As you’re planning for retirement, it may seem as though you constantly hear one alarming piece of news after another. The Social Security program is often the focus of these stories, causing you to feel worried about your future retirement income. Since there is a lot of confusion about how Social Security actually works, we thought it was time to clarify a few common myths about the system.
Myth 1: Your payroll taxes are set aside in an account under your name. You will receive that money, plus interest, when you retire.
The truth: The taxes we pay into the system today are covering benefits being paid today. Current workers are supporting current retirees. Your benefits are not set aside in a personal account.
Myth 2: It will take years to receive Social Security disability benefits if you become disabled.
The truth: The Social Security Administration fast-tracks certain disability applications through a program called Compassionate Allowances. If you have one of the 200 medical conditions covered by the program, your disability application should only take couple of months. Disability claims do sometimes drag out for years, but it is usually because the person filing the claim has a unique disability which must be assessed on an individual basis.
Myth 3: People who have never held a job cannot receive Social Security benefits.
The truth: You can qualify for Social Security benefits based on your spouse’s work record. Of course, he or she must first accumulate the 40 work credits required by the program.
Myth 4: If you die before you reach full retirement age, you will lose thousands of dollars. So you should take your Social Security benefits early, when you reach age 62.
The truth: That’s a pretty unlikely scenario, considering the average life expectancy is 84 for men and 86 for women. Unless you’re already in very poor health, you probably won’t miss out on your benefits.
Myth 5: If you work in retirement, while receiving benefits, Social Security will withhold some of your money and you will lose it forever.
The truth: There is indeed an earnings limit for those who receive Social Security, but it only applies to people who have not yet reached “full retirement age”. Once you reach this age (65 to 67, depending on your birth year), you will receive all of your benefits no matter how much money you earn through employment. And in some cases, retirees will receive credit for the amounts previously withheld.
Make sure to talk to your financial advisor about Social Security. Make your financial decisions based on facts, rather than fear or untrue stories.
This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency