Social Security Planning Strategies and Challenges as It Hits Its 90th Year: A Financial Adviser's Guide

Longer life expectancies and changing demographics put extra pressure on the program, making it crucial for future retirees to understand its evolution, common myths and how to strategically plan for their benefits.

By Kelly Gilbert, Investment Adviser Representative

published 14 August 2025

in Features

(Image credit: Getty Images)

Social Security has been making headlines for some time, primarily due to longevity concerns.

Currently, more than 70 million Americans rely on this program to make ends meet, yet the most recent predictions estimate the Social Security trust fund that pays retiree benefits will be depleted by 2033.

As the program enters its 90th year, it's important to understand how we got here, what's currently happening and how this could impact future recipients.

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How it started

President Franklin D. Roosevelt signed the Social Security Act into law on August 14, 1935.

It was established to provide financial support to older people and has since evolved to provide benefits for spouses and minor children of retired workers, those who are disabled and those who are widowed or divorced.

What made this program so monumental at the time was that it would be funded through payroll taxes. The idea is that Americans will spend their working years paying into the program, then benefit from it in retirement.

How it's going

While this worked great in the beginning, changes in life expectancy, declining birth rates and an unbalanced worker-to-beneficiary ratio have put the program's future at risk.

Having more people receive benefits than those paying into it will drain the fund fast.

Initial estimates predict that benefits will have to be reduced by 20% to 25% to keep Social Security going — which can be extremely challenging for recipients such as retirees on fixed incomes. Can this be stopped or reversed?

The answer: not easily and not practically. The current downward spiral of the trust fund won't stop unless Congress acts quickly.

Seeking solutions

Unfortunately, Social Security reform has become the proverbial third rail of politics: Anyone who proposes changes to the program gets accused of trying to ruin it. I expect our politicians to continue kicking the can down the road when it comes to finding solutions.

In the meantime, the program is operating at full capacity, so it's important to understand how it works. As an adviser, I see many misconceptions surrounding the program.

Busting myths

Lately, some people claim that your Social Security benefit is based on your last 10 years of earnings — that's incorrect. Your benefit is based on your top 35 years of earnings. The calculation is quite involved, but essentially, the first decade of those 35 years carries more weight than the last.

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Another myth I've encountered is that many people believe Social Security will go away entirely. At this point, benefits will be reduced if Congress doesn't intervene, but the program will not disappear.

Still, it's extremely important for pre-retirees to explore and plan for other streams of income in retirement.

The final misconception I'd like to address deals with spousal benefits. Many believe they can't collect spousal benefits from a divorced spouse. However, you can.

If your ex is already collecting benefits and you were married to them for at least 10 years, and are not remarried at the time, you can collect a spousal benefit that equals half their total benefit or your own benefit, whichever is larger. I've had many single female clients who benefited greatly from this rule.

Crafting strategies

In addition to having a general understanding of how the program works, knowing when to claim Social Security benefits is also crucial and can have significant consequences.

While you can claim benefits at 62, you won't receive 100% of the amount to which you're entitled. To receive 100% of your benefits, you must wait until you reach full retirement age (FRA), which depends on the year you were born.

For example, people born from 1943 to 1954 reach FRA at 66. It gradually increases to 67 if you were born from 1955 to after 1960. If you claim before you hit FRA, you can expect to lose more than 8% of your yearly benefit amount.

You also have the option to take a delayed retirement. If you decide to go this route, you can delay receiving benefits past your FRA, which will increase your monthly benefit by 8% a year until you reach 70.

Another mistake many clients make is choosing to claim Social Security benefits early while still working to make up the difference. However, you're severely limiting yourself in this situation.

According to the rules, if you collect benefits early, the Social Security Administration limits your annual income to about $22,000. If you earn more than that, you'll get penalized. For every $2 you make above the threshold, they'll take $1 back.

However, once you hit your FRA, the threshold is removed, and you can make whatever you want and still claim 100% of your benefit.

As you plan for retirement, I'd aim to wait until you reach FRA to claim benefits, seeking professional guidance if you need to deviate from that.

Final thoughts

Social Security has come a long way since 1935, but the financial support it gives to those in need has remained the same.

Whether you're nearing retirement or decades away, understanding the purpose behind this social insurance program, how it's changed and what it might look like in the future is necessary for comprehensive planning.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Kelly Gilbert is the co-founder of Eminence Financial Group. He brings more than 20 years of experience to the finance industry, particularly through small-business and process improvement consulting. He is the co-author of Future Proof Investing and carries more than a decade of insurance strategies and financial investing advice experience to the industry.