I've spoken with several financial planners who recommend saving at least 15% of income for retirement (media example and this site has an example). They do not include social security, which takes 15% (half I pay, half my employer pays) up to an income limit (around $120-130K).

For people making under that threshold that amounts to saving 30% (15 + 15) for retirement. This sounds like a lot, as that equates to $0.30 being saved for retirement for every $1 earned (granted, employees don't see the part of social security that employers pay, so it only feels like their losing 7.5%).

Is there a reason that financial planners exclude social security in these calculations?

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    Anecdotally, projected solvency issues with Social Security lead some people to assume that they will not receive benefits when they retire.
    – asgallant
    Commented Apr 18, 2018 at 21:35
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    SS is a contract between the generations. You are paying for the current retirees, not yourself. The law was written as, and the courts have upheld, that just because you pay into SS, you are not guaranteed to receive anything from it. SS is simply designed to keep elderly people out of complete poverty (not that it necessarily does).
    – Ron Maupin
    Commented Apr 18, 2018 at 22:07
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    @asgallant - SS cannot be 100% insolvent. About 70% or so of future SS benefits are covered by current (in the future) payments. SS is not saving account. Current beneficiaries are paid by current contributors, and difference is spend wisely by Congress to make rubble bounce somewhere. Commented Apr 19, 2018 at 13:38
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    @Piohen economically speaking, the cost of SS is born almost entirely by workers (in the form of lower pre-tax wages), even if the incidence of the tax is on employers. Who gets assigned what portion of the tax for bookkeeping purposes is irrelevant.
    – asgallant
    Commented Apr 20, 2018 at 15:54
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    @PeterMasiar SS doesn't have to become 100% insolvent for there to be solvency issues. In all likelihood, Congress will simply find a way to pay benefits even if the SS fund runs dry. It would be political suicide to do otherwise. Personally, I hope we find a better replacement for SS before that happens, but my cynical nature says we won't.
    – asgallant
    Commented Apr 20, 2018 at 15:59

6 Answers 6


There is no guarantee how much you will actually receive from Social Security. The amount you pay in does not go into an account set aside for you personally.

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    There is actually no guarantee how much you will actually receive for any other savings, just a side note.
    – user45830
    Commented Apr 19, 2018 at 10:56
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    @9ilsdx9rvj0lo FDIC insures deposits up to $250k per depositor. Also, what if one's savings consisted of only actual cash?
    – glassy
    Commented Apr 19, 2018 at 17:27
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    @glassy: The rate of inflation is not set by any central planner. That $250K could buy you an egg by the time you need it. Commented Apr 19, 2018 at 17:44
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    ... uh, isn't the rate of inflation manipulated by the Federal Reserve (and, intentionally pushed to positive values)? But, if inflation got that bad, I would expect FDIC maximums to go up, as well.
    – jpaugh
    Commented Apr 19, 2018 at 18:41
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    @glassy: Your question was "what if one's savings consisted of only actual cash?" I answered your question: in that case the buying power of your savings is 100% exposed to the ravages of inflation. Just because the Fed has managed the economy to keep inflation reasonable historically is no guarantee that they will continue to do so forever. Keeping your investments in cash is making a bet about future buying power. If you didn't want an answer to that question, why did you ask it? Commented Apr 19, 2018 at 19:47

Social security has a maximum payout of not greater than $3600 per month ($43,200 per year). That figure requires planning and to be a high earner. The average is approximately $1500 per month ($18,000 per year). That average is barely more than the current minimum wage.

Even if you live modestly and retire with no debt that is not much income. Other programs exist to help with medical expenses but most still require some payment. You also have to cover basic necessities with those payments.

Social Security is a safety net and is not currently paying out enough to support a comfortable retirement. Saving for retirement independently of Social Security or other safety net programs makes it far more likely for you to be able to retire the way you want to retire.


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    "no longer pays out enough to support a comfortable retirement" - actually it never really did and was never even intended to do so. It was always meant to be a supplement, and not a sole retirement source.
    – Norm
    Commented Apr 18, 2018 at 21:42
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    Perhaps we have different standards of comfort? I consider myself pretty well off, yet aside from mortgage payments (which I expect to be paid off around the time I collect SS), I spend about that much per month.
    – jamesqf
    Commented Apr 18, 2018 at 22:39
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    Yes but $1500 is $1500, regardless of whether it pays for your entire retirement shouldn't the $1500 count towards your retirement?
    – Jim W
    Commented Apr 18, 2018 at 23:29
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    @jamesqf Elderly people likely want to remain where they have lived their entire life, where their friends and family are nearby. Forcing someone to uproot and move somewhere completely new where they don't know anyone is not good. A 'comfortable' retirement would involve remaining in the community you have lived in for a long time.
    – Eric Nolan
    Commented Apr 19, 2018 at 9:03
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    @EricNolan: Sure, and that brings us back to the point whether social security is meant to pay a comfortable pension or just as a buffer against outright poverty. Commented Apr 19, 2018 at 14:34

Is there a reason that financial planners exclude social security in these calculations?

Well, they should be including SS in the calculations. If you're within 15 years of retirement the calculation is pretty easy. Beyond that it gets tougher, since without any changes most projections predict SS will be unable to sustain the current payout rates. Perhaps beyond 15 years you could only collect 75% of the current amounts, and the farther you are from retirement the more difficult it is to predict how much you can count on.

Also, this is a pessimistic point of view, but many financial planners make money based on how much you invest with them. If they can convince you that you won't be able to count on receiving SS, you'd be inclined to invest more, leading to higher commissions for them. If this theory is correct then financial planners who are paid by the hour rather than as a percentage of your investments would be more likely to consider SS in your overall retirement. (This might be a fun experiment to conduct.)

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    They also have a financial interest in the downfall of SS and bringing it about by fueling a perception that it's not sustainable. Commented Apr 18, 2018 at 23:46
  • @R.. I suppose if you extrapolate my theory, they'd benefit even more if SS didn't exist, though, I'm not sure perpetuating that belief could help make it a reality. ;)
    – TTT
    Commented Apr 18, 2018 at 23:52

Let's put that 30% into perspective: how many years will you live while retired as a proportion of how many years you worked? If you work about 40 years and will live on 20 years more after you retire, saving about one third of your income sounds just right.

  • Once one sets aside all the machinations of taxes, ROI, COLA, etc., this is fundamentally the issue. Commented Apr 19, 2018 at 22:10
  • However, this neglects the effects of investment growth. If you start at an early age, and invest in a tax-free vehicle like a 401k or IRA,
    – jamesqf
    Commented Apr 19, 2018 at 23:38

Save 15% is a simple rule of thumb for the average person, who is earning considerably less than the limit. (in 2017, the median income was $56k, in 2014 $120k would put you in the top 6%.)

If you meet with a good financial planner to create a bespoke plan factoring in your personal income, your current savings, the lifestyle you want to main in retirement, your risk tolerance, life expectancy, etc they will come up with a number tailored to your personal situation. If you're earning well over the social security cap, that solution will almost certainly be to save more than just 15% of your current income.

Alternately there are various saving for retirement calculators that can take similar inputs and spit out a number for your situation.

All of the above is far to complex to put into a simple rule of thumb, of the form "you should save X amount".


I'm not sure which way you're asking the question.

The financial planners are quite aware of the potential payout from SS when you retire. Their recommended savings plans are (or certainly should be) based on the total expected income from all sources. If your financial planner's accounting sheet doesn't include SS payments in the bottom line, then he is lying to you.

But if all you're asking is "... why save an additional X% after the percentage of SS/Medicare tax..." then the answer is simply that the planners or planning tools are trying to advise you on optional saving planning. You don't have any choice about taxes you pay. You do have a choice on spending or saving your after-tax income.

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