Is Social Security Broken? 4 Alternatives That Can Earn You More Money
Written by
Karen Doyle
Edited by
Zuri Anderson
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For the past 90 years, Americans have been able to look forward to monthly payments from the government after they retire. By paying into the Social Security system over the course of their working lives, they are entitled to collect benefits once they reach a certain age. But the Social Security program is in trouble and is at risk of not being able to pay out the benefits that were promised.
According to the Social Security and Medicare Boards of Trustees, the Old-Age and Survivors Insurance Fund will only be able to pay 100% of scheduled benefits until 2033. After that time, income from the program will cover 77% of scheduled benefits. The shortfall is due to fewer people entering the workforce, retirees who are living longer, and more income inequality, according to the Urban Institute.
So, what should you do if you don’t think Social Security will be around when you retire? Here are four alternatives that can earn you more money.
Employer-Sponsored Retirement Plans
Be sure to take advantage of your employer-sponsored retirement plan to the maximum extent that you can. Contribute as much as you can, which in 2025 is $23,500 for a 401(k), 403(b), 457, or Thrift Savings plan. If you’re 50 or over, you can add a $7,500 catch-up contribution, and if you’re 60 to 63, your catch-up limit is $11,250, according to the IRS.
If you can’t make the full contribution right now, at least contribute enough to get the company match. Many employers will match your contribution up to a fixed percentage of your salary. So, if you make $50,000 per year, and your employer matches 3%, they’ll give you $1,500 as long as you contribute at least that much. Don’t leave this free money on the table.
If your employer offers a Roth option, consider that instead. You’ll contribute after-tax money, but you won’t pay taxes when you withdraw it in retirement.
A Traditional or Roth IRA
If your employer doesn’t offer a plan, you can still contribute to a traditional or Roth IRA, but the contribution limits are lower. You can contribute up to $7,000 per year, plus a $1,000 catch-up contribution if you’re over 50.
Small Business and Self-Employment Plans
If you are self-employed or own a small business, you have additional options. You may be able to set up a plan just for you if you’re a sole proprietor, or for you and your employees if you are an employer. There are several different kinds of plans, and you may even be able to put away even more money than you would with an employer-sponsored plan.
The IRS has lots of good information about how to choose a plan that’s right for your business.
Income-Producing Investments
With some advance planning, you can set yourself up with investments that will produce income for you in retirement. Investing in real estate is a good way to do this. Your properties can generate rental income, or, if you decide you no longer want to be a landlord, you can sell the property in retirement and live off the proceeds.
You can also choose securities that produce income. These include bonds, which can generate revenue on a quarterly basis, or dividend-paying stocks and ETFs, which pay cash dividends either quarterly or annually. If you buy these kinds of investments when you’re young, you can reinvest the dividends until you retire, and then begin taking them as an income stream.
Whether Social Security is still around by the time you retire or not, having an alternate stream of income to fund your lifestyle is a smart idea. After all, Social Security is designed to replace only about 40% of your pre-retirement income, so planning ahead to supplement your benefit makes good financial sense.
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