Most retirees depend on their social security benefits for at least some part of their income, so understanding how it works is important. To help you get the most from your benefits and steer clear of any hocus-pocus, we came up with five social security myths and the truths you need to know.
Myth #1: You can’t take social security until age 65.
The golden age of retirement used to be 65 years old; therefore, that is when many retirees starting claiming their benefits. The truth is you can collect your retirement benefits any time between the ages of 62 and 70. The longer you wait to apply, the more benefits you may receive. Go to the Social Security Administration’s (SSA) website for more information.
Myth #2: Social Security is running out of money.
Perhaps one of the biggest social security myths is that the program is running out of money. While it is true that the trust fund will not be able to keep up with payouts within a couple decades – mostly due to the large baby boomer population and longer life expectancies – we don’t believe the government is going to let the program expire. Instead, lawmakers will have to pass legislation for higher taxes on the working population in order to pay for the benefits promised.
Myth #3: The program doesn’t pay very much.
The average Social Security retirement benefit is about $16,000 a year – or $1,350 a month. For some retirees, this may not seem like very much, but it depends on your expectations in retirement and how well you plan your investments for retirement. Keep in mind that the higher your earnings during working years, the higher your benefits may be. To get a better idea of what you can expect, we recommend you get an estimate of your benefits over at the SSA’s online estimator.
Myth #4: You only get benefits if you worked for an employer.
This is another one of those big social security myths. The truth is, if you are self-employed, you are also eligible for social security benefits. In fact, you are required to pay the combined employee and employer amount of Social Security taxes (if you have an employer, you pay half the tax and your employer pays the other half), and you can apply for benefits as long as you worked and paid Social Security taxes for at least 10 years.
Myth #5: There isn’t much you can change about how much you receive.
While you can’t change the amount you paid into Social Security during your working years, there are a few things you can do to maximize your benefit. For one, you can choose to collect your own benefits or your spouse’s, but you’ll want to choose the one with the greatest amount of benefits. The SSA also periodically revises benefits for cost-of-living adjustments, which is set to take place in 2017 with a 0.3 percent increase.
Now that you know the myths about Social Security – and the truths – you can look at the program as an opportunity for your future instead of a frightening part of your retirement.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.