5 Moves to Make Before Retirement In Case Social Security Runs Out
Written by
Lydia Kibet
Edited by
Angela Corry
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You’ve probably heard that Social Security may run out by 2035. It’s natural to feel anxious about your financial future, especially if you rely on the trust fund for retirement income. The good news is that you can act now to secure your financial stability in retirement. Here are five moves to make before retirement in case Social Security runs out.
Reduce Your Spending
Cutting back on expenses is one of the most effective ways to stretch your savings further when Social Security runs out. Review your current spending habits and identify areas where you can trim down. Start by tracking your income and expenses 一 this will show you where your money is going and help you pinpoint areas to cut back on.
Small changes, like canceling unnecessary subscriptions or dining out less frequently, will go a long way. You can also go the extra mile by downsizing your home or even relocating to a state with a lower cost of living.
Save and Invest More
Since the future of Social Security is uncertain, it’s high time to ramp up your investments and savings as much as possible. While you should aim to invest 10% to 15% of your income towards retirement each year, surpassing this will help you reach your goals faster.
Focus on saving for retirement in the most tax-efficient way, like getting your employer’s 401(k) match and maximizing your contributions to other investment accounts like Roth IRA and HSA to help you grow your nest egg.
Pay Down High-Interest Debt
High-interest debt, such as credit card balances and personal loans, can be a huge financial burden in retirement. Such debt can eat into your retirement income, so prioritize paying it off as soon as possible. Whenever possible, make additional payments toward your debt to pay it down faster. Once the high-interest debt is out of the way, you’ll have more flexibility in your budget during retirement.
Find Ways to Increase Your Income
One way to boost your financial security in case Social Security runs out is to increase your income before retirement. This could be getting a second job, a side gig, or even starting a small business. However, consider doing something you love to avoid burnout. You can use the extra income to pay down debt, boost your savings, or invest in cash-flowing assets.
Diversify Your Retirement Income
Relying on one retirement income is risky, especially with Social Security’s uncertainty. Diversifying your income sources ensures that if one stream dries up, you’ll still have other sources to rely on.
Consider investing in income-generating assets like real estate, dividend-paying stocks, bonds, and index funds. These investments can provide a steady income stream. You can also reinvest what you make to earn even more.
If you take these steps before retirement, you’ll be in a much better financial position in case Social Security runs out. The earlier you start, the more prepared you’ll be to retire comfortably, regardless of what happens to Social Security.
