Social Security has been a vital part of retirement planning for nearly a century, but if you’re looking ahead, especially as a parent or grandparent, you may be wondering:
“What happens if Social Security isn’t there for my kids or grandkids?”
If you have the financial resources, you’re in a unique position to prepare the next generation – not just with money, but with a mindset of independence and confidence.
Here’s a simple guide to help you offset the potential loss of Social Security for your family and turn that concern into a legacy.
1. Start the Conversation
Before the numbers, start with values. Let your kids or grandkids know:
- Social Security may look very different when they retire.
- Planning early gives them more freedom and less stress later.
- You want to help them build independence, not dependency.
Pro Tip: Share your story – how you approached saving and why you want them to be ready for a different future.
2. Help Them Start Saving Young
For Kids with Jobs: Fund a Roth IRA
If they have earned income (from part-time jobs, internships, etc.), help them open a Roth IRA. You can even gift the contribution, up to the amount they earned.
- Why it works: Contributions grow tax-free, and retirement withdrawals are tax-free.
- Example: If they make $5,000 mowing lawns or working part-time, you can gift $5,000 to a Roth IRA in their name. A $5,000 Roth IRA contribution at age 20 could be worth over $75,000 at age 65 (assuming 7% annual growth). Contributions are limited to what they make in a year or up to $7,000, which is the annual limit.
For Younger Children: Start a Custodial Investment Account
No earned income? No problem. Open a custodial brokerage account and make periodic gifts to it.
- Why it Works: This gives them a jump start on compounding and helps them see how money can grow over time. This becomes a “nest egg” they can use for retirement or other long-term goals.
3. Invest in Education & A Debt-Free Start
One of the best ways to set the stage for financial success is to minimize student debt and career-launch stress:
- Contribute to 529 Plans – fewer loans mean more capacity to save later.
- Consider a “career launch gift” to cover first-year job costs (relocation, wardrobe, car, etc.). Every dollar they don’t spend on debt or rent is a dollar they can save for their future.
4. Create a Long-Term “Family Security Fund”
If you want to build something lasting, consider funding an investment account or trust fund designed to supplement their retirement income in 40-50 years:
- A single $50,000 investment today, growing at 7% annually, could become $750,000 in 40 years.
- You can set guidelines (e.g., distributions begin at age 65, matching personal savings, or after completing financial literacy milestones).
This becomes your family’s “Private Social Security” – custom-built, sustainable, and values-driven.
5. Teach Them to Fish (Financially Speaking)
Empower your kids and grandkids with financial education, not just financial gifts:
- Share books like The Psychology of Money or The Index Card (two of my personal favorite financial books)
- Listen to podcasts like our very own Off Street with Adam and Sean or Planet Money by NPR.
- Invite them to join you for a financial planning conversation – make it normal, not taboo.
Financial literacy is an underappreciated gift. Start passing it on early.
Final Thoughts
You can’t control what Congress does with Social Security, but you can shape what your children and grandchildren grow into financially. With some intentional planning, you can turn uncertainty into a lifelong advantage for your family.
If you’d like help modeling a custom “Family Security Plan,” we’d be happy to help you get started – whether it’s running projections or simply having the right conversations.
