Retirement Planning: How Each Generation Should Account for Social Security
Written by
Josephine Nesbit
Edited by
Zuri Anderson
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How Social Security factors into your retirement planning depends on your goals and financial standing, but also your age.
According to Yaqub Ahmed, global head of workplace, retirement and wealth at Franklin Innovative Research, Strategies and Technology, “Every generation and income cohort now faces a very different retirement reality, and our research shows that Social Security plays sharply different roles depending on both age and income level.”
Depending on your generation, here’s how you should account for Social Security in retirement.
Gen Z
“In my experience, Social Security shouldn’t be treated the same way for every generation or as if it’s a guarantee,” Trevor Houston, CEO at ClearPath Wealth Strategies, LLC, wrote in an email. “It’s a piece of the puzzle, yes, but not the entire picture.”
Starting with the youngest generation in the workforce, Gen Z is still many years away from retirement, and Ahmed recommends that this generation plan Social Security as secondary, not a foundation.
“They expect a world of flexible work, plan personalization, multiple income streams, portable benefits and digital-first financial tools rather than long-tenure employment and reliance on employer-sponsored pensions,” Ahmed explained. “That lines up with what we heard in our interviews with industry leaders: Standard retirement accounts don’t fit the expanding gig economy reality.”
According to Ahmed, personalization and delivery will be the new baseline for the future of retirement.
“Younger workers who are already comfortable with digital wallets will benefit the most as the system shifts in that direction,” he added.
Millennials
For millennials and even Gen Z, Houston commented that he wouldn’t build a retirement strategy around Social Security at all.
“When you focus on what you can control, like saving, investing and creating income streams, it can help build confidence in the younger generation rather than relying only on government programs,” Houston wrote.
Gen X
Gen X needs to be a little more conservative when it comes to Social Security, according to Ahmed.
“They are close enough to retirement that potential Social Security adjustments feel consequential, yet many still lack clarity across siloed accounts like 401(k)s, IRAs, HSAs, and taxable assets,” he noted.
Ahmed also pointed out that, based on their research, Gen X holds significant wealth in real estate but has fewer years remaining to build their retirement savings.
“For middle-income cohorts in particular, Social Security remains important, but they must model it more conservatively due to solvency concerns,” Ahmed explained.
Houston also explained that Gen X needs to be flexible, as Social Security could potentially look different than how it is today.
“Their benefits could be delayed, adjusted or taxed more aggressively in the future,” Houston wrote. “I recommend acting as if Social Security is a supplement, rather than their primary source of income.”
Baby Boomers
For baby boomers, especially low- to moderate-income retirees and near-retirees, they’re the group for whom Social Security is still a meaningful share of retirement income, Ahemd explained.
“Our research shows Social Security represents 54% to 72% of income for the lowest three income quintiles of retirees, but only 18% to 34% for the highest two,” he added.
And Houston agrees, noting that Social Security is still very much part of the equation for this generation.
“They paid into the system for decades, which helps provide a meaningful baseline income. But the key here is still strategy,” Houston wrote. “When you decide to claim matters, how it coordinates with other income matters and taxes matter, too. I’ve seen people lose thousands simply by rushing into these decisions.”
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