You Don’t Need an IRA; There’s Always Social Security

By in Automatic Saving, Bond, Investing, Mutual Funds, Retirement | 17 comments

 Do I Need a Roth IRA If I Have Social Security?

I’m one of those dinosaurs that started her first IRA in her 20’s at the beginning of the IRA movement. At that time, there was no such thing as a Roth IRA, so I invested in a traditional IRA. On top of that anomaly, I was the only 25 year old at a retirement seminar in a room full of 60 year olds. The question of whether I needed need a Roth IRA if I have Social Security didn’t cross my mind since I believed that there’s no such thing as ‘too much financial security’. 

Do I need a Roth IRA If I Have Social Security?

Although my passion for saving and investing has stood the test of time, I am deeply concerned about the financial future of those who haven’t yet started to save and invest. Read on for some motivation to get started investing in a Roth IRA today. Get the answer to the question, “Do I need a Roth IRA if I have Social Security?”


A True Retirement Story

At 8:00 AM I receive a call from an older neighbor, just wanting to talk.

She started off by recounting the details of her husband’s firing from his job. My neighbor, June, believes he got fired because of his hot temper.

Strike one, keep your temper in check at work. The saga continues as she tells me about the new blinds she is buying for the home. I casually mentioned, that she might postpone this purchase since her husband, the main source of family income just lost his job. June replies, that expense was already planned so she will get the new blinds.

Strike two, don’t add more financial stress after a job loss. To top it off, June continues her financial mismanagement by sharing how she paid a consultant $100.00 to explain Medicare coverage to she and her hubby. Unable to keep my big mouth shut, I said that Medicare will explain their system for free. Strike three, don’t pay for information readily available for free.

The final blow came when she mentioned she has no Roth IRA, Traditional IRA, no 401k and little saved up for retirement.

She stated “We don’t need retirement savings, we’ll have social security soon.” 

What is she thinking? She simply stated I don’t need a Roth IRA if I have Social Security.

Why You Must Start a Roth IRA Today

I understand that retirement seems a long way off for those in their 20’s and 30’s. Yet, the earlier you start saving, the less total money you need to save, and the more you will have at retirement time. The future of Social Security is uncertain. And even if you do receive Social Security, it doesn’t come close to replacing your pre-retirement income. Your Social Security benefits will likely replace from 26% of your pre-retirement income if you were a high income earner up to 53% if your pre-retirement income was low. At best, benefits will be smaller and start later than they do now.

Today, long term employment with a single employer is practically nonexistent. So, if you fail to take responsibility for your future, you face a scary life in old age. As we all live longer, we need more assets to ensure that we don’t outlast our money. We also need to be certain that our IRA beneficiary designations are up to date. Explore the data so you don’t end up old and poor.

Even if you have a 401(k) at work, you should set up a Roth IRA as well. The more you can save today for retirement, the better your entire life will be. Once you automatically have your contributions transferred into your retirement account, you won’t miss the money, and you’ll learn to live on the rest. 

How to Invest Less and Have More Money in Retirement

Joleen’s Story

At age 25, Joleen began investing $200.00 per month in a Roth IRA and her employer added another $100.00 per month bringing the total up to $300.00 per month. She invested the monthly retirement money* this way:

  • 40% ($120.00) in Vanguard Total Stock Market Index Fund (VTSMX)
  • 30% ($90.00)  in Vanguard International Stock Index Fund (VTIAX)
  • 30% ($90.00) in Vanguard Total Bond Market Index Fund (VTBLX)

She started investing at age 25 and stopped at age 65, for a total of 40 years. At age 65, Joleen’s contributions plus her employers’ grew to $787,444.00*.

Jamar’s Story

Jamar, Joleen’s brother wanted to spend his earnings and didn’t think about the future. No retirement investing for Jamar, he was having too much fun; Jamar figured social security would take care of him.

At age 40, Jamar had a change of heart. He woke up one morning and realized that he had nothing invested for his future; and he was scared.

He decided to start investing and chose the same investments as Joleen, but decided to try to catch up.

Bonus; One of my favorite places to open an IRA is M1 Finance.

Jamar invested $400.00 per month, twice as much as Jill’s $200.00. Jamar’s employer matched his $400.00 per month with an additional $100.00, just like Jill’s. This brought his total monthly investment to $500.00.

*Assume: Portfolio average annual return of 7% At age 65, Jamar’s contribution plus the employers’ grew to $405,036.00, while Jill’s lesser contributions grew to almost twice that amount at $787,444.00.

Jamar invested $24,000 more than Jill and ended up with $382,408.00 less than Jill.

 Joleen & Jamar’s Total ContributionsEmployer’s ContributionCombined Total Roth IRA ContributionsPortfolio Value at Age 65
Joleen $96,000$48,000$144,000$787,444





Do I Need a Roth IRA if I Have Social Security? The Answer

My friend June is living in denial. When Social Security comes, it won’t match her husband’s former income. As her savings are small and she didn’t plan for the future she faces major lifestyle cuts as she ages.

The alternative to old age is death. If you expect to get old, own up to reality, and invest through work or a discount broker in a Roth IRA and start contributing today.

Even if Social Security continues, don’t expect it to pay for a comfortable retirement. You can choose not to invest for the future, but be aware that Social Security is uncertain, and you will likely be poor in your old age without investing in an IRA. Start now, you won’t miss the money and you’ll appreciate the financial security later.

 The answer to this question, “Do I need a Roth IRA if I have Social Security?” is “Yes”. You do need an IRA, Social Security won’t be enough to support your retirement.

Click here and find out how we grew our retirement account 538% and get the 14 Rules of Investing.

A version of this article was originally included as part of Jeff Rose’s Good Financial Cents Roth IRA movement.

Have you started your retirement investing yet? If not, what are you waiting for?

Updated; April 11, 2019


  1. I’m a bit worried that my dad might be a situation like this. As far as I know I don’t think he has money saved for retirement. I’m not sure what his plan is, but I suspect he is planning on relying on social security too. Meanwhile my mom just recently retired with her husband and I’m pretty sure they have a lot of savings and a plan for their future.

    As for myself, I’ve saved a bit for retirement, but feel like I haven’t made much progress. At least now I have recognized that and will be trying to take steps to improve that situation.

    Modest Money

    March 26, 2012

  2. Invest early, invest often, diversify and stick with index funds is a winning formula. A Roth IRA is such a great tool, especially because of the ability to take money out tax and penalty free for home purchases.


    March 27, 2012

  3. @Modest- It’s never too late to bulk up one’s savings. But as you saw from the article, starting early and staying the course makes a funded retirement much easier. Hope your dad has more saved than you think.
    @Short Road- Well put!


    March 27, 2012

  4. I remember my Mom saving for retirement because she was afraid the Social Security would not be enough. My mother’s home was paid for and she had no debt and still she was concerned about the future. Since she lived to almost 99 years old, she was right. At best, Social Security is living at a subsistance level.


    March 27, 2012

  5. I totally agree that it’s foolish to rely wholly on Social Security. Even since Reagan pilfered the coffers in the 80s, this program has looked less and less viable in the long term. While I hope that there will be something in Social Security for me when I reach my golden years (I’m 29 now), I’m not counting on it, and I’m doing the best I can to set apart money now.


    March 27, 2012

  6. I have faith that Social Security will be around – but in some disfigured, shadow of itself. In my retirement plan, social security will just be icing on the cake when I receive it. Meanwhile, I plan to max the Roth until I am no longer eligible.


    March 27, 2012

    • @My Money Design, I couldn’t agree more. You are certainly on the right track by maxing out your Roth IRA. Make sure to keep the investments in the ROTH in line with your risk tolerance.


      March 30, 2012

  7. @Krantcents-It seems as though some of that healthy concern for the future is missing. Everyone will need to retire at some point.
    @Bryan-It’s a great time for you to start preparing for your own retirement.
    @My money-Smart move. Actually, social security was never designed to provide total support in retirement.

    Barbara Friedberg

    March 29, 2012

  8. My dad is planning for his retirement. But he do not know of what he’s going to do of his future.Thanks for the post. My dad will be happy to read this.


    March 30, 2012

  9. thanks for this post. This will help me now.


    March 30, 2012

  10. My favorite part of this post is how Jamar’s name magically turned to Jack in the middle of his story! This reminds me of the “magic” of compound interest.

    Very nice contribution to the Roth IRA movement. I kind of wish I had taken part in this. I will probably do a late post on this topic at some point.

    • Hi Matt, Every considered a job as a proofing editor? Thanks for the heads up. It’s never too late to get started, write the post up anyhow 🙂


      March 30, 2012

  11. I’m working on maxing my 401k and roth IRA. Of the people my age (mid 20’s) who I work with that I’ve talked to about retirement, I seem to be the only one really doing this. Everyone else is for the most part just doing up to the 5% 401k employer match (some aren’t even doing that)I wonder if they will at some point realize they should probably be saving more for retirement, and spending less on toys.


    August 5, 2013

  12. I always recommend Roth IRAs, especially since tax levels are at historical lows. You might as well get the tax out of the way now. Heaven forbid we get back to the upper limit of 90+% like what occurred decades ago. Gulp!

    James Pollard

    February 16, 2016

    • James, I love the Roth IRA! The only problem (and its a good one) is that the opportunity to participate phases out at higher income levels. That said, it is close to a perfect retirement account!

      Barbara Friedberg

      February 26, 2016

  13. I just this year found out about workplace Roths. 401K or 403B Roths.
    The contribution limit is 18,000 and there is no income cap!

    CIndy W

    April 29, 2016

  14. Cindy, Isn’t that great! The more you can contribute now, the happier you’ll be as you get closer to retirement. Thanks for sharing that information with our readers! Best regards,

    Barbara Friedberg

    April 29, 2016


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