Scared About Social Security's Future? Take These Steps Now

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For millions of Americans, the idea of retirement without Social Security is unthinkable. According to the Social Security Administration, about 41 million retirees and dependents receive retirement benefits from Social Security, with disabled workers and their dependents making up nearly 11 million more recipients and 6.2 million survivors relying on Social Security benefits as well.

Yet with the $863 billion that the SSA anticipates paying out in benefits this year making up almost a quarter of federal spending , concerns about the long-term financial sustainability of Social Security have made many younger Americans nervous that they'll never see benefits at all.

Before you panic about the uncertainty over Social Security's future, though, it's important to take stock of the program's full condition. In addition, there are steps you can take to shore up your own financial situation to ensure that no matter what happens to Social Security, you'll be in the best position possible to take care of your own money needs in retirement.

Will Social Security Be There for You?

A recent survey from the Transamerica Center for Retirement Studies looked at attitudes among adults aged 18 to 35 about Social Security and other economic and political issues. More than 80 percent said they were concerned that Social Security was unlikely to be there for them by the time they retired. And two-thirds expect to get most of their retirement income not from Social Security but rather than their own savings and investments, either inside or outside of specific retirement-savings vehicles like individual retirement accounts and employer-sponsored 401(k) plans.

Of course, millennials have the benefit of one of the most valuable resources in investing: time. With 30 years or more before they expect to retire, millennials have the most flexibility in tailoring their finances to balance current financial needs and wishes against future money issues.

But even if you don't have that long a time horizon, you can still handle the uncertainty about Social Security.

1. Know the Worst-Case Scenarios

Despite the survey's revelations about our fears, the reality is that it's unlikely that Social Security will disappear entirely. Even once the Social Security Trust Fund runs out of money, which is currently projected to happen in 2034, ongoing payroll taxes are expected to provide the program with enough income to pay more than three-quarters of scheduled Social Security benefits.

So at this point, what many see as the potential worst-case Social Security scenario is that, then the Trust Fund is exhausted, benefits will have to be cut by around 25 percent to keep the program stable. A trim of that size to the average monthly benefit -- currently around $1,300 -- means you'll be losing about $350 of the monthly income you could have expected. You'll either need to replace that money with your own investments, or tighten your belt.

2. Get Smarter About Investing for Retirement

One of the most impressive findings of the Transamerica survey was the extent to which millennials are taking action sooner rather than later. An estimated 70 percent of millennials have already started saving for retirement, and they typically began saving at 22. More than 75 percent have discussed saving, investing and retirement planning with family members, friends and other respected peers. That's encouraging -- and a wise choice whatever your age.

Moreover, taking advantage of opportunities to save for retirement through work has become essential. The typical millennial contributes 10 percent of their annual pay to a 401(k) plan, taking full advantage of company matches and using vehicles like target-date funds or strategic allocation funds to get age-appropriate diversified exposure to a variety of different investments.

3. Keep Your Job Skills Competitive

One of the most discouraging aspects of the recent economic downturn was that high unemployment rates lasted for a long time even after the recovery began. More recently, job growth has started to pick up somewhat, and that has put Americans in better position to provide for their financial futures.

Nevertheless, it's more important than ever to remain valuable as a worker. For many who are close to retirement age, the best way to make sure their limited resources last through retirement is to work for a few extra years. But in today's sharply competitive labor market, getting the opportunity to stay in your job isn't a given. So for workers nearing retirement age, consistently demonstrating your value to your employer is essential if you are to remain employed as long as you choose. Somewhat younger workers have even more at stake to stay at the top of their game to reduce the chance of an early layoff, and looking at educational opportunities to bulk up your skills can be a smart way to protect against a drop in eventual Social Security retirement income.

Fixing Social Security's long-term financial woes will require either raising taxes, raising the retirement age, modifying how benefits are paid, or some combination of those -- none of which are politically feasible in the current environment, so repairs aren't likely to happen soon. Your best bet for getting financial security you desire is to take matters into your own hands by boosting your own savings and investing. That way, Social Security can be less of a necessity and more of a welcome supplement by the time you retire.

You can follow Motley Fool contributor Dan Caplinger on Twitter @DanCaplinger. For more on ensuring a comfortable retirement for you and your family, see our free report in which Motley Fool retirement experts give their insight on a simple strategy to take advantage of a little-known IRS rule to boost your retirement income.