Written by James Royal, Ph. D. – Edited by Lisa Dammeyer – 4 Minute read
Americans are increasingly concerned about Social Security. The program will likely have to cut benefits around 2033 unless the federal government shores up funding for the program, which would affect more than 70 million people who receive Social Security benefits each month. Recent cuts to funding levels at the Social Security Administration and Tesla CEO Elon Musk’s recent unsubstantiated claims of fraud are dragging down the public’s confidence that the government will safeguard the program’s payouts.
Americans who think Social Security will eventually be cut may want to take action in their own finances to secure their retirement plan. Here are five things you can do to improve your retirement plan, replace potentially missing Social Security income, and safeguard your future.
1. Commit to maxing out your 401(k) — and max the catch-up
A 401(k) plan is one of the best tools that everyday Americans have for saving for retirement, since it lets you sock away so much each year via an easy-to-use paycheck deduction. Plus, many employers sweeten the deal by matching your contributions, turbocharging your savings.
In 2025, all workers can contribute up to $23,500, while those age 50 and older can put in an additional $7,500 as a catch-up contribution. Those who are ages 60–63 can add even more, topping up their account with a super catch-up contribution of $11,250 in lieu of the regular one.
Your 401(k) plan offers you a great way to save on a tax-advantaged basis, letting you contribute to a traditional plan on a pre-tax basis or an after-tax basis via a Roth 401(k). They’re some of the best ways to grow your private assets and offset a potential Social Security shortfall.
2. Revise your asset allocation
Your retirement plan’s asset allocation is what financial advisors are referring to when discussing what portion of your investments are in stocks versus bonds, which are the two major asset classes. Your asset allocation is important because it determines how much your portfolio will grow over time. Portfolios with a heavy weighting toward stocks tend to deliver higher returns than those with a heavy weighting toward bonds, though stocks are more volatile in the short term.
Allocating more of your assets to stocks can help you grow your 401(k) more over time than sticking with a bond-heavy portfolio. If you have a long time until you need to access your funds, you can afford to be more aggressive — that is, have more in stocks — than if you have a shorter time frame. By revising your asset allocation, you can make more money over time without contributing more to the account — but you don’t want to get too aggressive with your 401(k).
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This article originally appeared here and was republished with permission.
