Life is a balancing act. We balance work and play, family and friends, and being in control and having no control at all. That balance isn’t always necessarily a 50-50 split. Saving for retirement works in a similar way. Finding a balance between income streams, saving, and spending habits, is vital for successful retirement planning. Social Security, for many people, is the main source of income in retirement, but is that a healthy retirement savings balance?
Christy Bieber for The Motley Fool lists her logic behind not relying on Social Security alone to save for retirement. As she believes, a healthy retirement savings balance is heavily geared towards other forms of income. As Bieber puts it, her reasons for not counting on Social Security are:
- We as normal people don’t have a say in Social Security’s future.
- We will have to use our savings if we want to retire before our full retirement age.
- Social Security should be seen as extra money, not the only money
A Healthy Retirement Savings Balance
The Social Security faces a funding issue, and while that won’t affect the distribution of payments, it will potentially affect our total benefit amount. That uncertainty can make it difficult to factor Social Security into our retirement plan. Relying on numbers we can control, like the amount of savings we put away in other accounts, provides us a safety net for the future.
Additionally, if we want to retire before our full retirement age, we risk taking a significant cut to our benefits. By delaying our benefits, we can increase them, but that also means dipping into other savings and income streams to fund our retirement in the meantime.
Finally, Social Security is designed to only replace 40 percent of our working income. A healthy retirement savings balance would have us save more, to replace more of our working income ourselves. If we can save enough to resemble our working income, we strengthen our own financial safety net and have the added benefit of Social Security on top of what we save. That way we don’t have to empty our savings the moment an unexpected expense pops up.
The Weight of Social Security
This reasoning makes sense. However, we can demand a say in Social Security’s future. The Council for Retirement Security is working to turn Congress’ attention to the Social Security Trust to finally address the funding issues we face.
A healthy retirement savings balance should consider Social Security as an added benefit, while utilizing other types of savings first. Retirement is expensive, and Social Security should be something that we can rely on to add to our financial safety net and help protect us in our retirement.