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Going by the strict definition of Gen X, that demographic ranges in age from 45 to 60 years old in 2025, meaning Social Security is a very real near-term consideration for the oldest Gen Xers. After all, if one is willing accept reduced benefits, Social Security can be claimed as young as 62 years old.
Accepting lower benefits isn’t advisable for all clients and recipients, but some Gen Xers may be thinking it’s best to get while the getting is good with this program because there’s widespread concern about Social Security’s health among Gen X.
Middle-aged clients aren’t off-base regarding their Social Security fears. Unless some tough choices are made, Social Security won’t be able to pay out full benefits as soon as 2034, according to the 2025 Social Security Trustees' Report. Problem is the tough choices likely boil down to just two: raising taxes or reducing benefits. Remembering that alterations to the program require acts of Congress, it’s unlikely changes come to pass because benefit reduction is political suicide and there’s only limited support for raising taxes.
Gen X Right to Ponder Social Security’s Fate
When considering Gen X’s ages, the group is right to be concerned about the health of Social Security. Even the younger members of the demographic have been working for two-plus decades, paying into the system. They want what they were promised and rightfully so.
Unfortunately, promises, particularly those of a political nature, can be broken. In a recent interview with Morningstar, Kerry Hannon, author of Retirement Bites: A Gen X Guide to Securing Your Financial Future, positions the Gen X/Social Security conversation in good news/bad news terms.
“I know Social Security is such a hot-button issue,” said Hannon. “It has been for many years now because we know that the pending time when the funds are going to be depleted and Social Security, the trustees’ report says, unless something gets done its benefits will be trimmed back to 70% to 80% of what the full benefit should be. It’s so hard to know whether Congress is going to act and what changes may come down with Social Security. But I have to say in my heart and maybe I’m just an upbeat kind of gal, but I tend to think that Social Security is going to be there.”
Perhaps it’s overly simplistic, but one way of looking at the above comments is that Gen X will be getting Social Security (Yay!), but maybe not to the extent they’re expecting or paid taxes on (thumbs down emoji).
Gen X in a Social Security Rock and a Hard Place
Advisors and Gen X have ample reasons to start and improve relationships. Those currently in the 45-60 age range are the first to lack broad access to defined benefit pensions and many are pulling double duty – caring for children and older family members.
Add Social Security to the list of reasons why Gen X need advisors and why the group again finds itself in a precarious situation. For starters, working Gen Xers (and others) are paying for baby boomers’ Social Security benefits, but many boomers claimed too early and/or are living longer lives. Compounding that scenario is the fact that not enough young folks are entering the workforce (not necessarily their fault) to fortify the system.
Bottom line: Gen X could well be cruising toward Social Security disappointment, but not outright loss of the benefit.
“So, it’s a quite clear economic challenge that the Social Security Administration is facing in terms of how these benefits are going to get paid out because of the way the system is set up,” Hannon told Morningstar. “But I would find it super hard to believe that it’s going to go away. And I would love to hear what you two think about this, but it is really something that people—in fact it’s good advice maybe not to even plan for it if that’s how you want to deal with it, but I do think it will be there for people. Potentially it may be a slightly reduced benefit they may tweak when you have access to it, which is of the cut in itself, but we’ll see.”
Related: Meet XDIV: The New ETF Helping Investors Outrun Uncle Sam