Social Security income benefits will increase by 3.6 percent in 2012 in order keep up with inflation. The adjustment is based on recent cost of living data from the Bureau of Labor Statistics.

Many individuals speculate if Social Security will even be around in 40 years when it’s time for Generation Y to retire. Regardless, saving for retirement is crucial.

Social Security should be icing on the cake, not a primary source of retirement income.

Make a point to set aside money without thinking about it. Use direct deposit to put a portion of your check in a savings account each pay period.

If you don’t see the funds in your checking account, chances are you’ll forget that you even have the money stocked away for a rainy day.

If a company offers a 401k plan, be sure to contribute the full amount that they match. This is an instant 100 percent return, and you don’t have to pay taxes on the income immediately.

Saving for retirement is not the same as saving for a vacation. You won’t touch this money in your IRA (individual retirement account) until you’re at least 59.5 years old without incurring a 10 percent withdrawal penalty.

Start saving as soon as possible to build a base of funds that will earn a return. As time progresses, the portfolio will compound and grow significantly.

People in their 20s can afford to take risk because they have time on their side. If they lose it all, they have time to make it back. Furthermore, the returns will be greater to compensate for higher risk. An aggressive growth strategy, such as investing in small companies, has historically offered the highest returns in the stock market.

For instance, $1 invested in 1926 in small cap stocks grew to $17,000 by 2010, according to a report by Morgan Stanley Smith Barney. Large cap stocks grew to around $3,000.

Individuals should reallocate their portfolio as their lifestyle changes. As they approach retirement, stocks probably aren’t the safest type of investment, as there is always a chance a company could go bankrupt.

It is important to keep track of your finances and plan accordingly for the future. Once you have that first job and are earning a little money, save some!

Find a Certified Financial Planner, CFP, to make sure you’re on the right track to meet your goals when the time arises.