In this week’s episode of Retire in Texas, Darryl Lyons, CEO and Co-Founder of PAX Financial Group, takes on one of the most urgent and often misunderstood topics in retirement planning: Social Security. With headlines swirling, political tensions rising, and myths spreading, Darryl breaks down the real math behind the Social Security system, the challenges it faces, and what retirees (and future retirees) need to understand today.
Drawing on personal stories, economic context, and practical advice, Darryl explains why this issue affects everyone – not just those currently receiving checks – and how thoughtful, long-term thinking can help you navigate decisions like when to claim benefits, how to plan for your spouse’s future, and what tax impacts to watch for.
Key highlights of the episode include:
• Why Social Security has been called a “Ponzi scheme” – and whether that label is fair.
• The looming 2033 shortfall and what it could mean for benefit payouts.
• Why investment policy (or the lack of it) in the Social Security trust fund matters so much.
• The dangers of claiming benefits early without considering your spouse’s future.
• How Social Security taxation really works – and the thresholds that affect you.
Whether you’re already retired or getting close, this episode is designed to help you understand how Social Security impacts your financial picture – and what you can do now to make informed, confident decisions about your retirement income.
For more insights or to connect with a PAX Financial Group advisor, visit http://www.PAXFinancialGroup.com.
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Transcript:
Hey, this is Darryl Lyons, CEO and Co-Founder of PAX Financial Group. And you’re listening to Retire in Texas. This information is general in nature only. It’s not intended to provide specific investment, tax, or legal advice. Visit PAXFinancialGroup.com for more information.
I’ve had really a great last couple of weeks. I had a chance to speak to some kids at New Braunfels Christian Academy. Got a chance to talk to them about, the title, the presentation I did was – How to Become a Millionaire. And I know if you’re older, you’re like, yeah, start saving early and invest early and, I told them and hopefully they listen.
They’re a good group of kids, so I’m hoping that they, they asked great questions afterwards. And then I actually did one last night. It’s a little tired today, but all good. At Saint Mary’s University to their accounting club banquet. I was the keynote there, so I’ve really enjoyed speaking. If y’all don’t know me by now, I always thought I was going to be a professor.
Maybe. Maybe one day, but I do. Certainly, when I get invited to go speak at the university level, I do enjoy. It’s so fulfilling. So I just wanted to give you guys that update. Also, visit our website, as you navigate there, let me know if there’s anything that you need us to add or just we actually take inventory of what content is being digested.
So that way we can continue to add that type of content. If you’re not getting our newsletter, let us know. And then there’s a place on the upper right-hand corner that says connect with us. If you’re not a client, you could do that. Have a 15-minute consultation. There’s no cost, no obligation. All of our advisors have hearts of a teacher, and we, I think you’ll find it to be a refreshing conversation.
If you have questions, just go there. All right. So, I’m going to talk about Social Security today because in the last week I had three questions about Social Security. One is well, there are some statements and questions and comments and convictions, and opinions all kind of wrapped into one. But the three that I wanted to address in, I’m going to address it at the end because I need to kind of lay the land.
But the first one is, I don’t care if they don’t give me my Social Security later, if I don’t need it. Okay. It’s number one. Number two, I’m going to take my Social Security now while I can. That’s for somebody who’s 62. And the third question is – It’s an opinion, a statement. 100% of my Social Security is taxed.
Okay. So those are the three that we’re going to tackle. First, let me set the stage. Social security is the cornerstone of retirement for many families. And if you have money, you know who you are. I just want you to know that most Americans rely on Social Security to be either their primary or their sole source of income.
And like it or not, that’s the situation that we’re in as a country. And so, touching Social Security, politically is dangerous. But also, I think we also have to have a heart for, for recognizing that a disruption to this group of people, which is a big chunk of America, is really problematic because, $100 or $50, there is a significant dent in their lifestyle.
And yes, we could question lifestyle, but I think we do have to, you know, especially a person of faith. I have to come at Social Security with a heart to know that there’s many people that that’s their primary or only source of income. So, I have to come at this whole thing with a heart. I am a capitalist, and I can do math.
So how do you handle, how do you reconcile having a heart for people, which is what I’m called to do, and actually being able to make math work? That’s the beauty of my job. That’s what I love to do. And so that’s what we’re going to talk about today, because I do have a heart. I deeply care about the people.
I had a family member, not anybody in my immediate family. And I won’t say their name. Passed away now, but they said to me, I said, who do you vote for? And this person, 100% of their check was dependent on Social Security. And she told me that she voted Democrat because whenever she voted Democrat, her Social Security check went up.
I was told this when I was 17. That was an interesting revelation for me that I never forgot. And it was a multifaceted answer that had a lot of implications. If you think about it. So, I set the stage because I need you to know that this is a really challenging task that’s going to take somebody. Somebody could be Trump, somebody with a lot of guts to resolve it.
And we’ve had wimps over the last 40 years that have not been able to tackle this issue. And you have to be able to run the math, and you’ve got to have political will.
Social security is relying on a big chunk of money to pay out benefits. The problem that exists today is that two problems, one is the baby boomer generation is much bigger than the previous generation Gen X, so baby boomers are getting a lot of money coming out of the system, and not enough money’s going in. So, what happens is, when that happens in any math equation, you have to rely on a savings account to make up the difference.
And that savings accounts, called the Social Security Trust Fund, that’s going to run out of money at 2033. So, there’s not going to be enough money coming in to support retirees in 2033. The math just doesn’t work out. And so, what will have to happen if nothing is done, then the current retirees that are living off of Social Security, then they will only get 80% of what they’re getting now because the math doesn’t work.
So when we heard Elon Musk say it’s a Ponzi scheme, there is truth to that because Ponzi scheme and I know this is a little bit of an exit ramp, but this may help, when an investment is not a Ponzi scheme, the money that you put in and the money you take out are the same money’s. A Ponzi scheme, is the money you put in is your money, but the money you take out, you think it’s your money, but it’s actually coming from somebody else’s wallet.
That’s a Ponzi scheme. And if you use that definition, then yes, this is a Ponzi scheme in the fact that we’re depending on other people’s money. But we are told that it’s our money. So, if it is our money, then where is it? I think these are logical answers and or questions, and the reason that the math is so far off is, like I mentioned, people are living longer.
So, the actuaries didn’t do a good job upfront, and probably they did. But the politicians weren’t willing to make the adjustment so that people are living longer. And there’s a big divergence in demographics of generations between baby boomers and Gen Z. And then third one, any guess what the third one might be? This is a big one that really caused all the problems.
And actually George Bush, to his credit, tried to fix this. I don’t know how much effort he put in. I really can’t tell. But I do know that he was trying to do this, and that’s, allows the trust fund to be invested, similar to a pension plan, which has a high fiduciary standard in responsibility.
And it’s been done all across the world for decades. But Social Security alternatively, refuses to invest. And I’ve seen this politically. They refused to invest in the capital markets because from and I know this sounds political, but you can look it up. I think it should be out there somewhere. The Obama administration, whoever was in that administration said that, that they did not want Wall Street to benefit from the trust fund investing in their portfolios.
And so, it became like this really weird political, us versus them conversation. And so, as a result, we’ve left it in these treasuries that make 2.5%, and they have been making 2.5% for decades. Had they been invested in something similar to a pension plan that the state of Texas and all the state teachers funds invest in, we would have been closer to maybe 7 to 10%, and we would not be in this, this problem wouldn’t exist.
But no, we refused to invest those moneys in the trust fund. And here, this is where we’re at today, man. It’s frustrating. So, I’d love for you to challenge me on this, but I feel pretty good about what I just stated to you. And if you hear something different, I hear politicians talk about this all the time, and I look at them and I just go, you’re just lying like this.
I saw one just the other day, and he said that the sole purpose of the current administration’s strategy behind Social Security changes is to and this is his quotes. He used it 2 or 3 times, at least twice was for, Trump and Elon to rob Social Security. And you think about that and you think, well, that’s not a big deal.
But then you look, I was watching this on YouTube and I was watching this guy talk. And then I look at the comments and these seniors are completely frightened. I mean, fearful, absolutely scared, because this rhetoric. So, I think that’s where it becomes dangerous is because, you know, I just really have a problem with the noise creating unnecessary fear, which creates more anxiety.
So, what do we do about all this? So, I mean, it is a political problem because people are just as I mentioned, you know, we don’t want Wall Street to get rich or you, you hate poor people or whatever. You hate seniors. Like, there’s people out there that hate seniors. So all this rhetoric is making us frozen and we can’t move forward.
So, we make these little tweaks like, I mean, cost of living adjustments. We had a big one in 2023 because of inflation. That was a cost of living in adjustment for beneficiaries of 8.7%. It was a big increase in pay. That was good. This recent 2025 was only 2.5%, so not quite as big. We do have something called a full retirement age.
That’s at 67. That’s going to probably have to move to a different age. The customer service issues are real. The AARP talks about that a lot, and we are going to have to fix those customer service issues. There’s all types of strategies that are discussed. Trimming the benefits, increasing the retirement age, adjusting that COLA, that cost-of-living adjustments.
One of them that probably will happen is lifting taxable earnings. So right now, not everyone’s income is subject to Social Security tax. Everyone pays Social Security tax. When you’re working it’s 6.2% and your employer matches that and it’s up to a certain amount. They’ll probably raise that. And I could see that is something that they’ll easily do.
And they’ve talked about doing it for anyone over 400,000. Right now. You max out your Social Security tax at 168,000. They’re just going to increase taxes. They talked about increasing taxes over 400,000. So, we’ll see. That was from Bernie Sanders in 2020. But I mean, I’m going around every party subjected to this issue and tried to navigate.
Mitt Romney had something that he wanted to do, like these committees to try to fix it. But then everyone screamed and said, no, you’re going to do behind the door kind of stuff. We need this open and, it’s just crazy. It’s just crazy because I have a heart for these people that are really challenged, because most of their income is Social Security, but we’re not resolving it.
And by doing nothing, we are doing something. So let me answer these questions. I guess you see my heart here and I’m just frustrated. Okay. So, my first statement that somebody told me is that like I look, I don’t, if I’m rich and I don’t need it, then fine, you know, give it to somebody else. Here’s the issue I take with that.
I don’t trust the government doing the right thing with your money. So, you put this money in, it is in fact your money. They did not invest it wisely. It would have been better off if you had invested it on your own, but most people would have spent it. So, from that perspective, I do see the value of the government saying, we’ll take care of it.
The problem is they put it in 2.5%. It didn’t make anything. But for you to say that I would rather the government, if you don’t need it, if you were a responsible American citizen that saved for you and your family, to then not get it because you were responsible doesn’t make sense to me morally. But secondly, we would assume that the government would then in turn, turn around and give it to somebody who’s poor or indigent or needs it.
And I just don’t assume that they’ll make that transaction as transparent, and I don’t think they’ll do it. So, to the person who told me, if I’m wealthy, you know, Warren Buffett actually said this too, if I’m wealthy and I don’t need it, then I’m going to trust the government to not give it to me and give it to somebody else.
I think you’re being completely ignorant there. So that’s what I would say about that. The other person that said, I’m just going to take it now, I’m 62 and I’m going to take it early. Here’s what I would say to you here. You have to 100% consider your spouse. Here’s why, I have sat down kneecap to kneecap with many spouses over the years who are, let’s say 74.
Their husband passed away, at 72. I’m making this up, and their husband took a lower social Security amount. It had their husband, and I’m using gender just to make it easy here. Had their husband waited and took a higher amount of social security, the widow would have received a higher death benefit of Social Security for the rest of their lives.
Instead, they get a lower benefit because he decided to take it early. And now I’ve got to sit across the table from a widow who’s 74. Who, by the way, unfortunately, businesses don’t hire widows. They just, it’s hard to get jobs. They’ve got to live 10, 15, 20 years on a smaller check because the husband decided that they wanted to get it early for whatever justification.
My inclination is when you’re making your Social Security decision, your primary purpose in making that decision is ensuring that your widow has enough money for the rest of their lives, because having a widow live off of less money for 20 or 30 years, is really, really hard. And so, my priority in making a Social Security decision does consider taking it early.
But the primary and number one consideration is taking care of the surviving spouse. Okay. Number three, 100% of my Social Security check when I’m retired will be taxed. That’s not true. There’s two methodologies. I won’t get into that, but based on how much money you make, up to 50% of your Social Security could be taxed.
And then there’s another formula in which up to 85% of your Social Security could be taxed. So that’s something that’s not 100%, but it sure is a lot. And it is frustrating that the money that you’ve been taxed on is now, you know, you take it out and it’s taxed again. That is frustrating, I get it.
That’s the way it is. There’s also something else you got to watch out for. And that’s if you make too much money in retirement, your Medicare could also be subject to a surcharge. So, you got to watch out for that one. We do have some good tax technology pieces. I was going to say software, but it’s really tech artificial intelligence pieces that can help model those things out to try to prevent those things from happening.
But I tell you what, this is a sensitive subject. We have to have resolve as a country. And but the things that we can’t control as responsible adults, I think we have to think long term about the implications of our decisions, specifically when we take social Security. All right. I covered a lot of ground in a short period of time.
I hope it all makes sense. And remember, you think different when you think long term. Have a great day.
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