Social security is in trouble and many Americans have begun seeking social security alternatives to safely plan for retirement. The Social Security Administration suggests that your social security benefit make up about 40% of your income. If social security is only 40% of your earnings, how can you prepare for retirement without being too dependent on social security?
When President Franklin Delanor Roosevelt signed the Social Security Act of 1935, the United States was in the midst of rebuilding its economic infrastructure during the Great Depression, World War II had yet to begin, and the invention of the internet was decades away. Social security still exists, and is indeed a prevalent factor in planning your retirement, however you should continue to seek out social security alternatives for successfully planning your retirement.
5 Social Security Alternatives
1.) Consider a Part-Time Retirement Job
While social security offers a steady source of income, AARP recommends that retirees may benefit from undertaking a part-time job in retirement. A part-time job can not only add supplemental income, but also a new sense of purpose to your everyday life.
These jobs don’t just have to be your standard, run of the mill, part-time jobs. Many retirees can jump right into a company and use their years of experience to make a difference. Some part-time jobs include: interpreter, park ranger, dog walker, or even your old job, part-time!
While getting a part-time job is a great way to add some more financial security, be aware that once you exceed a certain income threshold, your monthly benefit may be reduced
2.) Stay Up to Date on the Social Security Administration
For the first time since 1982, The New York Times reports that the Social Security Administration must start drawing down its assets to pay social security contributors the benefits they have been promised. When this happens, there is less money available for contributors. The Social Security Trustees annual report indicates that the Social Security Trust may be depleted by 2035.
In order to fix this issue, a bipartisan political solution must be reached. However, in an already polarized political climate, putting all your eggs in the social security basket can lead you to miss out on money you deserve.
3.) Consider a Fixed Index Annuity
While social security is effectively a no-risk income option, it isn’t the only way to secure a steady stream of retirement income. Fixed index annuities offer the financial security of social security while diversifying your financial profile. Fixed index annuities are a risk-free investment option. When the market goes up, you earn a certain percent on your investment as dictated by your annuity contract. When the market goes down, you lose nothing. This means that the initial investment will always be protected and any earnings will have the opportunity to grow on the stock market.
4.) Know Your Current Retirement Savings Plan
Social security plans are tied to a general understanding of your overall retirement planning. In order to know the amount you should be saving, it is important to meet with a trusted financial advisor who specializes in retirement. Once you know how much you should have saved for retirement, you can calculate what percentage social security will need to be for you to retire comfortably.
5.) Explore Investment Opportunities
Under the guidance of a financial advisor, there are a plethora of alternative investment opportunities that can help you reach your retirement goals. For example, you could invest in a small business, the stock market, and much more to help supplement retirement income.
For over 80 years, social security has provided a secure source of income for American retirees. While we hope it continues to serve this purpose for the next 80 years, we recognize that this is not a guarantee. Therefore, it is extremely important to include social security alternatives in your retirement planning.
Connor Rosenberger
connorctag@gmail.com
Connor is our digital marketing intern at Cowen Tax Advisory Group for the summer of 2019. A senior at Providence College, Connor is working alongside the team to support the year-round staff in various projects as well as improving his marketing skills.
