5 Social Security Myths and the Facts Behind Them

man with social security cards; social security myths

Social Security is a complicated system, but your livelihood could depend on knowing the facts. Nearly half of all Americans have next to nothing set aside from retirement. This means you need to get the most out of your Social Security benefits to make your retirement as stress-free as possible. Here are five Social Security myths and the facts.

Myth 1: I should collect my benefits as soon as possible.

If you begin collecting your SS benefits when you are first eligible to do so at age 62, you benefits will be permanently reduced. For every year you wait between 62 and your full retirement age (FRA), your benefits will increase 7 percent. If you surpass your FRA and still have not begun to collect your benefits, they will increase by 8 percent each year until you reach age 70. 

Many financial advisors will wisely advise you to use the majority of your savings before collecting your Social Security benefits. This will make your monthly check larger for the rest of your life. For example, if you retire at 62 but delay collecting Social Security until 66, you can increase your monthly benefits by 33 percent. 

Myth 2: I can claim my benefits early and invest the money.

Nothing grows your Social Security like delaying your benefits. If you attempt to match the growth of your Social Security benefits by investing the money, it would likely be a risky investment move that could hurt you later if the market or economy changes.

Myth 3: I should claim my benefits early if I have chronic health issues. 

The life expectancy for Americans has declined for the past two years. The life expectancy for an American man is now 76.1 years, versus 81.1 for American women. This decline might encourage you to collect your benefits at a younger age, but doing this could hurt you or your spouse in the long run. The surviving spouse will still continue to receive the larger Social Security check, but if you collect benefits too early, this could leave your spouse in a bind with only one income that has been significantly reduced. 

Myth 4: I need to collect my benefits before Social Security runs out of money.

Social Security is not going bankrupt. This rumor circulates around the news once every few years, but Social Security has yet to go bankrupt. In order to keep everyone at full benefits, Congress will need to increase Social Security payroll taxes. If they don’t act, however, beneficiaries’ benefits could be cut up to 20 percent in order to keep the system afloat. 

Myth 5: Undocumented immigrants and refugees can collect Social Security benefits.

Some politicians may have you believe that undocumented immigrants and refugees take Social Security benefits away from hard-working Americans, but this is not true. In fact, immigrant groups help grow Social Security by working for employers who withdraw Social Security taxes from their paychecks despite the employee’s inability to later collect benefits. Social Security received $12 billion in 2010 from undocumented immigrants and their employers. 

If you need free and professional help to decipher Social Security myths from facts, you can stop by your local Social Security office, or call the Social Security administration at 1-800-772-1213 (TTY 1-800-325-0778). 

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