The Congressional Budget Office (CBO) released a report this year containing one number that should change how every American near retirement thinks about income. The Old-Age and Survivors Insurance Trust Fund (the part of Social Security that pays retiree benefits) is projected to run out of money in 2032.
When that happens, benefits don't disappear. But they do get cut. The CBO projects an initial reduction of roughly 7% in 2032, followed by average annual cuts of about 28% between 2033 and 2036.
More Yield, Less Trap: Sign up free to get Barchart’s daily Dividend Investor newsletter straight to your inbox.
The Senior Citizens League's 2025 study found that 39% of American seniors depend on Social Security for 100% of their income. For those households, a 28% annual cut isn’t a budget adjustment. It’s a full-blown financial crisis.
The window to build replacement income outside the federal program is now less than seven years. For investors with that window in mind, three Dividend Kings (companies that have raised their dividends for at least 50 consecutive years) stand out as the cleanest building blocks of a Social Security replacement portfolio.
Procter & Gamble (PG)
Procter & Gamble has raised its dividend for 69 consecutive years. The current yield sits at roughly 2.98%, with a five-year dividend growth rate near 6% annually. Both numbers are useful in isolation. Together, they are more powerful.
A $100,000 position today generates $2,980 in year-one income. With a 6% annual dividend growth rate continuing, that same position generates roughly $4,480 by year seven… without a single additional dollar invested. The dividend itself is doing the work that wage growth used to do.
The underlying business supports that math. P&G owns the world's most durable consumer staples portfolio, with powerful brands like Tide, Pampers, Gillette, Crest, Olay, Charmin, and Bounty. People buy these products in recessions, in expansions, in inflation, and in deflation. That is the entire reason Procter & Gamble has been able to compound payouts through every macro shock since the 1950s.
Wall Street’s consensus on PG is "Moderate Buy" with the average price target implying modest upside, though most analysts agree the income story is the real reason to own the name.
Johnson & Johnson (JNJ)
Johnson & Johnson has raised its dividend for 62 consecutive years. The current yield sits at roughly 2.22%. The company split off its consumer-products business as Kenvue in 2023, leaving J&J as a pure-play pharmaceutical and medical device company, and a structurally faster-growing business than the pre-split entity.
JNJ’s pharmaceutical pipeline has rebounded sharply post-split. Darzalex remains the company's largest revenue contributor, while newer launches in oncology and immunology have begun replacing the revenue lost to the Stelara patent cliff. Medical devices, including Abiomed's heart pumps acquired in 2022, are growing in the high-single-digit range.
For a retiree replacement portfolio, J&J does something the other two Kings cited here don't: it provides direct exposure to the aging-demographic spending pattern. The same demographic wave that is straining Social Security is also buying Darzalex, Stelara, and heart pumps. In that sense, the pressure on the federal program is structurally tied to the tailwind for J&J's revenue base.
Coca-Cola (KO)
Coca-Cola has raised its dividend for 63 consecutive years, and the current yield sits at roughly 2.6%. Warren Buffett's Berkshire Hathaway owns 400 million shares – a position it has held for more than three decades.
The bullish case on KO for income investors comes down to two things. First, the global beverage portfolio is structurally less cyclical than packaged food, which means dividend coverage stays clean even in recessions.
Second, the company's recent pivot toward premium products and away from low-margin bottling operations has expanded operating margins by several hundred basis points.
For investors looking to anchor the most defensive position in a Social Security replacement portfolio, KO is the cleanest building block. The dividend has compounded steadily through every recession, every inflation cycle, and every consumer-spending downturn since the Eisenhower administration.
The Combined Math
A $300,000 portfolio split evenly between PG, JNJ, and KO at current prices generates roughly $7,800 in year-one dividend income, with a blended dividend growth rate near 5% annually. That number doesn't replace Social Security on a one-to-one basis for most retirees, but it doesn't have to. For now, it only has to cover the gap.
The average Social Security benefit in January 2026 was $2,071 per month, or roughly $24,852 per year. A 28% cut beginning in 2033 removes roughly $6,958 in annual income from that average benefit. The “3 King” dividend portfolio above, even at current prices, more than covers that gap… and grows faster than inflation while it does.
The CBO has given retirees a date, while the market has given them a tool. The decision is whether to use it.
On the date of publication, Caleb Naysmith did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
More news from Barchart
3 Dividend Kings to Buy Now to Replace the Social Security Income You're About to Lose Zscaler Stock Plunges on Weak Guidance. Investors Were Maybe Right to Worry About an AI Apocalypse. Prepare for a Volatile Ride Ahead in Lam Research Stock After 278% Gains Nvidia and Micron Stocks Are Almost Exclusively Driving S&P Earnings Strength. These 3 Very Real Risks Could End It All.