Q3 2025 Commentary: Social Security - Will It Be There For Me?

Pine Haven Investment Counsel, Inc. – Commentary – 3rd Quarter 2025

Casey Fitchett, CFP® & Paige Johnson Roth, CFA®

Social Security, a once boring and dull topic of conversation amongst retirees, is making headlines. Much of the information and misinformation on Social Security follows clickbait titles that scare readers into believing that benefits will stop completely because Social Security is going to “run out of money”. It is true that if nothing changes, the Trust Fund reserves are projected to run out in 2034, but that does not mean that individuals will not get future benefits.¹ The data indicates that even when reserves are depleted, 81% of benefits will still be able to be paid from the payroll taxes at that time.² Additionally, there are options available to extend Social Security benefits at their current levels. The sooner they are enacted, the less ‘painful’ they will be.

History: Social Security was established in 1935 by Franklin Delano Roosevelt (Happy 90th Birthday!). It has been very effective at keeping people in their old age out of poverty and was never meant to replace 100% of a retiree’s income. Following Social Security’s enactment, Roosevelt said, “We can never insure one hundred percent of the population against one hundred percent 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."³

Social Security was established as an insurance program, not a program that guarantees that you will get out what you put into the system. In that way, it is most similar to an annuity (or pension) and not a 401(k) plan. At Pine Haven, we like to think of it as longevity insurance and as a bond replacement.

Strains: Over time, the number of people covered by Social Security has increased, and the benefits paid out have also increased. The system is strained. One cause has been an increase in life expectancy. In 1935, average life expectancy was 61.7 years (60 for men and 64 for women). In 2025, it is 78.4 years (76 for men and 81 for women).⁴

Another strain has been the ratio of workers to retirees. In 1950, this ratio was 16 workers for every one retiree. Now there are around three workers for every one retiree, and it is projected to get close to two to one by 2035.⁵ With much fewer workers paying into the Social Security, current benefit levels are unsustainable.

Although those in power have attempted to mitigate the issues through heavily increased payroll taxes and some tweaks to the Full Retirement Age (FRA) over the past 90 years, none of the solutions have completely solved the issues that plague the system.

Future Viability: There are a multitude of policy options that can be implemented to enhance the long-term viability of our current Social Security system. These include some familiar fixes like continuing to increase payroll taxes and raising the full retirement age from 67 to 68 (or more), or new ideas like slowing benefit growth for the top 70% of earners, subjecting more wages to payroll tax (currently workers don’t pay Social Security taxes on earnings above $176,100), lowering cost of living adjustment (COLA) calculations, and/or capping benefits. For example, if payroll taxes were increased to 16.05% (from 12.4%), projections show that Social Security could pay out all scheduled benefits through 2099.⁶ Of course, the sooner changes are enacted by Congress the less painful the changes will be. Reforms have occurred in the past – most recently, the increase in the Full Retirement Age to 67 (for those born after 1960), was enacted in 1983.

If you would like to explore the options for Social Security reform, there is an interesting fun virtual Social Security Challenge tool from the American Academy of Actuaries.

Individual Considerations: At Pine Haven, we do review your projected Social Security Earnings and discuss when it may make sense to claim your benefit. In many circumstances, we recommend waiting until 70 to claim, especially for the primary breadwinner. We also like to frame Social Security (and other pension income) as a bond replacement. In other words, when looking through the lens of the popular 4% withdrawal rule, you would need a portfolio of around $1.5 Million to generate a monthly income of $5,000. That amount is the current maximum payment for Social Security. For this reason, we will often hold higher allocations of equities for clients, especially when they expect that Social Security benefits will be sufficient to cover their non-discretionary expenses in retirement. For our younger clients, we run both baseline and more conservative estimates that assume lower benefit amounts as we develop their financial plans.

For all clients, we recommend reviewing your earnings record and current projected benefits by creating an account on the Social Security website. For any additional information or questions about Social Security, please don’t hesitate to reach out.

More info: Social Security Report Fast Facts

Disclosure Information: This presentation is not an offer or a solicitation to buy or sell securities. The information contained in this presentation has been compiled from third-party sources and is believed to be reliable; however, its accuracy is not guaranteed and should not be relied upon in any way whatsoever. This presentation may not be construed as investment, tax or legal advice and does not give investment recommendations. Any opinion included in this report constitutes our judgment as of the date of this report and is subject to change without notice.

Additional information, including management fees and expenses, is provided on our Form ADV Part 2 available upon request or at the SEC’s Investment Adviser Public Disclosure website, www.adviserinfo.sec.gov. Past performance is not a guarantee of future results.