Skip To Content

The future of Social Security:
How to prepare

As questions arise about the solvency of Social Security, it’s more important than ever to save for your own retirement.


Fact versus fiction


If no changes to the system are made, the Social Security Administration will be unable to pay scheduled benefits in full and on time starting in 2033; however, that doesn’t mean you won’t get any benefits.


For generations of savers, Social Security has been an essential building block of retirement planning, providing a guaranteed monthly payment for life that adjusts for inflation. Many of today’s younger Americans are realizing the size of that monthly payment may be smaller than they’d anticipated when they retire.

The Social Security Administration will be unable to pay scheduled benefits in full and on time starting in 2033 if no changes are made, according to the most recent annual report from the Social Security Board of Trustees.2 But that doesn’t mean you’ll get no money when you retire; according to the report, you’d likely still receive about three-quarters of your Social Security benefit. The cause of the shortfall is simple: The number of people claiming benefits is rising, while the income from working-age people contributing to Social Security via payroll taxes is projected to stay relatively flat.2


Take charge of your own retirement

It’s more important than ever to have your own retirement income plan. Once you stop working, how will you continue to pay for your lifestyle and enjoy the retirement you’ve envisioned? Fortunately, there are lots of things you can do today to prepare.


Jeremy Kaneer headshot

For younger savers especially, the money you personally save and invest is likely to continue to play a larger role in determining your financial security in retirement than Social Security.

Jeremy Kaneer,
Director, Investment Solutions Group for Merrill

#1. Start saving early.

“Getting an early start can make a big difference,” notes Robin Dziuba, Senior Vice President, Senior Relationship Manager, Merrill Lynch Wealth Management.


For example, thanks to the power of compounding, someone who started saving and investing $500 a month at age 25 would have $588,000 at age 55, assuming a 7% long-term return, while someone who began saving and investing the same amount 10 years later would only have about half as much, or $255,000.3

#2. Maximize your pre-tax savings.

If you’re eligible for a 401(k), Dzuiba recommends contributing the maximum amount allowed. To help determine how much, review the current annual 401(k) contribution limits. At least contribute the amount needed to get your full employer match, if your employer offers one. Once you’ve maxed out your 401(k), “you may want to consider contributing to a Roth IRA, if you’re eligible,” says Jeremy Kaneer, Director, Investment Solutions Group for Merrill. “You pay taxes on those contributions up front, which means no taxes on withdrawals of those contributions in retirement.”


#3. Use a high-deductible health plan.

If your employer offers a high-deductible health plan, consider selecting it so that you can contribute to a health savings account (HSA). “Contributions come out of your paycheck pre-tax, grow tax-free, and come out tax-free too, as long as you use the money for qualified medical expenses,” Kaneer says.


#4. Don’t just use fixed income.

Though fixed income has a place in providing retirement income, investing a greater portion of your savings in equities and dividend-paying stocks might help to increase your nest egg’s growth potential, Dziuba suggests. You might also consider adding exposure to real estate — either by investing in REITs or owning an income-producing property.


#5. Consider an annuity.

“An annuity can provide an additional guaranteed income stream to supplement what you get from Social Security, and it could make it easier for you to manage ongoing day-to-day expenses in retirement,” Kaneer adds. There are various types of annuities, all of which present differences in what they can offer as well as their risks. It’s important to establish an appropriate investment allocation for your goals, age, liquidity needs and risk tolerance.

Maximize your Social Security benefits

Regardless of your age now, you’re likely to still receive Social Security benefits at some level, so be sure you know the rules and how to maximize the amount you receive.


Don’t leave any of it on the table, if you can help it. The key to maximizing what you get from the program is timing when you begin to claim your benefits, says Dziuba. Among nonretirees, the average target age for retirement is 66, according to a 2022 Gallup survey.4 But claiming before full retirement age reduces your benefits — for life. For every year you wait to claim, up to age 70, your monthly Social Security benefits increase by about 8%.

There’s a lot to consider when it comes to planning for the time when you no longer receive a paycheck. An advisor can help.


How much income do you need once you retire? What expenses do you expect? What other expenses should you plan for just in case? How much will Social Security cover if benefits get reduced? How can you make up the difference? Which investing strategies should you use?


Your advisor can help you answer these questions and any others you may have as you prepare for the future of Social Security.

New to Merrill? Connect with a Merrill Advisor

Would you like us to contact you?

By providing your contact information above, you agree that a representative of Merrill, the Brokerage affiliate of Bank of America Corporation, may contact you via telephone and/or email to discuss and/or offer investment products and services that may be appropriate for you. You agree that you are providing to us your consent for us to contact you regardless of any Do Not Call or Do Not Email privacy choices you may have previously expressed until you revoke this consent, or up to 90 days. You may revoke your consent at any time by notifying the Merrill representative.

1The Associated Press and NORC, “Younger generations are not confident that Social Security or Medicare will be there for them,” April 7, 2023.

2Social Security Administration, “The 2023 Annual Report of the Board of Trustees on the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds.” investment goal calculator, accessed 2023.

4Gallup, “More in U.S. Retiring, or Planning to Retire, Later,” July 2022.

Save for your future

Start planning for retirement, healthcare expenses and future education needs today.



You need to answer some questions first

Then we can provide you with relevant answers.

Get started