Why Millennials and Gen Z Shouldn't Rely on Social Security for Retirement

Social Security has long been a cornerstone of retirement planning, but for Millennials and Gen Z, relying on it as the primary source of retirement income is increasingly risky. The program operates on a pay-as-you-go basis, where current workers’ payroll taxes fund retirees’ benefits. This means your future benefits depend on the contributions of the next generation.

According to the Social Security Administration’s 2024 report, the fund can pay full benefits only until 2035. After that, payouts are projected to drop to about 83% of scheduled amounts. For example, the average monthly benefit of $1,948 could decrease to roughly $1,617. While helpful, this amount is unlikely to cover all living expenses in retirement.

So, what can you do to secure your retirement? The key is proactive personal financial planning. Here are six actionable steps:

• Set up retirement accounts early—even if you can’t contribute much now, being ready to save is crucial.
• Max out employer-sponsored plans like 401(k)s, especially if there’s a company match—free money accelerates growth.
• Invest in IRAs after maxing out your 401(k) to benefit from tax advantages and compound growth.
• Pay down major debts like your mortgage to reduce monthly expenses and stretch retirement income.
• Consider relocating to lower-cost areas to save on taxes and living expenses, freeing more money for retirement.
• Utilize health savings accounts (HSAs) to prepare for healthcare costs, one of the largest retirement expenses.

The future of Social Security may be uncertain, but your financial security doesn’t have to be. By combining Social Security benefits with smart saving strategies and intentional money management, you can build a sustainable retirement plan that offers peace of mind regardless of what lies ahead.

Don’t wait for Social Security to cover everything. Start planning today and take control of your retirement future.