It’s Social Security’s 80th birthday, and while news about the program’s financial status is rarely upbeat, most Americans are glad it still exists. Women and lower-earning workers rely particularly heavily on the program.
Here’s why you need to pretend it doesn’t exist.
Underfunded as it is, Social Security remains a favorite political football and a target for further trimming.
At the same time, we’re living longer, and our savings need to last longer. So whatever happens to SS, it’s more important than ever to use all the savings strategies at your disposal.
Eight ways to do that, one for each decade of Social Security:
1. Make saving simple
Just how important will your personal savings be in retirement? Take a look at this chart from the National Academy of Social Insurance, a nonprofit group that focuses on “how social insurance contributes to economic security.”
It shows, roughly, how the Social Security program replaces more than 50 percent of income for low-earning workers. It also shows how high earners would need to reduce their lifestyle radically if they need to rely heavily on Social Security income in retirement.
The Social Security Administration calculates income replacement rates for retired workers across a range of income scenarios, from those with very low income to those who hit the maximum annual amount of income taxed by Social Security (in 2015, it’s $118,500). Their calculations assume 35 years of contributing to the program and are based on Social Security’s national average wage index (AWI). For 2015, the average is $47,820.