Social Security, the government program that provides monthly payments to retirees, is facing serious problems. If no action is taken, the Social Security Administration (SSA) warns that by 2033, retirees may only receive 79% of their full benefits. This situation is creating stress and confusion among current and future beneficiaries.
To make things worse, there is increasing concern about possible delays in payments, staff cuts, and ongoing efforts to detect fraud and cut costs, according to reports from Yahoo! Finance and CNN.
So, what does this mean for you? And how much money do you really need to save for retirement if Social Security doesn’t survive?
Let’s break it down.
72.5 Million Rely on Social Security Monthly
According to the SSA, more than 72.5 million Americans receive a Social Security check every month. For many retirees, this is their only source of income. Any delay or reduction in benefits could have serious consequences for basic expenses like rent, food, and medicine.
Although President Donald Trump has promised to protect Social Security, more than half of Americans (52%) are still very concerned, as per a Gallup poll. And many younger Americans are doubtful that the program will still exist when it’s their turn to retire, Newsweek reported.
What If Social Security Disappears?
Financial experts say that if Social Security stops or if the amount is reduced, Americans will need to double or even triple their retirement savings. That’s a big shift from traditional planning, where Social Security covered a large part of retirement expenses.
Why Saving for Retirement is More Expensive Than You Think
Andrew Lokenauth, a financial advisor who manages retirement accounts, says that most people are not saving enough.
“It would take between $2 million to $3 million in savings to live a middle-class life without Social Security,” Lokenauth explained. “That’s 2–3 times more than what people usually save when Social Security is expected to be there.”
Lokenauth shared a real-life example of a client who had saved $1.2 million and thought she was ready for retirement. But when they removed Social Security from the equation, she actually needed another $800,000. That meant saving an extra $40,000 every year, which was a shock.
Lokenauth’s Retirement Strategy Without Social Security
If you’re worried about what will happen if Social Security is reduced, here are some tips to help you build a secure and flexible retirement plan:
1. Max Out Tax-Advantaged Accounts
Make full use of 401(k), IRA, and HSA accounts. Lokenauth says he personally contributes $22,500 to his 401(k) and another $7,500 to a Roth IRA using the backdoor method. These accounts grow tax-free, which helps your savings grow faster.
2. Invest in Rental Properties
Several of Lokenauth’s clients have built portfolios that bring in $3,000 to $4,000 per month. This rental income can act as a replacement for Social Security, especially during retirement years.
3. Build Multiple Income Streams
Lokenauth says this is the real secret. Don’t rely on just one income source. Combining dividend stocks, consulting work, and real estate can help fill the gap left by missing Social Security payments.
“Start building these income sources long before retirement,” he advises.
4. Cut Your Expenses Early
Downsizing can make a big impact. Lokenauth reduced his monthly costs by $1,500 by moving to a less expensive city, which made his retirement savings go a lot further.