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This may come as no surprise to you, but those of us in Generation X and beyond can’t count on Social Security for our retirement. A recent Wall Street Journal reported that Social Security will exhaust its reserves by 2033, three years sooner than previously thought. Once that happens, benefits will automatically drop by 25%, though I suspect even more dramatic changes will occur.

The likely scenario is that benefits will be reduced, start later (i.e. age 70) and grow more slowly than they do today. Politicians won’t take action beyond rhetoric to fix the issue for fear of voter-backlash, and since it’s more than a decade away from meltdown, it can be someone else’s problem.

The impending insolvency of Social Security further demonstrates that we will and must be responsible for our own financial security. Just as this generation was starting to make progress in building a nest egg, stocks plummeted, real estate investments crashed and jobs were lost. The financial crunch coupled with vanishing Social Security makes it all the more critical that we take aggressive steps to build savings and solid investments now.

We can be doing things now such as diversifying our portfolios to minimize risk. Look for options that offer higher returns than traditional savings accounts and money market funds. Take care to spend money wisely, and keep the big picture in mind.

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