Watching Your Wallet: Will Social Security be there when you retire?

MIDLOTHIAN, VA (InvestigateTV) - When it comes to retirement savings, Americans are falling behind — and it is stressful.

One recent survey found a shocking 21 percent of Americans have nothing at all saved for the future, and another 10 percent have less than $5,000 socked away, according to Northwestern Mutual’s 2018 Planning & Progress Study.

When you retire, will Social Security even be there?

Tricia Heacock helps customers at her coffee shop in Midlothian, VA.
Tricia Heacock helps customers at her coffee shop in Midlothian, VA. (Source: InvestigateTV)

Inside the hustle and bustle of a new corner coffee shop in central Virginia sat owner Tricia Heacock. She’s always all smiles and laughter when it comes to her new corner coffee shop.

“We brought the fudge and coffee together to create our Coal Mine Coffee!” she said with a hearty laugh.

She sells lattes and java daily, but her sunny outlook turns a bit bland when it comes to thinking about what happens when she stops working.

“I do worry that it's going to be there. What it's going to be and what it's going to cover for me,” Heacock said.

Like millions of Baby Boomers, Tricia said she is worried about Social Security.

“I worry about it because more people going into the system, less people paying into the system. I also know millennials are having a hard time finding full time jobs,” Heacock said.

(Source: InvestigateTV)

Heacock is 56, and her husband is 60. They're just five years away from retiring.

“And we want to do it together so we get a chance to relax together. It is the dream!” she said with another laugh and flash of a smile. She retired from the corporate world and has been in the coffee business just nine months. She wasn’t ready to stop working because she knows she needs to save.

“We’ve been reading a lot of the headlines talking about is it (Social Security) going to be there. It’s going to be bust in a couple of years.”

“This is a huge misconception,” said Arielle O’Shea, a writer for the financial website NerdWallet. The mom of three covers investing and retirement and said Social Security will absolutely be there for the boomers, Gen Xers and millennials.

“People don’t understand how Social Security works, and they hear that the trust fund is being depleted. And they think that means they’re not going to get any, and that is wrong,” O’Shea said.

Even if the fund is there, some people worry Social Security will simply be less than they expected.

“The amount of your income that Social Security is going to replace will probably be a little bit less than your parents got, but those pay checks will still come and you should be factoring them in when you're planning how much you should save for retirement,” O’Shea said.

What the fund will look like in 15 years - and how much to save

Based on the Social Security Administration's latest report to Congress the system is not going to zero. The trust is on track to be depleted in 2034, but we're still paying in payroll taxes. That means you'll still get your benefits, but you'll likely only see about 77 percent.

“Social security is not going to fund your entire retirement. You really need to be saving,” O’Shea said.

She recommends a 401(k) through your work or an IRA or Roth IRA. A good rule of thumb is to replace about 70 percent of your pre-retirement income. Social Security money will make up some of that, but definitely not all.

“We are planning on if anything, (Social Security as) a backup,” Heacock said.

Heacock now has a financial advisor and is brewing a plan for her future. She's used to good conversation over a cup of coffee. And when she can, she stirs in some simple advice, "Save! Save!”

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