Investor sentiment

Miracle or math? Investors look to solve retirement funding challenge

October 21, 2025 - 5 min

Executive Director, Natixis Center for Investor Insight – Natixis Investment Managers – US Distribution

Fewer American investors are counting on divine intervention in their pursuit of retirement security in 2025, but the challenge is no less complicated: Concerns about the sustainability of Social Security, growing levels of public debt, and inflation trauma loom large in retirement confidence.

According to the 2025 Natixis Global Survey of Individual Investors, 21% of 750 US investors believe it will take a miracle to achieve retirement security – almost half of the 39% who felt the same in 2023.

Optimism tempered by Social Security concerns

One explanation for the optimism: Two years of 25%+ returns from the S&P 500^® have swelled account balances, giving investors more confidence in their retirement plans. In the longer term, investors still have much more to worry about, especially when it comes to Social Security.

Knowing there are challenges ahead for this foundational source of retirement income, 41% rank it as a key fear about their life after work, and 52% of retirees worry about prospects for benefit cuts, making it their biggest struggle in retirement.

Overall, the vast majority of 750 US-based individuals included in the 2025 Natixis Global Survey of Individual Investors worry that this all-important source of retirement income is heading for hard times. An aging population is one key reason for concern, as 78% of those surveyed recognize government programs don’t account for longer lifespans.

An aging population tests the math of Social Security

Investors’ instincts are right. Pay-as-you-go retirement systems like Social Security depend on a simple mathematical principle: You need more people paying into the system than there are taking money out. When the system was initiated in 1935, the math added up. The US population was only 133 million.¹ Retirement age was set at 65, but the average life expectancy in the US was only 61.1 years.² Few were likely to collect benefits for an extended period of time.

Source: Statista

Fast-forward 90 years and it no longer computes. In that time, the population grew threefold, reaching an estimated 346 million in 2025. Over that same time frame, medical advancements and healthier living have pushed the average lifespan forward in the US to 77.4 years.

In simple terms, even as the overall US population has expanded dramatically over past century, it has been outpaced by the growth of the elderly population. As a result, there are now 32 people age 65 or older for every individual of working age (18–64) in the US.³

While it shows significant challenges ahead for Social Security in the US, other countries are facing a bigger aging problem. Japan, where the ratio of people age 65+ for every individual of working age is 54.9, has long been held up as an example of the problems presented by aging populations. Elsewhere, Germany, Italy, and France – with 42.4, 41.7, and 39 people age 65 or older for every working-age individual, respectively – will face a similar challenge in the coming decades.

Rising public debt levels complicate retirement security

Investors also see growing levels of public debt as another threat to their Social Security benefits. More than three-quarters (76%) of those surveyed worry that the debt problem will result in benefit cuts down the road.

Public debt in the US has been increasing steadily over the past 25 years. Starting the century at about 55% of GDP, debt first spiked in 2010 as the Great Recession reduced tax revenue and stimulus spending brought it up to 82% of GDP. Debt expanded throughout the decade and then Covid stimulus spending saw debt spike to a whopping 132% in 2020. Even though debt moderated to 118% by Q2 of 2025⁴, investors recognize someone will have to pay the bill.

Source: Statista

No easy solutions for retirement funding

With Social Security under these dual pressures, policymakers have limited options in how they can respond: Increase the payroll tax, raise retirement age, or cut benefits. Not one is likely to be popular with voters on either side of the aisle.

While the pressures have been amplified over the past 25 years, they are not sudden discoveries. Congress had already begun to address shortcomings of Social Security more than 40 years ago when it implemented reforms in the Social Security Amendments of 1983.

Key steps in the legislation included increasing taxes, making benefits taxable for higher earners, and raising full retirement age, among others. Changes in policy didn’t apply to those in the program or nearing retirement age. Age increases have been phased in over time, with those born in 1960 or later now waiting until age 67 to collect full benefits. It will be two more years until individuals in this age bracket will reach full benefits age.

A disruption to decades of retirement planning

Reforms are likely on the horizon, but it will be important to consider the role that Social Security plays for Americans in retirement income planning. For decades, the standard income planning model has been a three-legged stool of pensions, Social Security benefits and personal savings.

Over time, traditional defined benefits pensions have been phased out at most companies. Today only one-quarter (24%) of civilian workers and just 14% of private-industry workers in the US have access to a traditional defined benefits pension.⁵ As a result, the three-legged stool is already on shaky ground.

Venn diagram showing pension, personal savings, and Social Security intersecting as retirement income

Pensions have been replaced in the workplace by defined contribution plans like 401(k) and 403(b) plans. Funded by both employee and employer contributions, these plans have blurred the line between income from pensions and personal savings. Social Security benefits continue to be an important funding pillar, and 52% of US investors say it will be hard to make ends meet without Social Security benefits – including 42% of those with $1 milllion in assets.

Why social security means so much to so many

Traditionally, retirement income planning has relied on the 4% rule: In the first year of retirement, individuals should count on drawing 4% of their savings as income, then withdrawing that amount plus inflation in successive years to ensure their savings could support a retirement of 25 years or more. Even for those fortunate enough to have $1 million in savings, 4% adds up to an annual income of only $40,000. By way of comparison, that $40,000 would have been an income stream of about $13,000 in 1985.

Graphic showing that $40,000 income today is the equivalent of $13,000 in 1985

When it comes down to it, individuals know the pressure is real, and 81% of those surveyed believe it is increasing their responsibility to fund their own retirement.

Investors not past inflation trauma

Uncertainty over retirement benefits isn’t the only issue vexing investors. The prolonged bout of post-pandemic inflation has opened investors’ eyes to the real risk rising prices hold for their retirement plans.

Where inflation had been minimal since 2000, four years of rising prices has made a lasting impression: 60% of investors say they’re saving less, thanks to higher prices; 57% say it’s whittled away their investment gains; and 67% say it’s eroding the future value of their savings. Even as inflation nears Fed targets, only 26% of those surveyed think it is in the rearview mirror.

When it comes down to it, 41% of those surveyed say inflation is killing their dreams of retirement, ranking it right behind not saving enough (45%) and right alongside benefits cuts (41%) as their top retirement fears.

The reality check from retirees

Getting to retirement is only the start of security challenges. Just ask Boomers. The oldest members of the generation will turn 80 in 2026. Well into the retirement cycle, they offer a clear picture of where the pressure lies.

The good news is that 43% of those surveyed report they are living the dream, free from any struggles. But that means the struggles are real for close to six in ten.

According to those who are challenged, their biggest retirement struggle is uncertainty over government benefits (52%) – this among a group with an average retirement savings balance of $1,184,000.

Retirement isn’t always a choice

The first wave of their generation saw the qualifying age for full Social Security benefits increase to 66 years old. Not everybody gets to work to that age because retirement isn’t always a choice. Many times, individuals are forced to leave the workforce as a result of a late-career layoff, or a personal illness or injury, or they need to take care of elderly parents or a sick child.

For whatever reason, many retirees in the survey retired early, leaving the workforce at age 60 on average. If it was unplanned, this six-year gap could challenge their ability to preserve assets as they will have to draw a larger share of savings as income over a longer time horizon. This dilemma is one reason that half worry they will outlive their assets.

The same number are realizing another factor could deplete their savings even sooner: healthcare. Now that they are in retirement, 50% have found that their healthcare and long-term-care costs are bigger than they anticipated. It’s likely they are. The St. Louis Fed reports the average annual healthcare expenditure for households with members age 65+ increased by 36% over the past decade, rising from $5,069 in 2013 to $8,027 in 2023.⁶

Advice from retirees

While they may have found some aspects of retirement a struggle, overall, the survey group of affluent investors have succeeded in getting to their goal with a substantial a nest egg.

Knowing the challenges younger investors will face in retirement, they offer basic best practices for ensuring retirement security: Save more and live frugally (66%), and establish a long-term plan (35%).

Retirees’ best practices for security

Source: Natixis Global Survey of Individual Investors

But retirees’ experience tells them there is one factor that is the most critical to success: Get professional advice (69%). In essence, retirement is a complicated mathematical equation, and the variables are undefined. Nobody knows how long they’ll live. Nobody knows what things will cost in the future. And nobody knows for certain what they can count on for benefits. Saving more is one part of the equation. Setting goals and establishing a plan is the other, and that’s where professional advice can truly pay off.

¹ https://www.statista.com/statistics/1067138/population-united-states-historical/

² https://www.statista.com/statistics/1040079/life-expectancy-united-states-all-time/

³ https://www.oecd.org/en/data/indicators/old-age-dependency-ratio.html

⁴ https://fred.stlouisfed.org/series/GFDEGDQ188S

⁵ https://www.bls.gov/charts/employee-benefits/percent-access-participation-takeup-retirement-benefits.htm

⁶ https://fred.stlouisfed.org/series/CXUHEALTHLB0407M

The views and opinions expressed may change based on market and other conditions. This material is provided for informational purposes only and should not be construed as investment advice. There can be no assurance that developments will transpire as forecasted.

Actual results may vary.

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