Five Common Misconceptions About Social Security

Retirement should be a time to enjoy the fruits of years of hard work and preparation, but when it comes to Social Security, many people have more questions than answers. From figuring out the best time to claim, to understanding how benefits are calculated, navigating Social Security can feel overwhelming. By separating fact from fiction, you can make more confident decisions about your retirement planning.

Myth 1: Social Security Won't Exist When I Retire

Social Security is fundamentally different from a typical investment account. It's a government-managed program funded through payroll taxes and trust fund reserves. In their most recent annual report, the Social Security Board of Trustees stated that while the program faces financing issues, they expect to pay full benefits through 2035¹, and sources² agree that the program is unlikely to vanish entirely.

Myth 2: The Age to Qualify for Full Benefits is 65

Many people believe that 65 is the universal age for receiving full Social Security benefits. While that was once true, the full retirement age (FRA) is now dependent on your birth year. For most people approaching retirement age, their FRA falls between 66 and 67. While you can claim benefits as early as 62, this choice permanently reduces your monthly payments. Conversely, delaying your claim beyond your FRA increases your monthly benefit.

Myth 3: Social Security Replaces the Need for Other Retirement Savings

Social Security is designed to serve as a supplement to retirement income rather than a complete replacement for earned income. On average, the program replaces approximately 40% of pre-retirement earnings³. Though cost-of-living adjustments (COLA) help benefits keep pace with inflation, paying for necessities and maintaining your desired lifestyle usually requires additional income sources.

Myth 4: You Don't Pay Taxes on Social Security Benefits

Social Security benefits can be taxable, depending on your combined income. Combined income includes:

• Adjusted gross income
• Tax-exempt interest
• Half of your Social Security benefits

Current tax thresholds are as follows:

• Individual filers: May owe if combined income exceeds $25,000.
• Married couples filing jointly: May owe if income exceeds $32,000.

Additionally, 85% of benefits could be taxable for individual retirees whose combined income exceeds $34,000 or married filers whose combined income exceeds $44,000.

Myth 5: You Lose Benefits Permanently if You Keep Working

Working during retirement doesn't permanently reduce your Social Security benefits. Though earnings above certain thresholds may temporarily decrease benefits before reaching FRA, these withheld amounts convert to higher monthly payments upon reaching full retirement age.

Work With an Advisor

While social security benefits play an important role in retirement income, they represent just one piece of a comprehensive retirement strategy. Let’s work together to develop a plan that aligns with your retirement goals and makes the most of your available benefits. Contact my office to get started.

^{1) “A Summary of the 2024 Annual Reports,” Social Security Administration, retrieved January 22, 2025, from https://www.ssa.gov/oact/trsum/.
2) “72% of Americans worry Social Security will run out in their lifetimes,” CNBC, January 22, 2025, https://www.cnbc.com/2024/08/02/72percent-of-americans-worry-social-security-will-run-out-in-their-lifetimes.html.
3) “The Future Financial Status of the Social Security Program,” Social Security Administration, January 22, 2025, https://www.ssa.gov/policy/docs/ssb/v68n2/v68n2p1.html.}