need to count on investments in retirement

Social Security isn't the silver bullet for retirement – the Social Security Administration estimates it will provide only about 40% of pre-retirement income on average for those retiring now.

This means you'll be responsible for much of your retirement income, and your investments will play a major role.

As an example, here's what the average 65-year-old American's retirement income looks like today:

average-65-year-old-this-is-what-retirement-income-looks-like

Considerations

  • Many of today's 65-year-olds have a pension that heavily supplements their Social Security income. We expect the role of income investments will continue to grow as pensions become less common. People aren't retiring at the "traditional" age of 65, which you can see reflected by the 28% of income still coming from work or earnings.
  • While you can’t control what, if anything, will change with Social Security, you are in control of some key aspects of your retirement strategy.

What you can control

While you can’t control what, if anything, will change with Social Security, you are in control of some key aspects of your retirement strategy.

  • When you take Social Security: You have options on when you begin to claim Social Security benefits. If you decide to take benefits before your Full Retirement Age (FRA), they are permanently reduced. If you wait to claim until after FRA, you may be eligible to receive "increased" benefits.
  • Your personal retirement savings: As the chart above shows, you'll be responsible for much of your income during retirement. Any proposed changes to Social Security also would likely increase the amount you need to save to provide for your retirement. So work with your financial advisor to make sure you are saving as much as you need to in order to help ensure your ideal retirement.

How we can help

Then talk to your financial advisor about steps you can take now to control what your income looks like in the future.

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