How To Prepare For Retirement Amid Social Security Problems, According to Graham Stephen
Written by
Nicole Spector
Edited by
Molly Sullivan
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Social Security has long been in a bad place, and it’s not looking like things will get better anytime soon. Currently, Social Security benefits are expected to be payable in full on a timely basis until 2035, at which point the trust fund reserves are projected to become exhausted. Some projections forecast funds running out as soon as 2033. As of February 2024, approximately 67 million people collected Social Security benefits. That breaks down to about one in every five U.S. residents.
What will happen to retirees without Social Security, the financial bedrock for so many? It’s terrifying to think about, but we must get ready for such a possibility. Real estate investor and financial influencer Graham Stephen recently posted a video on his YouTube channel (which has 4.91 million subscribers) that discussed how Americans can prepare for retirement while the future of Social Security remains unclear at best.
“This entire thing is a ticking time bomb,” Stephen said. Let’s dig intothree of his recommendations for future retirees.
Budget and Track Your Expenses
According to Stephen, there’s no future in which we don’t either work longer (at the government’s order) to delay taking Social Security benefits, pay more in taxes to fund Social Security or see Social Security benefits be slashed by between 21% and 25%. The first thing we can do to get ahead of whichever of these three scenarios happens is to budget and track our expenses.
“Without exaggeration, I’ve been meticulously tracking all of my expenses for more than a decade,” Stephen said. “And if there’s one thing that’s going to dramatically put you ahead of everyone else, it’s this. That’s because so few people actually take the time to understand where they spend their money. Even fewer people make a reasonable budget.”
By closely monitoring every aspect of your spending, you will be able to see areas you can cut back and save on.
Wisely Invest What You Can Afford To Invest — And Start Now
Social Security is funded by taxes taken out of your paycheck, so it’s not free money. What’s worse, it’s money that doesn’t generate compound interest over time.
“You’re probably going to pay out more than you receive,” Graham said, likening Social Security to insurance versus an investment. This is where Social Security becomes problematic for some. You pour money into it, but don’t get very much back once it’s your turn to collect.
Once you understand this, you’ll recognize just how important it is to be assertively investing as much money as you don’t need to have immediately on hand.
Granted, this won’t be easy. Stephen asserted that “most people have absolutely no idea how to manage their own money.”
He recommended investing in a broad index fund. And start ASAP. The longer you wait, the more money you’ll have to part with to get your investment big enough to support you throughout retirement.
Get Ready for Higher Taxes and Working Longer
None of us knows how the Social Security crisis will be handled. Stephen said he “has a feeling” we’ll see higher taxes ahead. “And most likely a delayed retirement age so that there’s fewer people drawing on those reserves.”
Stephen added that as he sees it, neither the Republicans nor the Democrats want to be the party that makes the move of cutting Social Security benefits. “So the most likely outcome from this is that they push it off for as long as possible, wait until the last possible minute and then blame the other side for not wanting to fix it sooner.”
Since big-picture political moves are beyond your control, do what you can right now to secure a comfortable retirement that doesn’t totally rely on Social Security. Even if nothing changes (which is not possible), it’s still smart not to rely on the government for your livelihood — even if you’ve earned it. Do what you can to increase your income now, before, heaven forbid, you’re no longer able to work.
More From GOBankingRates
