Moneywise
6 min read
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Tony Robbins, the well-known motivational speaker, warns that the most popular approach to Social Security is also the most dangerous.
On his blog, he says relying on the program as the foundation of your retirement plan is a “recipe for disaster."
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Here’s why Robbins encourages people to look beyond this safety net and why a growing number of working-age Americans are already leaning towards alternative strategies.
For most Americans over the age of 65, an average monthly Social Security benefit of $2,000 isn’t enough. Data from the Consumer Expenditure Surveys (CE) program shows that retired households spend over double that every month.
The program’s sustainability is also in doubt, meaning future retirees could potentially see even lower benefits. Trust fund assets are expected to be depleted by 2033, according to the Social Security Administration (SSA), while the Trump administration’s proposed tax cuts could deplete the funds in as little as six years, according to Marc Goldwein of The Committee for a Responsible Budget.
In other words, Social Security might not be a solid foundation for your retirement plan.
“Time to get your head out of the sand and do some easy number crunching to find out where you are and where you need to be,” Robbins wrote in a blog post.
Robbins goes on to encourage working-age Americans to create their own nest egg. Instead of relying on Social Security, it could be a good idea to start building out an independent retirement fund as soon as you can.
Robbins recommends targeting savings of roughly 20 times your annual expenses. This can be coupled with the 4% withdrawal rule, which means you can safely use 4% of these assets after adjusting for inflation to meet your living expenses without depleting your funds over the long term.
To reach that level of savings, it’s important to start investing early and often.
Read more: Rich, young Americans are ditching the stormy stock market — here are the alternative assets they're banking on instead
The key to building a robust portfolio for the long run is spreading your wealth across different asset types. As you approach retirement, you’ll often need to sell off assets to maintain your lifestyle.
