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Sometimes things are good in theory, but not so much in practice.

And when it comes to theorycrafting your retirement, knowing what works, and if banking on Social Security is enough, can make or break your golden years.

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Imagine Jennifer, whose father, Mason, says that he would have been better off if, instead of having to pay into Social Security, he had invested that money himself.

Mason took the figures for his lifetime earnings and contributions, using the earnings history available on his my Social Security account, and then calculated what he would have earned if that money had instead been invested in the S&P 500.

He found that the total would be in the millions, and that the monthly drawdown amount he could take would be many times what he receives each month in Social Security benefits.

But a simple calculation like this doesn’t capture the full scope of a life. Here are a few points you to consider before going all in on the S&P.

Social Security began in 1935 during the Great Depression — the worst economic crisis in modern U.S. history — when millions of people were unemployed (1).

The political response to the dire situation was the creation of Social Security. When President Franklin D. Roosevelt signed the Social Security Act, he said, "We can never insure 100% of the population against 100% of the hazards and vicissitudes of life, but we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age."

Today, Social Security keeps millions of older Americans above the poverty line. According to the Center on Budget and Policy Priorities (CBPP), without Social Security, almost four in 10 older adults would be living below the poverty line (2).

According to the CBPP, one-fifth of Social Security beneficiaries receive disability or young survivor benefits (3). The CBPP also notes that "The risk of disability or premature death is greater than many people realize. Some 8% of recent entrants to the labor force will die before reaching the full retirement age, and many more will become disabled."

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There is a limit to how much of your earnings are subject to the Old-Age, Survivors, and Disability Insurance (OASDI) tax. Workers and their employers pay into Social Security as a percentage of earnings.

In 2026, employers and workers each pay 6.2%. Self-employed people must pay 12.4%. The taxable maximum amount for earnings in 2026 is $184,500. So, if you made $184,500 or more, you would contribute $11,439, and so would your employer (4).

At a glance, investing between 6.2% to 12.4% of your paycheck into something low risk sounds good, but there is no guarantee that most Americans would do so. Making the decision to invest requires a different mindset compared to payroll deductions for Social Security.

When it comes to retirement savings, a recent Gallup poll found that only about six out of 10 Americans have money invested in a retirement savings plan such as a 401(k), 403(b) or individual retirement account (IRA) (5).

It's also easier for workers with higher incomes to save, whereas lower-income workers spend a bigger percentage of their earnings on necessities (6). For example, USDA research found that in 2024, the 20% of households with the lowest incomes spent an average of 33% of their before-tax income on food, while those in the top 20% spent 6.4% (7).

Bank of America data found that in 2025, almost a third of lower-income households (29%) were living paycheck to paycheck — that is, spending 95% of their income on necessities, including housing, gasoline, groceries, and utility bills (8).

The Gallup poll found that 83% of Americans with household incomes of $100,000 or more had a retirement savings plan, while for those earning less than $50,000, that number drops to 28%. The poll also found "a sizable gap by race/ethnicity, with 68% of non-Hispanic white adults having a retirement savings plan versus 42% of people of color."

The way that your Social Security contributions are invested is very different from money that's invested in the stock market.

Your contributions are held in the Social Security trust funds, which are financial accounts in the U.S. Treasury. Money not used to pay benefits and administrative costs is invested in "special Treasury bonds that are guaranteed by the U.S. Government," according to the Social Security Administration (9).

Money you invest in the stock market, however, is subject to a lot more risk. You also have to time your withdrawals if you’re invested in the market. That's why investors are typically advised to rebalance their portfolios as they near retirement, so they hold lower-risk investments.

Moreover, most retirees can’t save all that they need for retirement on their own. Most need to depend on a mix of both Social Security and their own savings. Unlucky retirees who face a market downturn, such as the 2008 financial crisis, could enter their golden years with a lot less gold in their purses than anticipated. In the first quarter of 2009, for example, Americans' retirement accounts had lost an estimated $2.7 trillion from their peak in 2007, according to the Urban Institute (10).

That’s why it's critical for savers to consult a financial advisor to ensure their money is set up to withstand market downturns, and their investments are diversified as a contingency plan.

If you have a portfolio of $250,000 or more, platforms like WiserAdvisor can connect you with vetted professionals who specialize in this kind of planning.

Simply answer a few questions about your savings, retirement timeline and overall investment portfolio.

From there, WiserAdvisor reviews its network to match you — for free — with up to three vetted, reputable advisors aligned with your specific needs.

You can then schedule no-obligation consultations with your matches to determine who is the best fit for your long-term goals.

WiserAdvisor is a matching service and does not provide financial advice directly. All matched advisors are third parties, and specific financial results are not guaranteed.

And remember that your Social Security contributions don't just come back to you as benefits when you retire — they also support survivors and dependents of deceased workers, as well as people with long-term disabilities.

Without the safety net of Social Security, millions of Americans could find themselves in dire financial circumstances, like those seen in the Great Depression, which inspired the program's creation in the first place.

Saving for a rainy day isn’t just a nice-to-have, it’s a sound financial strategy. Since you can’t know what’s around the corner, putting some money in an automated portfolio helps you plan for the unexpected.

Platforms like Stash make this incredibly straightforward.

With over 1 million active subscribers and more than $5 billion in assets under management, the intuitive app lets you set daily, weekly or monthly recurring investments that fit your cash flow.

You can build a diversified portfolio in just a few clicks using its award-winning Smart Portfolio, which adjusts your investment mix based on your goals and risk level. Prefer a more hands-on approach? You can also choose your own stocks and ETFs, or combine both styles.

And if catching up on retirement is a priority, a Stash+ subscription offers 3% IRA matching, which can give your contributions an extra boost.

You can set up a recurring deposit in just a few minutes and steadily build your nest egg on autopilot.

Plus, you can get a $25 bonus investment when you fund a new Stash account with $5, plus a 3-month trial to explore the platform.

*All investments are subject to risk and may lose value. View important disclosures. Offer is subject to T&Cs.

CNBC reports that the average American between 21 and 42 with at least $3 million in investable assets is not putting the majority of their wealth in the stock market — in fact, they hold only 25% of their assets in stocks or stock funds, according to Bank of America Private Bank’s 2025 survey (11). Instead, they’re opting for alternative investments, including real estate, private equity and cryptocurrency.

If you’re a high net worth investor, you can partner with IRA Financial to use a tax‑advantaged IRA or Solo 401(k) to invest in alternatives and public markets, all in one place, while staying compliant with IRS rules.

IRA Financial gives you the freedom to invest in alternative assets like real estate, private equity, precious metals, and crypto within a self-directed retirement account. And now you can add real-time, public market investing, powered by Interactive Brokers, a trusted global brokerage.

For the first time, you can manage both traditional and alternative assets seamlessly within a single self‑directed retirement structure, all for a flat fee.

Complete the application online in minutes to open your self‑directed retirement account with stock trading access powered by Interactive Brokers.

— With files from Rebecca Payne

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We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.

Social Security Administration (1),(4),(9); Center on Budget and Policy Priorities (2),(3); Gallup (5); TD Economics (6); U.S. Department of Agriculture (7); CBS News (8); Urban Institute (10); CNBC (11)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.