On Aug. 14, 1935, when the U.S. was in the midst of the Great Depression, Congress instituted the Social Security system.

In the general description of the Social Security Act (HR 7260), it states that Social Security is to “ … provide for the general welfare by establishing a system of federal old-age benefits and by enabling the several states to make more adequate provision for aged persons … ”

Social Security was never about providing the primary source of retirement income. It isn’t the cake itself but was designed to be the icing on the cake.

Clients can begin taking Social Security benefits as early as 62, but those benefits are reduced from the full retirement age of 66. Although monthly benefits would be 32% greater at 66 and 76% higher at 70, 62 is the most popular age when clients begin taking benefits.

Sadly, more than 40% of Americans claim Social Security early primarily because they need the money, PBS NewsHour reported on May 26.

And 44% of those surveyed said that Social Security will be their biggest source of income during their retirement years, according to an Associated Press poll released in May.

Those who don’t want clients to have to rely on Social Security for support during retirement -- in other words, they want them to have some cake under the icing -- here are some useful hints:

  • Anticipate that Social Security benefits may be cut back, and expect the retirement age to be raised again.
  • Follow a simple rule: “God helps those who help themselves.” We aren’t a socialist nation, so don’t pretend that we are.
  • Fund 401(k) or 403(b) plans to the maximum allowed, and take full advantage of a company match if applicable.
  • Invest for the long term.
  • Save, save and save some more. Start saving for retirement as soon as possible. Retirement comes about much sooner than expected, and compounding savings does wonders.
  • Those who are healthy should put off taking Social Security as long as possible. The longer the wait to draw on Social Security, the higher the monthly benefit.

Does this sound like tough medicine? For some clients, it is.

But better to plan for reduced benefits and retire in dignity and comfort than fool oneself and expect a benevolent government to increase benefits.

Social Security is the icing on the cake. Other retirement savings plans are the cake supporting the icing.

This story is part of a 30-day series on Social Security.

Register or login for access to this item and much more

All Financial Planning content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access