8 Myths About Social Security

There is a ton of information out there on Social Security. And oftentimes it’s very difficult to tell fact from fiction. So what I would like to talk about today is eight myths regarding Social Security. The first one that I hear pretty frequently that’s a huge myth is that Social Security will fully fund your retirement. That couldn’t be further from the truth, at least for most people, okay? Yes, you could file Social Security at age 62. And in 2024, the max benefit that you can get from Social Security at age is 62 is $2,710 per month. But in order to get that, you have to earn the Social Security limit which is $168,600 for 2024, for 35 years, okay? So if you’re a high earner like that and you’ve become accustom to that type of income and you think you’re going to live just on $2,700 a month at that point when you start collecting Social Security with nothing else to lean on, you could very well be mistaken. So that’s a big myth right there. Social Security is not or should not be your only source of income in retirement. And then myth number two, taking benefits early is best. Well, not necessarily. Yes, you can take it at 62 right away and that’s the earliest that you can take it. But is it the best for your situation? Well we don’t really know, but it could be if you don’t think you’re going to be, if you’re healthy or if you’re not healthy. If you don’t think you’re going to live a long life, then it might be in your best interest to take Social Security right away. But oftentimes, it could be in your best interest to wait a little bit longer to maximize those benefits later in life. Myth number three, full benefits start at age 65. Now I think where the confusion comes with this one is well, you can apply for Medicare and start Medicare at age 65. So a lot of people think that well okay, my full benefits of Social Security start then. And that’s just not the case. So your full retirement age benefit is actually somewhere between age 66 and 67 depending on your birth year. And then you can also delay your benefits ever farther until age 70 and then that’s when you get your max Social Security benefit. Myth number four, applying in person is required. That’s not the case, okay? You can apply right from the comfort of your own home online, if you want to. Now, I suggest you be a little tech savvy with that because there’s an application process that you have to navigate through on the computer. And I do find a lot of clients, they appreciate meeting with someone in person, face to face to get that all squared away. Myth number five, I can’t work and earn income while collecting Social Security. That’s not true either, okay? So you can work. Now if you collect right away below your full retirement age, there are income limits, okay? For 2024, that income limit is $22,300. So if you earn more than that and you’re on Social Security, there’s going to be penalties and you don’t want to go down that road. But once you get to full retirement age and after, there’s no more income limits. So yes, you can work, but you just have to limit it. Myth number six, Social Security benefits are not taxed. I wish, right? We all wish, right? You’ve paid into it your whole working life. You would think you would get that money tax-free, but you don’t. There are certain cases you can, but your income has to be a little bit lower. So if your income is under $25K for a single filer, that’s half of your Social Security, plus your other income, then your Social Security benefits would not be taxable. But if it’s above that, well then up to 85% of your Social Security benefits could be taxable. So myth number seven, it’s impossible to stop my benefits once I start them. No. Actually Social Security gives you a little do over time, okay? If within the first 12 months of applying, if you want to do it over and stop it. You can do that and then restart your benefits at a later date. But that’s only within the first 12 months of applying. And then finally myth number eight, divorcees can’t collect Social Security. No, you can collect Social Security. Now there are some rules. You have to have been married for 10 years and you have to be age 62. But if that benefit on your ex-spouse’s work history is higher than yours, then you might want to take a look at taking advantage of that. All right there you have it, eight myths on Social Security. If you need help navigating Social Security and all those different options, please don’t hesitate to reach out to us.