Will Social Security Run Out of Money? How to Protect Your Retirement

While Social Security isn’t running out of money anytime soon (if at all), it’s not enough to retire on.
Last updated April 3, 2023 | By Michelle Smith Edited By Michael Kurko
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Worried that the Social Security Administration (SSA) is going to run out of money? Good news: As long as there are employees who contribute a portion of each paycheck to Social Security, the Social Security Administration will have funds. 

But whether it will have enough funds to help you afford your retirement is a different question entirely. 

Unless the federal government makes some drastic changes, the SSA will only have the money to pay out 80% of benefits after 2035.

Fortunately, you can still retire on time even if your benefits payouts are 20% lower than you’d expected. Check out our 10 tips for protecting your retirement below.

Save for retirement in other accounts

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Your monthly Social Security payouts should eventually total around 40% of your current income. Even before the current surplus runs out, that money is nowhere near enough to live off of (at least, not comfortably, or not without making other lifestyle and financial changes). 

Hopefully, even if you were planning on receiving 100% of your Social Security benefits, you’ve been saving retirement funds in an investment account like a 401(k) or Roth IRA.

Financial professionals often caution that you need 80% of your current income in retirement, and at least 40% of that amount will come from a source other than Social Security.

Pay off debt before retirement

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Once you retire, your retirement savings can help you pay bills, get health insurance coverage, and live comfortably. 

In other words, the bulk of your retirement savings should go toward maintaining your quality of life, so you won’t have much extra money to spend on paying debts.

To make the most of your savings in retirement, focus on paying off your debt well before you actually retire. If you’re already living with a lot of debt, try to avoid new high-interest debt like credit card payments. 

While you’re still working, you want to channel as much money into savings as you can, not into paying off an increasingly high debt.

Live within your means

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Most retirees don’t have as much leeway in their budgets as they did while working. After all, it might be a little harder to pick up a new gig to fund a purchase a decade or so into retirement than it would be for you right now. 

With that in mind, it’s essential to live within your means now so you can avoid debt and maximize savings for a more comfortable retirement later.

Plus, sticking to a budget while you’re still working establishes healthy financial habits that will continue to benefit you after you retire.

Find joy in affordable activities

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Yes, it’s fun to splurge on a huge event like a cruise or stadium concert tickets when you can. But unless you focus on retirement savings now, there’s no way you’ll be able to fulfill big bucket-list dreams once you no longer have a steady income.

Instead of spending huge amounts on entertainment, practice finding fun activities that can up your happiness level without breaking your budget. You’ll be able to put more into savings and also learn to enjoy activities that don’t have a huge price tag attached. 

Hopefully, some of the activities you pick up now can end up as lifelong passions that keep you engaged and enjoying life after you stop working.

Use credit card rewards to help pay for travel

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Many credit cards have built-in travel benefits that can help you cover major expenses like traveling. 

While you should only get a credit card if you can pay off the balance regularly and avoid consumer debt, the right card can make traveling more affordable so you can save for the future.

Take advantage of your local library’s free resources

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Instead of buying the newest hardcover release from your favorite author, you can save money by checking it out from your local library instead. 

Along with books, magazines, and DVDs, many libraries also offer free streaming services like Kanopy (movies and TV shows) and Freegal (music). Some have board games and video games you can check out for free as well.

Additionally, libraries serve as community hubs and provide a slew of free services. Look at your local library’s calendar to see if it offers any completely free or discounted classes or activities that can replace the paid activities currently in your schedule.

Sign up for your employer’s retirement fund match

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Speaking of free services, employer 401(k) matches are the best source of free money you’ll ever find. 

Depending on your company’s benefits, your employer could match up to 100% of the money you put into a retirement fund yourself. That doubles your own ability to save, and it doesn’t cost you anything in the meantime.

Exercise regularly

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Medical costs likely already take up a huge chunk of your budget. Once you retire, that will probably continue. In fact, most retirees spend thousands of dollars a year on healthcare. 

While you definitely can’t plan for every possible disability, long-term health condition, or accident, exercising regularly can give you a better chance at staying relatively healthy for the rest of your life.

Talk to your partner about your retirement plans

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If you have a partner, you need to be on the same page regarding your retirement plans. 

Do both of you have savings accounts or just one of you? Do you both have 401(k) accounts and, if so, how much are you putting away each year? Are you in agreement about your post-retirement budget and how to get there with your financial goals?

You could find that your current household budget needs to shift to account for Social Security changes and cost of living adjustments. If that’s the case, the two of you can decide together how to tweak your household budget to accommodate the changes.

Remember to plan for inflation

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As we all learned this year, inflation can devastate your budget in no time at all. Historically speaking, inflation rates always come back down — but how long that takes is often out of anyone’s control, even the Fed’s. 

The only thing you can really count on is that inflation will happen, so make sure you’re taking future costs into consideration while deciding how much you should save.

Bottom line

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While Social Security is likely here to stay, the amount of money beneficiaries are able to claim from the account might start to decrease next decade. 

Keep your retirement squarely in your own hands by following these 10 tips today to plan for a financially secure future.

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Author Details

Michelle Smith Michelle Smith has spent a decade writing for and about small businesses. She specializes in all things finance and has written for publications like G2 and SmallBizDaily. When she's not writing for work at her desk, you can usually find her writing for pleasure near large bodies of water.