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When it comes to the notion of “expectation vs. reality” — especially as it applies to disillusion in retirement — numbers truly tell the story, as reported in a study by Nationwide.

In a December 2023 Nationwide Peak Retirement Survey Insights Report, the insurance and financial services company found that basic living expenses take up more than half (53%) of retirees’ budgets. Yet many workers expect these expenses to average out at just 42%.

In more than a third of instances (36%), retirees reported that they receive less in Social Security benefits than expected, compared to the 9% who say they receive more and 56% who collect about what they anticipated. And that 36% could grow.

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Social Security’s main fund is expected to run out of cash by 2033, at which point benefits may no longer be paid in full and benefits are projected to be cut by 23%.

Yet retirees can do plenty to offset any cuts that might occur. Assuming that the U.S. House of Representatives and Senate are slow to address the Social Security funding problem, here are three ways to head off any potential cash crunch.

Invest in index funds

Annual benefits could be cut by $17,400 for a typical newly retired dual-income couple, according to the Committee for a Responsible Federal Budget. That impact would amount to “a lot” for 71% of people in pre-retirement and roughly three-in-four currently retired (74%), per the Nationwide survey.

Billionaire investor Warren Buffett (who also happens to be 93 years old) has famously said index funds will be part of his wife’s investment plan upon his passing: In his 2013 letter to Berkshire Hathaway shareholders, he wrote:

“My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund.”

You can take Buffett's advice and start investing in the S&P 500 through Acorns. Acorns is an automated investing and savings platform that can help you start saving without ever having to think about it.

All you have to do is sign up with your email, link your bank account and start spending. Acorns will round up your purchases to the nearest dollar, and invest the difference into a smart portfolio, in which you can choose to include ETFs tied to the S&P 500.

Moneywise

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