Dear Penny, I’m a 34-year-old man who just started saving for retirement last year after getting married. My husband is 39 and has been saving for some time. My question is about Social Security. Should someone in our age...

Dear R.,

Of all the things that keep me up at night, Social Security’s solvency isn’t one of them. At 37, I’m just a tad older than you. I expect to get benefits someday, and you and your husband should, too.

There’s a kernel of truth to the stories you hear about Social Security running dry. It’s starting to pay out more than it takes in, thanks mostly to people living longer and having fewer children who eventually pay in. Widespread job losses due to the pandemic probably accelerated things a bit.

But we’re still funding Social Security with our payroll taxes. It’s just that if Social Security’s reserves were completely depleted, our payroll taxes would only fund about 79% of obligations through 2090. That’s in the event that Congress takes zero action to shore up more money, which is highly unlikely given that Social Security is the most sacred of all social programs.

My bigger worry for young-ish workers like us is that our benefits won’t go very far. Even for our parents and grandparents who currently receive benefits, Social Security by itself makes for a meager retirement. The average retiree benefit in January 2021 is just $1,543 per month, or $18,516 annually. Social Security estimates that current benefits cover about 40% of an average worker’s pre-retirement income.

Those benefits buy less and less every year. Health care costs, which eat up a huge chunk of retirees’ budgets, rise way faster than Social Security benefits.

The 2021 cost-of-living adjustment was just 1.3%. Ask any retiree whether that’s adequate to cover their rising living costs. The younger you are, the less of your income you should expect your benefits to replace.

So while I think you should expect to receive Social Security someday, I don’t think it should factor into how much you save today. Knowing nothing about your budget or spending, I’ll give you the standard recommendation: Aim to save 15% of your pre-tax income for retirement. If you get an employer 401(k) match, make sure you contribute to enough to get your company’s full contribution. Once you’ve done that, make sure you have at least three months’ worth of emergency savings before you invest more for retirement. That protects your retirement funds so you don’t have to tap them when times are tough.

If you can comfortably save more, great. If 15% isn’t doable right now, figure out what’s manageable and work your way up. For example, you could commit to putting half of your next raise toward your retirement account.

Unfortunately, there’s no level of savings that guarantees you won’t have a rice and beans retirement. The younger you are, the more guesswork goes into retirement planning.

My life plans, at least as told to my Roth IRA brokerage, are as follows: work until age 67, delay Social Security until 70, die at 92. If everything goes as planned, I’ll die with millions. But really all of the above is just wishful thinking on my part. The picture changes drastically if I’m forced to retire early, take Social Security sooner and stretch my savings over more years than I expected. Or if a prolonged bear market hits right as I’m starting to withdraw my retirement money.

All that certainly supports the argument that you should save as much as you can muster as early as possible. But too often in personal finance, we only focus on the retirement years, assuming that they’re guaranteed. The truth is, life can be snatched from us at any moment. So I also want you to have enough room to spend so that you can enjoy life now.

That doesn’t mean you get free rein to spend. But if you focus on what really matters to you, I think you can strike that balance.

You’re 34. You don’t have to figure out your entire retirement plan right now. Focus on making saving a regular habit, and you can figure out the specific pieces as retirement gets closer.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to AskPenny@thepennyhoarder.com.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

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