When it comes to the subject of Social Security, there are plenty of myths, half-truths, and bold-faced lies. Cutting to the truth of Social Security requires extensive research. Instead of investing your time trying to pinpoint the truth, let us do so on your behalf. Below, we provide a look at the most common myths pertaining to Social Security.
Myth #1: Working After Filing for Social Security Makes You Ineligible
Filing for Social Security prior to the normal retirement age and continuing to work has the potential to temporarily decrease benefits depending on the amount of money earned. However, the benefits are delayed until the full retirement age is reached. Contrary to popular opinion, these benefits are not lost for good. Once full retirement age is reached, monthly payments will increase. Furthermore, there is the chance for the worker’s Social Security annual benefit to increase if the work performed is paid at a comparably high rate. Keep in mind, Social Security benefit payments are based on the highest 35 years of income.
Myth #2: Social Security Won’t be Available by the Time You Retire
Social Security will likely exist far into the future, largely because the population of the United States is increasing. Though the country’s birth rates are at an all-time low, immigration continues, meaning many more laborers will be added to the workforce. These workers will pay Social Security taxes, ultimately keeping the program going. Furthermore, if it appears as though Social Security will run out of money, the federal government will likely take legislative action to ensure enough funds are available. The worst-case scenario is retirees receiving partial payment decades into the future. However, these benefits are unlikely to completely eliminated.
Myth #3: Benefits are Unavailable to Those who Did Not Work Outside the Home
Though Social Security benefits are based on an individual’s employment across at least 40 quarters, some individuals have not worked 40 quarters. Individuals who have not worked the requisite 40 quarters, or at all, are eligible to receive half of what a spouse or an ex-spouse would have been provided. However, the caveat is that the marriage must have lasted a decade and the individual in question cannot have remarried. Furthermore, surviving spouses are eligible for the entirety of Social Security benefits on the spouse’s record.
Myth #4: It is Best to File as Early as Possible or as Late as Possible
Filing for Social Security as early as possible or as late as possible might seem logical yet there is a chance neither of these approaches will prove optimal in the context of financing your retirement. File as late as possible and you will have sacrificed some of your golden years in favor of earning that much more money at work. However, if you file as early as possible, you won’t maximize the amount of money you could potentially receive from Social Security.
Myth #5: Social Security is Enough to Fund a Retirement
An individual who is completely dependent on Social Security for retirement will struggle to make ends meet. However, more than 50% of Americans intend to fund their retirement solely with Social Security. These benefits are gradually adjusted to reflect increases in the cost of living, yet they are meant to supplement other savings for retirement rather than serve as the lone means of funding retirement. Your retirement planning should consist of Social Security, an IRA, a 401(K), savings and additional investments.
The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. All opinions are as of this date and are subject to change without notice.