Social Security strategies: How some Americans planned ahead

More than a half century ago, Mary Ann Sorrentino, then 16, dutifully watched her mother "kick a press" in a jewelry sweat shop.

It was a terrible job. With burned fingertips, Sorrentino helped solder cufflinks while laboring next to her mother, who'd been at it since fourth grade.

"She wanted me to see how I might end up if I didn't get a degree," Sorrentino writes in a first-person account for Yahoo News. Her mother's lesson: Get an education, invest your money -- smartly -- and don't expect something (hint: Social Security) to rescue you.

"After my dad died in 1952, she brought her measly savings to a conservative broker and built an investment portfolio," she writes. "I watched and learned from this woman -- brave enough to take the money from under the mattress (where my dad would have kept it) -- and invest it."

Sorrentino says her mother "kept kicking a press into her 70s," but she traveled the world, paid her daughter's college tuition and provided for a "wonderful wedding" in the Biltmore Hotel ballroom -- all without touching principal.

"Whatever wisdom I have," she writes. "I owe mostly to her."

Now nearly 70, Sorrentino says her mother's admonitions saved her -- especially considering that Social Security, that very American of safety nets, hasn't quite panned out the way many had hoped. She dubs them the "reality-challenged," referring to those who have long paid into the Social Security kitty with a blind belief they'll see their investments, and perhaps more, kindly returned to them by the federal government.

That dream has soured, says an Associated Press story this week. The average American who retires now will receive less Social Security money than what he contributed over a working life. There are variables (retirement age and income level are two big ones), but for many, it's clear: Social Security, she ain't what she used to be.

"Only those who refused to admit that the well was running dry are caught off guard," Sorrentino, who lives in Florida, writes.

Yahoo! News asked Americans young and old to share their personal strategies for dealing with a Social Security shortfall. Below are some perspectives.

"I'm in big trouble," Ilene Springer says.

"I've known it for years now, but I'm hoping for a miracle."

The 59-year-old expat, who teaches English as a foreign language in Malta, worries she'll work until she's past 70 because she can't live on Social Security and her savings alone.

"Four years ago, I left the United States (and two grown daughters behind) because I couldn't afford to pay both my rent and health insurance," Springer writes. "I lost my job then had to pay health insurance premiums that, at the time, were more than $900 a month."

So she moved overseas, and although the wages are "miniscule" compared to an American salary, she can afford rent and contributes to national heath insurance. Springer, who is divorced, says she'll net $600 monthly in Social Security payouts because she worked part-time after her daughters were born. If she doesn't remarry, she says, she'll get $1,000 a month, collecting off her ex-spouse's earnings.

"It's a reason to stay single," she writes.

To add to her Social Security benefits, Springer is contributing $500 a month to an IRA and hopes to have $100,000 by age 70 -- "which is nothing these days."

"I've written a book about leaving the States. I hope it'll become a best-seller," she says. "It's my one hope for financial survival."

Shauna Zamarripa isn't a big fan of Social Security.

"The idea of a forced, shared retirement plan -- serving as a catch-all for an entire country of workers and non-workers alike -- always seemed to me like it was doomed to fail, by the numbers alone," the 33-year-old Cibolo, Texas, resident writes.

Her strategy is three-pronged: 401(k), Roth IRA and recurring income from diverse sources. She invested in a moving-box company and a daily-deal start-up. She then rolled her $10,000 earnings into new ventures. "Putting all of my fiscal eggs in one basket is simply not my style," she says.

She says her multiple-stream revenue will earn her $5 million by age 65.

"Since I was in my early 20s, I have been working under the assumption that Social Security wasn't going to be there for me when I retired," Zamarripa writes. "While my heart goes out to those who are affected, I can say that, for someone like me, Social Security collapsing won't make a bit of difference. I've already been planning to live without it already. "

The well is running dry for 37-year-old Jimmy Collins. The Port Saint Lucie, Fla., small-business owner figures he won't hit the retirement age until at least December 2039 and that Social Security, according to the Congressional Budget Office, could be bone-dry by 2040.

"All this is bad news, although it's not a shock to me, and I've been warned since I was a teenager to prepare for my retirement without relying on Social Security. This is exactly what I've done," Collins writes.

He started investing in a Roth IRA and acknowledges he will work after age 65. Long-term planning, however, is too tricky and variable. He says he will make only $25,000 this year, compared to $40,000 in 2011, leaving him anxious about savings.

"Now retirement seems like a fantasy," Collins says.

Morris Armstrong, a financial planner in Connecticut, has done a little math. He's now 61 and will start collecting Social Security in four years. He thinks if he lives until he's 84, he will earn nearly $500,000 in Social Security benefits -- at $2,300 a month.

Not bad, right? But, Armstrong writes, don't ignore the "time value" of money: "If on December 31 of each year, I had contributed the amount of FICA withheld into a mutual fund that mimics the S&P500, I would have amassed more than one million dollars. With that much money, I could buy a lifetime annuity that would pay me nearly $5,000 per month. That is quite a difference!"

Although he says he lost 45 percent of his net assets and pension through a divorce, he's planning to work only another 10 years, and with his Social Security, pension and 401(k), he will retire comfortably.

"Who knows? Maybe it is the baby boomers who will bust the system," Armstrong says. "But I played by its rules."

For some like Kim Daugherty, retirement means eliminating debt. The 34-year-old Austin, Texas, area resident and her husband have a $130,000 mortgage, but they plan to pay that off by retirement. Their student-loan debt is nearly gone. Meanwhile, they're living below their means and diversifying their income.

"For years, I worked in the commercial finance industry, privy to the financial records of some very affluent people," Daugherty writes. "Many had significant income streams beyond a salary -- real estate, dividends, royalties and more recurring revenue that allowed them to earn a living without working in a 9-to-5 job. What I learned from my commercial finance years has formed the basis of our retirement plan."

They're socking away money in a 401(k) and an IRA, but they also owned investment property. Their annual income fluctuates between $100,000 and $150,000.

"The bottom line: My husband and I are not banking on any Social Security benefits in our retirement plans," she says.

In Rome, Ga., Tina Samuels is neither doom-and-gloom nor Pollyannish on Social Security.

"I'm somewhere in the middle of this mindset," Samuels, 42, writes."I'm confident our government will turn around and Social Security, while perhaps not as robust as it once was, will still be around in some fashion by the time I hit retirement. However, I'm also taking precautions."

She and her husband, who earn about $50,000 to $75,000 annually, have a 401(k), profit-sharing from a business, a life insurance policy and other benefits. She says their mortgage will be paid off by retirement.

"I'm a practical person: hope for the best, plan for the worst," Samuels says. "It is a strategy I use for retirement and Social Security uncertainty. While I'm confident, I'm not carving it in stone that it will happen and planning a Plan B just in case."

Correction: An earlier version of this article incorrectly said the Associated Press had conducted a Social Security study. It reported on a study.