Millennials and Gen Z: How to Prepare for Retirement Without Relying on Social Security

For many older adults, Social Security is an essential part of their retirement income. But if you’re a millennial or a Gen Zer, relying on Social Security alone may not be a safe bet for your future.

For years, experts have warned that the Social Security fund is running low, and recent government proposals could make the situation worse. While some current retirees might get more money in the short term, the long-term effects could lead to reduced benefits for future generations.

If you’re worried about whether Social Security will be enough when you retire, you’re not alone. Many financial experts stress that Social Security should be seen as just one piece of the retirement puzzle—not the entire plan. Let’s explore how Social Security works, whether it will be around when you retire, and what you can do now to secure your financial future.

How Does Social Security Work?

Social Security is a government program funded through payroll taxes. Here’s how it works:

• Employees contribute 6.2% of their income, and employers match that amount.
• If you’re self-employed, you pay the full 12.4% yourself.
• The money collected today is used to pay current retirees—not saved in a personal account for you.

When you retire, your benefits will depend on how much you earned over your highest 35 years of income and the age at which you claim Social Security. The earliest you can claim benefits is at age 62, but the longer you wait (up to age 70), the higher your monthly payment will be.

Will Social Security Still Exist When You Retire?

Yes, Social Security is expected to continue, but there may be cuts. The 2024 Social Security report found that the program can pay full benefits until 2035. After that, payments could be reduced to 83% of the current amount unless new funding sources are introduced.

For example, as of 2025, the average Social Security benefit is $1,976 per month. If the 17% reduction happens, that would drop to about $1,640 per month. While this is still helpful, it’s probably not enough to fully cover your living expenses.

Is Social Security Enough for Retirement?

Most people depend on Social Security as a part of their retirement income—but it’s not enough by itself. Even if you live a simple lifestyle, $1,640–$1,976 per month may not cover housing, medical expenses, and daily living costs.

This is why financial experts recommend building additional sources of retirement income instead of relying solely on Social Security.

What Can You Do Now to Secure Your Retirement?

If you’re worried about your financial future, here are six steps you can take now to start building your retirement savings—even if you can’t save a lot yet.

1. Set Up a Retirement Savings Account

The first step doesn’t require saving money immediately. Instead, review your options and open a retirement account so you’re prepared when you can start saving.

Talk to retired people in your family or workplace to understand how they saved for retirement. Knowing your options early makes it easier to take action later.

2. Maximize Your Employer’s 401(k) Plan

If your employer offers a 401(k) plan with a matching contribution, try to contribute enough to get the full match. This is free money that helps your savings grow faster.

Thanks to new rules in the SECURE 2.0 Act, even part-time workers may now be eligible to join an employer’s retirement plan. In 2025, you can contribute up to $23,500 to a 401(k). If you’re 50 or older, you can contribute an extra $7,500.

3. Open an IRA (Individual Retirement Account)

Once you contribute to your 401(k), the next best step is opening an IRA. In 2025, the maximum IRA contribution is $7,000 per year.

• Traditional IRA: Contributions are tax-deductible, but you pay taxes when you withdraw the money in retirement.
• Roth IRA: Contributions are made after tax, but withdrawals are tax-free in retirement.

If you’re unsure which one to choose, consider whether your income tax rate will be higher now or in retirement.

4. Pay Down Your Mortgage Faster

One way to stretch your Social Security income is by reducing big expenses—and housing is usually the biggest. If possible, try to pay extra toward your mortgage now so you own your home outright by the time you retire.

For example, if you get a bonus, tax refund, or extra income, use it to pay down your mortgage. Even small extra payments add up over time.

5. Consider Downsizing or Moving

If you live in an expensive area, consider relocating to a more affordable city or state. Lower housing costs and state taxes can help your retirement savings last longer.

For example, many people move from high-cost cities like New York to lower-cost places like Charlotte, North Carolina, saving thousands in taxes and living expenses every year.

If moving isn’t an option, you can still downsize to a smaller home or apartment to reduce costs.

6. Use a Health Savings Account (HSA)

Medical costs are one of the biggest expenses in retirement. If you have access to a Health Savings Account (HSA) or a Flexible Spending Account (FSA), use them to save money on healthcare now.

HSAs are especially valuable because:

• Contributions reduce your taxable income.
• Money grows tax-free.
• You can withdraw tax-free for medical expenses.

By investing in your health now, you can avoid large medical bills later.

Final Thoughts: Take Control of Your Financial Future

While we can’t predict exactly what will happen with Social Security, we can take control of our financial future. The best thing you can do now is start saving—even if it’s just a little at a time.

By combining Social Security benefits, retirement savings, smart budgeting, and proactive financial planning, you can build a secure and comfortable retirement—no matter what happens with Social Security.

The worst mistake? Assuming Social Security will be enough. Start planning today for a better tomorrow.

Disclaimer – Our team has carefully fact-checked this article to make sure it’s accurate and free from any misinformation. We’re dedicated to keeping our content honest and reliable for our readers.