Decoding Social Security

January 29, 2025by Alex Willard

Social Security has been a cornerstone of retirement planning for Americans since its inception in 1935. Signed into law by President Franklin D. Roosevelt during the Great Depression, the Social Security Act was designed to provide financial assistance to retired workers and those unable to work due to disability. At the signing, Roosevelt declared that the law would provide “some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age.” Over the decades, Social Security has evolved into the largest government program in the world, currently supporting more than 66 million beneficiaries with an annual budget exceeding $1.3 trillion.

Social Security is funded primarily through payroll taxes collected under the Federal Insurance Contributions Act (FICA). Workers and employers each contribute 6.2% of wages up to a taxable income cap, which is set at $176,100 for 2025. While the program was initially structured to have a large base of workers supporting a smaller number of retirees, demographic shifts have created funding challenges. Today, there are approximately 2.8 workers per Social Security beneficiary, but by 2035, this ratio is projected to decline to 2.3 workers per beneficiary. As a result, the Old-Age and Survivors Insurance (OASI) trust fund is expected to be depleted by 2033. If no legislative changes are made, tax income at that time will only be sufficient to pay about 77% of scheduled benefits, raising concerns about potential reforms such as means testing or benefit adjustments.

A key factor in determining Social Security benefits is the concept of Full Retirement Age (FRA), which is when retirees are eligible to receive 100% of their benefits. Initially set at 65, the FRA has gradually increased to reflect longer life expectancies. For those born between 1943 and 1954, the FRA is 66, while for those born in 1960 or later, it is 67. Retirees can claim benefits as early as 62, but doing so results in a permanent reduction—30% at 62, 25% at 63, and smaller reductions for each subsequent year until FRA. Conversely, delaying benefits past FRA can be advantageous, as they increase by 8% per year until age 70. For example, someone with an FRA of 67 who waits until 70 would see their monthly benefit grow from $2,000 to $2,480.

Deciding when to take Social Security benefits is a personal decision that depends on various factors, including health, financial need, and life expectancy. One important consideration is the break-even point – the age at which the total benefits received from delaying exceed the amount one would have received by claiming earlier. Typically, those who expect to live well into their 80s benefit most from delaying. However, if financial necessity or health concerns are factors, claiming earlier may be the better choice. Additionally, spousal strategies can play a role in optimizing benefits, ensuring that a surviving spouse receives a higher benefit in the long run.

Understanding Social Security is crucial for making informed retirement decisions. Our team is equipped to have these conversations to make sure clients are making informed election decisions. In an upcoming post, we’ll explore lesser-known aspects of the program like benefit reduction percentages, how benefits are calculated, and more!

Alex Willard

LeConte Wealth ManagementHeadquarters
We have an open door policy. Give us a visit.


4th Floor

333 East Broadway Avenue,

Maryville, TN 37804

Get in touchLeConte Social links
We participate in the online community. Connect with us.

Copyright 2025 LeConte Wealth Management LLC. All rights reserved.

Advisory Services offered through LeConte Wealth Management, LLC., An SEC Registered Investment Adviser.