8 Social Security Myths Exposed

Photo (cc) by 401(K) 2013

Will Social Security be around when I retire?

That’s a question lots of Americans are probably asking themselves, though it’s certainly not the only thing we might be wondering when it comes to Social Security. Given our national retirement program’s handbook of 2,728 rules and countless interpretations, few participants are likely to thoroughly understand it.

To help shed light on Social Security, we recently set out to separate fact from fiction. Below are some of the most common Social Security myths, along with explanations:

Myth: Social Security funds are running dry, so I should collect as soon as possible

The most recent government-issued report projects that Social Security will run out of funding by 2033. This is earlier than previously expected, but doesn’t necessarily mean Social Security will be gone in 20 years. It means system revenues won’t be capable of paying 100 percent of promised benefits under the law. The Social Security Administration estimates that benefits could be reduced by 22 percent at that point and may continue to decline if Congress doesn’t intervene.

Meanwhile, an increasing number of Americans are taking Social Security at the minimum age of 62, according to SmartMoney. But experts insist that it pays to wait. For each year you hold off on collecting Social Security after reaching full retirement age – which is typically age 66 for baby boomers – you’ll get an 8 percent increase in benefits. So waiting till 70 means about a third more income.

Myth: I’ll be able to live comfortably on Social Security alone

If you’re counting solely on Social Security to support you after retirement, you might find yourself in a difficult financial situation: The average Social Security payment to a retired worker is around $1,234 per month – slightly more than the Federal minimum for a month’s wages.

So unless you’re prepared to supplement Social Security with savings or a pension, be prepared for a challenge. Consider cost-cutting measures, like minimizing housing expenses, as well as earning extra income. You can work and claim Social Security benefits at the same time.

Myth: The more money I make now, the more I’ll get back later

Social Security’s progressive benefits formula favors low-income workers; they tend to get back a greater percentage of what they put in compared to higher-income workers. But for many retirees today, the amount they’ve paid in over the years will likely exceed what they’ll take out, according to an analysis by The Associated Press.

This has also changed drastically with the times. According to The Associated Press, those who retired in 1960 could expect to receive seven times more in benefits than they paid in taxes. Last year, data showed a retired married couple who paid $598,000 in Social Security taxes throughout their careers could expect to collect only $556,000 in benefits – and that’s if the man lives to 82 and the woman to 85, according to an Urban Institute study.

Myth: Social Security is only for the retired

The program provides benefits for disabled workers of all ages – though qualifying for benefits can be challenging. It also provides survivor benefits to dependents of workers who pass away.

Myth: Qualifying for disability will be easy

With more than 8 million Americans receiving Social Security Disability Insurance, you’d think anyone unable to work due to a long-term physical or mental disability would be covered. But that’s not necessarily the case. Applications are up nearly 50 percent over a decade ago, and some applicants have to wait two years or longer for a resolution. For tips on qualifying for disability benefits, take a look at SSA.gov.

Myth: If I’m divorced, I can’t collect benefits from my ex-spouse

You can collect retirement benefits on your ex-spouse’s record if you were married for at least 10 years. However, you can’t collect benefits if you remarry – unless your second marriage also ends.

Myth: If I’m collecting Social Security, I’m an obvious target for identity theft and scams

You should always keep a eye out for scammers. Recently, CNNMoney reported that identity thieves are targeting seniors by fraudulently rerouting Social Security benefits to their own accounts. But that doesn’t mean only those at retirement age are at risk – anyone with a Social Security number is.

Surprisingly, children are even more at risk for getting their Social Security number stolen, according to a Carnegie Mellon University CyLab study. An astounding 10 percent of children surveyed had someone else using their Social Security number. For ways to avoid identity theft targeting children, check out our story Your Child Might Be an Identity Theft Victim.

Myth: I’ll be eligible for Medicare as soon as I can collect Social Security

Americans can’t earn Medicare benefits until age 65, but can collect Social Security as early as 62. Exception: If you collect Social Security Disability, you’ll get Medicare coverage automatically after two years.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
3 Cable TV Companies Hiking Prices for 2021
3 Cable TV Companies Hiking Prices for 2021

Still married to your cable company? Hold on to your wallet!

Want a Healthy Retirement? Turn This Device Off
Want a Healthy Retirement? Turn This Device Off

A common behavior becomes increasingly dangerous for those who are 50 or older.

7 Ways Coupons Waste Your Money and Time
7 Ways Coupons Waste Your Money and Time

Here’s why I hung up my scissors and quit clipping coupons.

10 Clever Ways to Make Extra Money
10 Clever Ways to Make Extra Money

Looking for additional cash? Here are a bunch of options that are accessible to anyone with internet access.

15 Ways Retirees Can Make Their Savings Last Longer
15 Ways Retirees Can Make Their Savings Last Longer

Study these strategies to make your golden years gleam.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
10 Things Frugal People Never Buy
10 Things Frugal People Never Buy

If you’re a true tightwad, the mere thought of spending money on these items gives you the willies.

10 Useless Purchases You Need to Stop Making
10 Useless Purchases You Need to Stop Making

You might as well flush your money down the loo if you spend it on these things.

The 16 Cars Most Likely to Last 200,000 Miles
The 16 Cars Most Likely to Last 200,000 Miles

One automaker takes half the spots on a list of the longest-lasting vehicles.

7 Social Security Rules Everyone Should Know by Now
7 Social Security Rules Everyone Should Know by Now

Confusion over Social Security is a shame, considering how many of us will need this money badly.

9 Shopping Mistakes to Avoid at Costco
9 Shopping Mistakes to Avoid at Costco

Are you missing out on serious savings at your favorite warehouse club?

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

They don’t make coffee makers like this anymore.

11 Products Now in Short Supply Due to the Pandemic
11 Products Now in Short Supply Due to the Pandemic

Many goods we take for granted have become tough to find in 2021.

7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

14 Things You Should Stop Buying in 2021
14 Things You Should Stop Buying in 2021

These convenient household products come with hidden costs that you might not have considered.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

Is Writing a Check Still Safe?
Is Writing a Check Still Safe?

Every time you pay by check, you hand your bank account numbers to a stranger.

6 Ways to Protect Your Retirement Accounts From Hackers
6 Ways to Protect Your Retirement Accounts From Hackers

Imagine having $245,000 stolen from your retirement account — and not being reimbursed.

8 Things You Should Replace to Improve Your Life Today
8 Things You Should Replace to Improve Your Life Today

Being frugal isn’t smart if you put off replacing these items.

This Is the Most Dependable Car Brand in the U.S.
This Is the Most Dependable Car Brand in the U.S.

This brand’s vehicles are least likely to give drivers repair headaches, according to J.D. Power.

13 Amazon Purchases We Are Loving Right Now
13 Amazon Purchases We Are Loving Right Now

These practical products make everyday life a little easier.

7 Hidden Sections of Amazon Every Shopper Should Know
7 Hidden Sections of Amazon Every Shopper Should Know

These little-known departments of Amazon are gold mines for deal-seekers and impulse shoppers alike.

7 Income Tax Breaks That Retirees Often Overlook
7 Income Tax Breaks That Retirees Often Overlook

Did you realize all these tax credits and deductions exist — or that they apply to retirees?

7 Social Security Benefits You May Be Overlooking
7 Social Security Benefits You May Be Overlooking

There’s more to Social Security than retirement benefits.

The 6 Best Investing Apps for Beginners
The 6 Best Investing Apps for Beginners

If you’re looking to ease into investing in the coronavirus economy with just a little money, check out these easy-to-use tools.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.