Worried that the Social Security Administration (SSA) is running out of money? Good news: as long as there are employees who contribute a portion of every paycheck to Social Security, the Social Security Administration will have funds.
But whether it will have enough funds to help pay for your retirement is another matter entirely.
Unless the federal government makes drastic changes, the SSA will only have the money to pay 80% of benefits after 2035.
Fortunately, you can still retire on time even if your benefit payments are 20% lower than you expected. Discover our 10 tips to protect your retirement below.
6 Ways to Supplement Social Security in 2022
1. Save for retirement in other accounts
Your monthly Social Security payments should eventually be around 40% of your current income. Even before the current surplus is exhausted, that money is nowhere near enough to live on (at least, not comfortably, or not without making other lifestyle and financial changes).
Hopefully, even if you planned to receive 100% of your Social Security benefits, you saved retirement funds in an investment account like a 401(k) or a Roth IRA.
Financial professionals often warn that you need 80% of your current income in retirement, and that at least 40% of that amount will come from a source other than Social Security.
2. Pay off your debts before retirement
Once you retire, your retirement savings can help you pay your bills, get health insurance coverage, and live comfortably.
In other words, the bulk of your retirement savings should be spent on maintaining your quality of life, so you won’t have a lot of extra money to spend paying off your debts.
To get the most out of your retirement savings, focus on pay off your debt long before you retire. If you already have 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 as possible into savings, not into paying off ever-increasing debt.
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3. Live within your means
Most retirees don’t have as much wiggle room in their budget as when they were working. After all, it might be a little harder to pick up a new gig to finance a purchase a decade before retirement than it would be for you right now.
With that in mind, it’s essential to live within your means now to 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.
4. Find joy in affordable activities
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 saving for retirement now, you won’t be able to achieve big dreams once you no longer have a stable income.
Instead of spending huge amounts on entertainment, train yourself to find fun activities that can boost your happiness levels without breaking your budget. You will be able to save more and learn to enjoy activities that don’t come at a huge price.
Hopefully, some of the activities you choose now can become lifelong passions that keep you engaged and enjoying life after you stop working.
5. Use credit card rewards to help pay for your trips
Many credit cards have built-in travel benefits that can help you cover big expenses like travel.
Although 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.
Earn rewards and travel more while spending less with these best travel credit cards.
6. Take advantage of free resources from your local library
Instead of buying the latest hardcover version of your favorite author, you can save money by checking it out at your local library instead.
In addition to 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 that you can also check out for free.
In addition, libraries serve as community centers and offer a host of free services. Check your local library’s calendar to see if it offers completely free or discounted classes or activities that can replace paid activities currently on your schedule.
7. Join your employer’s retirement fund
Speaking of free services, 401(k) employer matches are the best source of free money you can find.
Depending on your company’s benefits, your employer may put up to 100% of the money you put into a retirement fund. This doubles your own ability to save, and it costs you nothing in the meantime.
7 ways to stretch every retirement dollar
8. Exercise regularly
Medical costs are probably already taking up a large part of your budget. Once retired, this will likely continue. In fact, most retirees spend thousands of dollars a year on health care.
While you certainly can’t plan for all possible disabilities, long-term health issues, or accidents, exercising regularly can give you a better chance of staying relatively healthy for the rest of your life.
9. Talk to your partner about your retirement plans
If you have a partner, you need to be on the same page about your retirement plans.
Do you both have savings accounts or just one of you? Do you both have 401(k) accounts and, if so, how much do you set aside each year? Are you in agreement on your post-retirement budget and how to achieve it with your financial goals?
You may find that your current household budget needs to be changed to account for Social Security changes and cost-of-living adjustments. If so, you can decide together how to modify your household budget to accommodate the changes.
10. Don’t forget to plan for inflation
As we’ve all learned this year, inflation can devastate your budget in no time. Historically speaking, inflation rates always come back down – but the time it takes is often beyond anyone’s control, even the Fed.
The only thing you can really count on is that inflation will happen, so be sure to consider future costs when deciding how much you should save.
6 Ways to Supplement Social Security in 2022
At the end of the line
While Social Security is likely to stay, the amount of money beneficiaries can claim from the account could start to shrink over the next decade.
Keep your retirement in your hands by following these 10 tips today to plan for a financially secure future.
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This article Will Social Security run out of money? How to protect your retirement originally appeared on FinanceBuzz.