Investment Corner: Social Security and your retirement – What you should know 

Larry Sidney

This is the first in a 2-part series on Social Security and retirement income. 

Social Security is an important piece of most people’s retirement plan. However, it is a common misconception that Social Security alone with fund your retirement, when in fact it will only cover a portion of your retirement needs in most cases. 

When the Social Security Bill was signed into law in 1935 by President Franklin D Roosevelt, the main idea was to bring economic security to retirees. At the time, the average life expectancy in the United States was only 61 years old, so most people didn’t live to age 65, which is often thought of as “retirement age”.  For those fortunate enough to make it past age 65, the government could send payments based on their prior earnings to help provide a living income. 

While this seemed reasonable at the time, life expectancy in the U.S. kept on increasing, hitting 73 years old in 1980 and nearly 79 years old in 2020. This meant more people living longer and collecting Social Security. Even before this increasing lifespan placed stress on the system, the reality is that Social Security was never intended to fully fund retirement. For 2023, the highest Social Security payment for someone at full retirement age is $3,627/month, or $43,524/year. With government budgets under pressure and more retirees than ever, there is additional uncertainty about how much income Social Security will be able to fund in the future.  

I could try to predict what Social Security payments will look like in the future, but that would be a waste of your time and mine; we just don’t know. Instead, we are better off discussing how you can prepare for the retirement income gap that most of us will ultimately have when our Social Security income falls short of our overall needs. 

To address the income gap in retirement, individuals should consider proactive strategies to supplement their Social Security benefits. There are three particular strategies that stand out to me. They are: 

  1. Build an investment portfolio by prioritizing personal savings. Tax-advantaged accounts like 401(k)s and IRAs are great ways to save on taxes now and allow your investments to grow tax-deferred. Roth IRAs offer different but worthwhile benefits; you pay the taxes now, but all future growth is delivered tax free. And, when you eventually pull money out of your Roth account, it does not count towards your annual income and no taxes are due, which makes the Roth IRA a great retirement and estate planning tool. Additionally, building a taxable investment account will provide you flexibility in dealing with tax and income-related considerations, since you only have income (and pay taxes) on the earnings that you pull from the account. 
  1. You can delay your retirement by one or more years. This provides a double whammy of financial security: your Social Security benefits typically increase, and you are delaying the need to tap into your personal accounts for your living expenses. 
  1. Consider part-time work during retirement. The benefits of this for many folks are well-documented, including reducing the need to withdraw funds from your personal accounts, keeping engaged in meaningful activities, and having healthy social interactions. 

Some of you are ahead of the curve and have already built up enough savings to be financially worry-free in retirement. For the rest of us, while Social Security is an important component of retirement planning, it is unlikely to fully replace pre-retirement income. By taking a proactive and diversified approach to retirement planning, individuals can enhance their financial security and enjoy a more comfortable retirement lifestyle.  

However you choose to prepare for your retirement, invest smart and invest well! 

Larry Sidney is a Zephyr Cove-based Investment Advisor Representative. Information is found at or by calling 775-299-4600 x702. This is not a solicitation to buy or sell securities. Clients may hold positions mentioned in this article. Past Performance does not guarantee future results. Consult your financial advisor before purchasing any security. 

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