The Pax Financial Blog

Chances of Getting Social Security

Financial Planning, retirement, Social Security Mar 5th, 2018 by: Darryl Lyons

“More young people believe they’ll see a U.F.O. than that they’ll see their own Social Security Benefits.” - Mitch McConnell


When our company is preparing a financial plan in our San Antonio office, we run on rules of thumb and then customize based on the client’s particular financial situation. The rule of thumb we developed after countless debates is that we should not use Social Security as part of the planning process if someone is under age 55.


Even those who watch more “Survivor” than CNBC knows that Social Security is bankrupt. But people are still paying in and benefits haven’t stopped, so we have to ask ourselves, can we count on it?


It depends on your age and income.


Using the Congressional Budget Office’s 500 distribution of outcomes, you can get some degree of unemotional probabilities. Someone who is 55 or older has a 93 percent probability of successfully receiving most of their Social Security. Yes, I didn’t say all, I said “most.” But “most” is 80 percent or moreThe question is, how could the government possibly reduce the benefit promised? They will reduce the promised benefit by (a) increased taxes on the benefits, (b) reduction in inflation or (c) means based testing. Your income could play a key role in the benefit reduction. Currently, 85 percent of your Social Security is subject to income tax depending on your income ($34,000 single and $44,000 married filing joint, 2016). This number will not stay flat over the next 30 years. Appropriate planning can help mitigate the taxes on Social Security.


Considering the probabilities, however, if you are 55 or older, you should plan to receive the benefit.


Alternatively, the younger generation (those born in the 1980s) doesn’t have the same luxury of probabilities. Those in their 30s have a 68 percent chance of getting most of their Social Security and only a 5 percent chance of getting 99 percent or more of the benefit promised. This frightening thought should make any 30-something aggressively start saving … yesterday.


So, our rule of thumb is still reasonable. If you are 55 or older, the probability is likely that you will get “most” of your expected benefit. 


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This material is provided by PAX Financial Group, LLC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results.


Darryl Lyons

Darryl Lyons

CEO and co-founder of the PAX Financial Group, Darryl Lyons has been a licensed professional in the financial services industry since 1999. A lifelong Texan, Darryl began his career in the financial sector just one day removed from earning his bachelor’s degree in corporate financial management and accounting at St. Mary’s University. Throughout his career, he has won awards for recruiting and development from Fortune 100 companies. In January 2007, he chose to begin and develop his independent practice. He joined Andres Gutierrez and Joseph Schuetze to form the PAX Financial Group. Darryl also served as the Chairman for Brooks Development Authority. Shortly after his service, Mayor Julian Castro, named a park “The Darryl W Lyons Park” in honor of his service. He was named to the 2010 San Antonio Business Journal’s “40 Under 40 Rising Stars,” which honors people making a difference in business and in the community.


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