Nearly half of non-retirees expect Social Security to end — is it time to form a contingency plan?

Amanda and Andrew Meindl of Wauwatosa, Wisconsin, went to their financial adviser with an unusual request. The couple asked for help to prepare for a retirement with no Social Security benefits. “We’ll plan like we’re going to get nothing,” Amanda told The Wall Street Journal, while Andrew commented that their financial adviser “thought I was a nutjob,” when the couple, who are in their mid-30s, made the request. They’re not alone in their concerns about whether Social Security will be available for them by the time retirement age rolls around. Gallup polling has found that 47% of non-retirees don’t expect to receive a benefit from the Social Security Administration (SSA), while a comprehensive study from the SSA covering 50 years showed Americans have long been skeptical about their prospects of receiving payments. But are those concerns justified, and, if so, how should would-be retirees prepare for a future with this government lifeline depleted?

Is a future without Social Security a reality?

While non-retirees have reason to fear for the future when it comes to Social Security, the idea that seniors will get no benefits whatsoever is simply unrealistic. The bulk of Social Security is funded by payroll taxes, and so as long as there are workers there will be money coming in. The problem is there’s a gap between that amount and the benefits going out. This is normally covered by a pair of trust funds, and if these funds were combined, they would be expected to run dry by 2035. But that doesn’t mean benefits would run out. There would still be enough funding to pay out 83% of scheduled benefits. Lawmakers also have time to shore up the program, so hopefully any shortfalls will be addressed before cuts occur. Still, future retirees like the Meindls may prefer not to count on getting benefits when the future of Social Security is out of their control. Preparing for life without Social Security income isn’t the worst idea, not because you’re likely to end up with nothing, but because doing so will encourage you to save more for retirement. As Amanda Meindl said, while the couple plans for no benefits, they’ll also “hope we get something and then maybe we’ll have enough.”

Plan for a future without retirement benefits

The Meindls decided to take their future into their own hands when their adviser couldn’t help them — the financial-modeling software apparently wouldn’t allow for a scenario that didn’t include Social Security. Instead, the couple told the Journal, they’ve chosen to invest in mutual funds, gold and cryptocurrency. While mutual funds are a standard part of many people’s retirement portfolios, both gold and crypto are considered alternative investments — and they’re considered risky because they don’t have a proven track record of consistent returns. If you’re OK with a lot of volatility and risk in exchange for a higher potential upside, you’ll also need to learn how to invest in these alternative assets, as it’s not always straightforward. You can buy physical gold like bars or coins, but this can be costly and expensive to store. You also have the option to open an IRA that deals in precious metals, to purchase gold stocks or to purchase gold ETFs. When it comes to crypto, you can purchase different coins from tailored exchanges and keep them in your digital wallets. Because these are volatile investments, be sure you understand what you’re doing before you dive in. You can also take a simpler approach and put money into index funds that track the performance of the stock market. You can invest after contributing to your company’s 401(k) or opening an IRA with any brokerage firm. Whatever you choose to invest in, saving enough to get by without Social Security can open doors for you, including retiring while delaying your Social Security claim, as putting it off until age 70 results in bigger checks. You also won’t face hardship if an automatic benefits cut happens, or if lawmakers make changes that shore up Social Security but leave you with less money than anticipated. You can put your retirement security back in your own hands instead of leaving it in the hands of the government who you may not trust to provide.