When it’s time to apply for your Social Security benefits, the process can be a bit confusing. It doesn’t help that there are quite a few untrue myths floating around out there, making soon-to-be retirees worried or uncomfortable about how the system actually works. Don’t fall for the following five myths about Social Security.
Myth 1: Your payroll taxes are set aside in an account under your name. You get that money back, plus interest, when you retire.
The truth: Taxes that are collected today cover benefits paid out today. Current workers are supporting current retirees. So no, there is no individual account set aside for you.
Myth 2: If you become disabled, it may take years to receive Social Security disability benefits.
The truth: A program called Compassionate Allowances was established to speed up the disability claims process. If you have one of the 200 medical conditions specified by the program, your claim will be “fast tracked” so that you begin receiving benefits quickly (usually within a couple of months). If you’ve heard about disability claims taking years to process, those are usually due to disabilities which fall outside of the Compassionate Allowances program. Those cases must be assessed on an individual basis.
Myth 3: You aren’t eligible for Social Security benefits if you’ve never held a job.
The truth: It is true that you must earn 40 work credits before you qualify for retirement benefits. However, you can qualify for Social Security benefits based upon your spouse’s work record. This rule was created to make sure non-working spouses (often women who raised children and supported their husbands’ careers) would receive support in retirement.
Myth 4: You should take your retirement benefits immediately when you turn 62. If you pass away before you reach full retirement age, you could lose thousands of dollars.
The truth: The average life expectancy for men is 84, and for women it is even higher at 86. You’re unlikely to die before you receive your benefits, unless you’re already in very poor health at retirement. Every situation is different, so this is an issue to discuss with your financial advisor.
Myth 5: If you choose to work after you claim your benefits, Social Security withholds some of the money each month and you lose it forever.
The truth: The earnings limit only applies to those who take their benefits before full retirement age (65 to 67, depending upon year of birth). Once you’ve reached full retirement age, Social Security won’t withhold any of your benefits no matter how much money you earn. If you are subject to the earnings limit withholding, Social Security recalculates your benefits after you reach full retirement age. In many cases retirees in this position receive credit for the amounts initially withheld.
Make sure to talk to your financial advisor about Social Security. There is a lot of misinformation out there, and you don’t want to make retirement decisions based off of fear or myths!
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.