Common Social Security Myths

Retirement

Common Social Security Myths

Posted by Infinite Wealth Advisors, LLC
3 years ago | July 25, 2016

As you would expect with any large government program, the Social Security program has so many complicated rules and procedures that they wouldn’t fit in a Manhattan phone book! You can hardly be expected to become familiar with all of them, so it’s no wonder that the general public believes in many urban legends regarding the program. Hopefully, our explanations of the following five common myths will put your mind at ease about Social Security.

Social Security CardMyth 1: Your payroll taxes are placed in an account under your name. When you retire and claim your Social Security benefits, you get that money back plus interest.

The truth: Workers paying taxes today are covering benefits paid out today. In other words, current retirees are supported by current workers. You don’t have an individual account where your money is growing until you reach retirement.

Myth 2: If you’re disabled by a serious disease, it can take years to receive Social Security disability benefits.

The truth: Because the disability claims process can be arduous, the Social Security Administration created a program called Compassionate Allowances. Under this program, your disability claim will be fast-tracked if you have one of 200 specified medical conditions. When you hear of cases that take years to process, it’s because that particular disability is uncommon or complex, and not covered by the Compassionate Allowances program.

Myth 3: If you’ve never worked, you aren’t eligible for Social Security benefits.

The truth: Yes, you must earn at least 40 work credits before you qualify for retirement benefits. However, you can qualify for spousal benefits based on your husband’s or wife’s employment record.

Myth 4: It’s best to take your retirement benefits immediately when you turn 62. You could die before you reach full retirement age, and lose thousands of dollars.

The truth: Currently, the average life expectancy for men is 84, and it’s 86 for women. Unless you’re already in poor health, it’s unlikely that you will die before you receive your benefits. Of course, every situation is different, so you should work closely with us to decide exactly when to claim your benefits.

Myth 5: If you continue working after you claim your benefits, Social Security will withhold some of the money each month and you’ll lose it forever.

The truth: This is only true for people who claim their benefits before full retirement age, but continue to work. Even if you are subject to the earnings limit withholding, Social Security will recalculate your benefits at full retirement age, and you will probably receive credit for the amounts withheld. Once you reach full retirement age, you will receive your full Social Security checks no matter how much money you earn.

There are plenty of rumors and scary stories about Social Security circulating among us. If you hear something that concerns you, give us a call so we can clear up any misconceptions. We can help you plan for retirement, keeping the facts in mind.

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