How To Retire Without Social Security

Most workers in America are counting on Social Security income to help fund their retirement. After all, ever since they began working, they have been paying Social Security taxes based on the expectation that they’ll be receiving benefits in the future. But the reality is that the Social Security trust fund is expected to be exhausted by 2033.

This doesn’t mean Social Security will go away entirely, as there will always be workers paying into the system, but it does mean that your benefits are likely to be reduced. That’s why now is the time to plan ahead for a retirement without Social Security, so that any benefits you may receive can just be icing on the cake for you.

The unfortunate truth for many Americans is that they’ll have to work longer to offset any reduction in Social Security benefits. However, this might not be as discouraging as it seems. For starters, many workers actually enjoy their jobs. The social interaction and sense of fulfillment they get from working at their job is a healthy combination of factors that can actually help extend life.

Plus, the more years that you work, the longer you can enjoy retirement. Even just a couple of extra years of work can be a big help in providing a secure retirement, as most workers are at their peak earnings rate shortly before they retire.

Increasing your 401(k) contribution is one of the best ways to help fund your retirement. Not only will you increase your tax-deferred earnings, but you may also garner a more sizable matching contribution from your employer.

Higher 401(k) contributions are particularly important when you are younger, as your account will have a longer period of time to benefit from the effects of compounding. However, even if you’re approaching retirement, the more funding you can get into your 401(k), the less likely you are to outlive your money once you retire.

You’ll generally get the most bang for your buck investing for retirement in a tax-deferred account like a 401(k) plan. However, there’s nothing stopping you from saving extra money outside of a formal retirement plan to boost your savings.

Even contributing $100 extra dollars per week or month to a regular, taxable investment account can provide you with enough additional savings by retirement to help offset any future cuts to Social Security payouts.

An emergency fund is the cornerstone of any good financial plan. Without an emergency fund, you’ll have to dip into your retirement savings or even go into debt to take care of unexpected expenses. With a smaller Social Security check awaiting you in retirement, a bigger emergency fund is a must, as you’ll have less income to help cover unplanned costs.

Once you stop working, you won’t have any additional income to shore up your emergency fund, so start on this step as soon as you can.

The most straightforward way to counteract reduced Social Security income in retirement is to earn more money now. While this may be easier said than done, there are a number of strategies that can help you earn more while you’re still working. For example, if you’ve been at your job for a number of years and haven’t received a raise, don’t be afraid to go to your supervisor and ask for one.

Another option is to pick up a side gig. Working a few extra hours per week at a different employer or even selling items on the internet from home can generate anything from a few hundred to a few thousand dollars every month, and that can make a huge difference for your retirement savings.

While you may not want to get a “real job” after you retire, there are likely plenty of options that can help generate revenue for you. If you have any hobbies that require specialized knowledge or skills, you may be able to turn those into profit centers even after you retire.

For example, if your hobby is woodworking, you can likely sell some of your pieces either locally or on the internet to earn a few bucks. The same is true for countless other hobbies, from needlework to baking to writing.

There’s a wide variety in the cost of living across America, and indeed all over the world. One way to give yourself an immediate “raise” is to move to a lower-cost area.

For example, if you were born and raised in Los Angeles, you might be shocked to discover the cost of living in places like Arkansas, where you may be able to buy a 1,500-square-foot, two-bedroom, three-bath house for $175,000 and the cost of regular gas is just $3.13 per gallon.

Not many companies offer a traditional pension plan anymore, but if you have changed jobs a lot in your life, you might have left some money behind you that you didn’t even know about. If you’re nearing retirement age, it’s actually likely that you have earned pension money somewhere along the line, and it behooves you to examine where that money might be.

If you’re a younger worker, consider seeking out employers that do still offer traditional pensions, which allow you to earn retirement savings from your employer at no cost to you while you’re still saving on your own.

Insurance programs like Medicare are designed to cover some of your medical costs in retirement, but Medicare alone won’t cover everything, especially non-medical expenses. You’ll likely need additional insurance policies to help protect against claims draining your available funds.

You may consider getting some lifelong insurance policies while you’re still young, both to help keep costs down and to prevent any claims from draining your money allocated for savings.

If you’re too conservative with your investment strategy, you might be far behind where you need to be by the time you retire. Many retirement models are built on the assumption that you’ll earn 8% to 10% per year on your investments, and that may indeed be the long-term average in a portfolio dedicated 100% to U.S. equities. However, if you have too much money in bonds, cash or other lesser-performing asset classes, you’ll get nowhere near where you expect to be if you’re assuming that 8% to 10% return.

While you should consult with your financial advisor to develop a portfolio that’s in line with your investment objectives and risk tolerance, being too conservative with your investments will likely lead to disappointing results by the time you retire, especially in an environment of reduced Social Security payouts.

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Gabrielle Olya contributed to the reporting for this article.