From June 2016 to June 2017, more than 2.9 million Americans signed up for Social Security benefits. On average, these people received $1,413.08 in monthly benefits—with women receiving less on average when dividing that group up between genders. For many attempting to maintain a certain standard of living in retirement, Social Security alone will be inadequate; however, that’s not to say it will not help as a supplemental form of income. That being said, as we look toward the future, the concept of Social Security for millennials is still somewhat questionable.
What’s happening to Social Security?
Social Security’s trust fund is expected to run out by the year 2034. For that reason, the majority of millennials currently believe that Social Security will be non-existent by the time they reach retirement age.
Some experts, however, are suggesting a bit of reassurance when it comes to Social Security for millennials. Even if and when Social Security’s trust fund runs dry, payroll taxes still exist to comprise about 75 percent of retiree benefits. Thus, a millennial retiring post-2034 would still receive a monthly check. That’s not to mention the fact that a plethora of plans are in the making to solve this Social Security issue.
How much do Americans rely on Social Security?
While basing your entire retirement savings strategy off of the existence of Social Security is admittedly not smart, it certainly plays its role in aiding a significant portion of working Americans.
More than two-thirds of Social Security recipients are retired workers. Half of those who are 65 or older rely on their monthly Social Security checks for half of their retirement income, the Social Security Administration reports. In addition, a quarter of retirees count on it for more than 90 percent of their income.
On top of that, keep in mind that Social Security is not just for retirees. In addition to retired workers, Social Security supports disabled persons and families of retired, disabled or deceased workers. At the end of 2017, disabled workers made up 14 percent of Social Security beneficiaries, while children made up 7 percent.
Social Security or not, what should millennials do to ready for retirement?
Though some form of Social Security benefits will likely exist to support millennials in retirement, pretending like it won’t is not a terrible idea. Eliminating a reliance on Social Security will promote a more aggressive personal savings strategy, which should implement the following:
- Building a substantial emergency fund.
- Contributing to your employer-sponsored 401(k), or opening an IRA and/or Roth IRA if you do not have a workplace plan.
- Gradually increasing your retirement account contributions over time.
- Living within your means during your working years.
- Establishing both long- and short-term savings goals.
- Adjusting your level of risk as you grow older.
Though Social Security for millennials may not be a myth after all, taking the appropriate steps to build a substantial nest egg for retirement is critical to your future well-being.
Stay tuned to Ty J. Young Inc.’s Retirement You Earned blog for more insight into life in your retirement years. To learn how you can maximize the amount of income you receive in retirement, call our knowledgeable Ty J. Young Inc. advisors today at 877-912-1919.