Don’t Believe These 17 Common Social Security Myths

You didn’t spend decades working just to sit around. You worked hard to build a retirement that lets you travel, relax on beaches, or simply enjoy quality time with family and friends.

While you’ve likely been contributing to various savings and retirement accounts, there’s one thing you’ve definitely been paying into: Social Security. This crucial government program forms the financial backbone for most retirees’ income streams.

Understanding Social Security: Separating Fact from Fiction

Like many government programs, Social Security is complex—and complexity breeds confusion. Dozens of myths have sprouted up that, if believed, could lead to significant retirement planning mistakes and potential financial shortfalls.

Most Social Security myths revolve around benefit eligibility, payment amounts, and future program changes. Falling for these misconceptions could mean smaller retirement checks and unexpected financial challenges.

Myth #1: Social Security Benefits Start at 65

Reality Check: You can actually start receiving Social Security benefits as early as age 62. However, taking benefits before your full retirement age (FRA) means permanently reduced monthly payments.

Here’s how early withdrawals impact your benefits:

• At age 62: Your benefits decrease by 30%
• At age 63: Your benefits decrease by 25%
• At age 64: Your benefits decrease by 20%
• At age 65: Your benefits decrease by 13.3%
• At age 66: Your benefits decrease by 6.7%

The silver lining? Delaying Social Security benefits increases your monthly check. For those born after 1943, your benefit grows by 8% for each year you wait, maxing out at age 70.

Myth #2: Full Retirement Age is Always 65

Truth Revealed: Full retirement age varies depending on your birth year:

• Born 1943-1954: FRA is 66
• Born 1955-1959: FRA gradually increases from 66 to 67
• Born 1960 or later: FRA is 67

Key Differences from Traditional Retirement Accounts

Unlike retirement savings accounts where withdrawals depend on contributions and investment performance, Social Security benefits are calculated based on your lifetime earnings.

The critical difference? Early Social Security withdrawal guarantees permanently reduced payments, whereas retirement account withdrawals can be more flexible.

Debunking More Social Security Myths

Pensions and Social Security Benefits

Recent legislative changes mean pensions no longer automatically reduce Social Security benefits, especially if FICA taxes were withheld from your paychecks.

Cost-of-Living Adjustments (COLA)

The annual COLA isn’t guaranteed. It’s tied to the Consumer Price Index and can be zero if there’s no significant price increase. For more information on the COLA increase for 2025, visit this link.

Taxation and Contribution Limits

Not all income is taxed for Social Security. In 2024, only the first $168,600 of earned income is subject to Social Security taxes. For details on state taxes on Social Security benefits, check this resource.

What You Need to Know About Social Security

Social Security won’t “run out” immediately. While the program faces challenges, it has a substantial reserve and will continue paying benefits, potentially at reduced rates.

Contrary to some myths, members of Congress now contribute to Social Security, and the program isn’t being “stolen” from—it generates significant interest income through government bond investments.

Final Thoughts on Social Security Planning

Understanding Social Security requires separating myths from facts. By staying informed and planning strategically, you can maximize your benefits and secure a more comfortable retirement.

Remember, knowledge is power—especially when it comes to your financial future.