Planning on NOT having Social Security and Having Personal Savings

Disclaimer Notice:

  • None of this is financial advice, what is presented in this blog are simply observations, commentary on Social Security in the United States, and some basic math from the given data on Social Security taxes.
  • You can calculate your own projected savings using the Government’s own compound interest calculator here:
  • Remember to speak with a certified financial advisor or planner regarding your own personal savings, it’s worth the time.
  • Important: Any investment or savings is subject to market conditions and banking regulations and all investments come with risk of loss of principal including up to your entire principal amount invested.

Before we begin, bottom line: It’s probably best to have multiple sources of income during retirement, instead of planning just one, such as Social Security.

Should you depend on Social Security for your retirement? Well in my opinion, as most financial planners would tell you, no, not alone, you definitely need additional savings. Yes, I do know this is hard to do for most Americans. Also will Social Security even be there when you retire? Well that depends on when you are going to retire, and I also believe that it will exist in some form for some time to come. If there’s ever going to be an end of Social Security it has to be wind down appropriately otherwise the Congress and President who preside over that time would be kicked out of office quicker than you can blink an eye.

Here’s how I imagine a process to wind down Social Security would go:

  1. Most likely those currently receiving Social Security would continue to do so for the reminder of their life.
  2. Those closely approaching retirement age and who are eligible to receive social security would probably receive their benefits from the program.
  3. Some cut off birth year would probably be set given those people ample time to participate in some other replacement plan or other independent retirement and savings plan. Say the bill to wind down Social Security would set some birth year where anyone who has at least 20 years or more before retirement will be excluded from receiving Social Security.
  4. Those who have at least 20 years or more left before retirement and who have paid into the Social Security system would receive some type of one time Lump Sum payment to be reinvested in an IRA or their 401Ks some similar retirement accounts.
  5. Social Security Tax would end however the American people who are still working would still be on the hook  via normal income tax for paying current retirees and those near retirement (less than the 20 year mark mentioned above) via debt issued by the Federal Government to continue to pay for those peoples’ Social Security benefits.
  6. 401K and other retirement pre-tax retirement savings limits would probably be increased considerable by the same bill that winds down Social Security.

Quick Facts:

  • As of 2018 Max Social Security Tax is $7960.80 / year or $663.40 a month.
  • That is based on Social Security Tax of 7.3% capped to $128,400 of gross income.
  • If you just save that amount over 30 Years it’s $238,824 in principal (savings without interest).
  • If you can get an average of 5% return (we are picking 5% out of thin air just to run the Compound Interest Calculator on You need to speak with a financial advisor and work with them to figure out what investments or savings plans work for your individual situation and risk appetite. Remember Interest is not guaranteed, you can get 0% return or even negative, potentially losing your entire savings, everything depends on Market Conditions, Banking Regulations and your individual choices.) year over year over that 30 year period, starting with ZERO in your retirement account contributing $663.40 a month getting compound interest annually you will have: $528,906.38 for retirement.
  • For more Return on Investment interest percentage numbers you can use that are realistic when playing with the’s calculator, you can Google: “what is the average return on 401k”
  • Since all retirement income calculators use 20 years of retirement, if you have a savings of $528,906.38 for retirement that would give you a yearly income in retirement of $26,445.32 / year. This doesn’t include continued interest on your remaining savings each year while you are retired.
  • The maximum social security benefit as of 2018 is $2,788 / month or $33,456, however the average monthly payout is $1,372 or $16,464 / year.
  • Our own savings plan listed above yielding a savings of $528,906.28 in total savings is slightly above the mean of those two numbers ($24,960). So you are doing much better than the average Social Security recipient but you are getting  less than the maximum benefit.
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