How to Not Rely on Social Security Checks for Your Retirement

Social Security has come quite a long way since it's first recipient received over $25,000 from an initial investment of less than $500.

This is the first year, because of the budget crises, that Social Security payments may actually decrease.

I have long advocated that retirees not rely on Social Security checks, as it is anything but secure now. Unless the birth rate suddenly spikes, or some legislator comes up with a brilliant idea, Social Security faces bankruptcy.

Here's how to not rely on Social Security checks for your retirement.

1. Relieve yourself of debt first and foremost.

   Turn all resources to paying off debt. If you are near retirement, debt is your number one enemy.

   Also, do not consider debt incurring options like reverse mortgages or any of the exotic scams that were partially responsible for getting us into this mess.

2. Don't be afraid to invest after recessions. The period after recessions is usually the best time to get back in.

   Give to your 401K or 403K CAUTIOUSLY. If you were lucky enough to survive the massive recession, now is the BEST time to get into securities. Give to your 401K if there is an employer match.

   If not, you should start your own portfolio, beginning with an IRA. As I write this, (October 13, 2009), stocks are trading at a discount. As a person near retirement, you want to keep your portfolio rather conservative -- the prevailing rule is 20% stocks, 80% bonds.

   If you own your own business, you can and should have 2 IRAs, one for your personal account and one for your business. The government allows self-employed people and businesspeople to have one in their company's name.

3. Roth IRAs should be a part of a smart retirement portfolio.

   If you can afford to pay taxes now after paying down your debt, consider a Roth IRA. That way, when you get ready to withdraw the money, you won't have to pay any taxes.

4. You may have to work a bit longer, but if you can make it to 70, that interest can add up.

   Defer payments by buying US savings bonds -- no risk, and a guaranteed rate of return.

   Also, did you know that you can suspend Social Security payments until the age of 70 and continue collecting interest? If you can afford it, take this option and let your money grow until you really need it.

5. Also, don't be afraid to rely on family during retirement. That's what they are there for.

   Once you're done setting up your portfolio, and you're ready to retire, roll all of your money over into a fixed annuity. This guarantees that you will not outlive your money.