8 Social Security myths exposed

Misunderstanding about Social Security abounds. Let's examine some common misconceptions in detail.

By Stacy Johnson Oct 2, 2012 11:52AM

This post comes from Renee Morad at partner site Money Talks News.


Money Talks News logoWill Social Security be around when I retire?


Image: Couple paying bills (© Corbis)That's a question lots of Americans are probably asking themselves, though it's certainly not the only thing we might be wondering when it comes to Social Security. Given our national retirement program's handbook of 2,728 rules and countless interpretations, few participants are likely to thoroughly understand it.


To help shed light on Social Security, we recently set out to separate fact from fiction. Below are some of the most common Social Security myths, along with explanations:


Myth: Social Security funds are running dry, so I should collect as soon as possible.

The most recent government-issued report projects that Social Security will run out of funding by 2033 (.pdf file). This is earlier than previously expected, but it doesn't necessarily mean Social Security will be gone in 20 years. It means system revenues won't be capable of paying 100% of promised benefits under the law. The Social Security Administration estimates that benefits could be reduced by 22% at that point and may continue to decline -- if Congress doesn't intervene, which is unlikely.


Meanwhile, an increasing number of Americans are taking Social Security at the minimum age of 62, according to SmartMoney. But experts insist that it pays to wait. For each year you hold off on collecting Social Security after reaching full retirement age -- which is typically age 66 for baby boomers -- you'll get an 8% increase in benefits. So waiting till 70 means about a third more income.


Myth: I'll be able to live comfortably on Social Security alone.

If you're counting solely on Social Security to support you after retirement, you will probably find yourself in a difficult financial situation: The average Social Security payment to a retired worker is about $1,234 per month, slightly more than the federal minimum for a month's wages.


So unless you're prepared to supplement Social Security with savings or a pension, be prepared for a challenge. Consider cost-cutting measures, like minimizing housing expenses, as well as earning extra income. You can work and claim Social Security benefits at the same time.

Myth: The more money I make now, the more I'll get back later.

Social Security's progressive benefits formula favors low-income workers; they tend to get back a greater percentage of what they put in, compared with higher-income workers. But for many retirees today, the amount they've paid in over the years will likely exceed what they'll take out, according to an analysis by The Associated Press.


This has also changed drastically with the times. According to the AP, those who retired in 1960 could expect to receive seven times more in benefits than they paid in Social Security taxes. Last year, data showed a retired married couple who paid $598,000 in Social Security taxes throughout their careers could expect to collect only $556,000 in benefits -- and that's if the man lives to 82 and the woman to 85, according to an Urban Institute study.


Myth: Social Security is only for the retired.
The program provides benefits for disabled workers of all ages, though qualifying for benefits can be challenging. It also provides survivor benefits to dependents of workers who die.


Myth: Qualifying for disability will be easy.

With more than 8 million Americans receiving Social Security Disability Insurance, you'd think anyone unable to work due to a long-term physical or mental disability would be covered. But that's not necessarily the case. Applications are up nearly 50% over a decade ago, and some applicants have to wait two years or longer for a resolution. For tips on qualifying for disability benefits, take a look at SSA.gov.


Myth: If I'm divorced, I can't collect benefits from my ex-spouse.

You can collect retirement benefits on your ex-spouse's record if you were married for at least 10 years. However, you can't collect benefits if you remarry, unless your second marriage also ends.


Myth: If I'm collecting Social Security, I'm an obvious target for identity theft and scams.

You should always keep an eye out for scammers. Recently, CNNMoney reported that identity thieves are targeting seniors by fraudulently rerouting Social Security benefits to their own accounts. But that doesn't mean only those at retirement age are at risk; anyone with a Social Security number is.

Surprisingly, children are even more at risk for getting their Social Security number stolen, according to a Carnegie Mellon University CyLab study. An astounding 10% of children surveyed had someone else using their Social Security number. 


Myth: I'll be eligible for Medicare as soon as I can collect Social Security.

Americans can't get Medicare benefits until age 65, but can collect Social Security as early as 62. Exception: If you collect Social Security Disability, you'll get Medicare coverage automatically after two years.


More on Money Talks News and MSN Money:


Oct 2, 2012 6:47PM

The politicians have raped the SS fund.  The "Borrowed from the fund" , but never paid it back  To my

way of thinking they are a bunch of thieves.

Oct 2, 2012 3:23PM
It doesn't help when "disabled" children of illegals collect SSI from a system that they, or their parents will never pay into.
Oct 2, 2012 5:01PM
President Johnson took the money out to fund the vietnam war on the behest of the rest of the American money making war machine. That is the same money that was supposed to be put back and never was.... Instead of bailing out the banks and the rest of the companies that had their money siphoned off by their execs and stockholders, let's put the money back, with interest, that belongs in the SS account. We wouldn't be talking about SS running out anytime soon if that were to happen.
Oct 3, 2012 3:05PM

So...I should not retire at 62, wait until I am 70 (to get a few more bucks), and then be dead at age 72. Wonderful. A lot of good that money did!! In the meantime, I lost 10 years of a meaningful retirement. Financial planners (with something to gain) create these fairy tales that everyone lives to be 90 playing volleyball on the beach.


Also, the government robbed the social security trust years ago to feed their spending addiction. The money they say they have set aside for SS is funny money (must be printed later).

Oct 2, 2012 4:44PM

It is simple math, it does pay to take social security at 62, if you wait until you are 70, you would be well over 90 by time you made up what you would have received between the ages of 62 and 70, and last time I checked the average persons life span is what 77 or 78 years old. 

Oct 2, 2012 8:03PM

I dont care how  you look at it,if the government put your s.s.withholding in a bank for 30 or 40 years with interest,there would be plenty of money for you to retire.

The fact that the government pays people out of it,that didn't pay in enough or not at all is not the baby boomers fault or the reason people are living longer fault.It's the people who have the right to right checks out of that funds fault.And what about all the people who die of cancer or of a accident or of a heart attack before they retire.What happens to that money,thats probably millions of dollars a year,just in money that should be recycled in the s.s. fund.There should b plenty of money in there for the retied people.

 If i make it to retirement,your damn right im taking it as soon as possible.Everybodies hand is in there but mine.

Oct 2, 2012 2:55PM
Organized crime is alive and well, it's restructured itself as the U.S. Government!
Oct 2, 2012 2:53PM
This is not a myth...Social Security is a fraud, ponzi scheme.  Its redistribution of wealth, plain and simple.  I was never asked if I like to participate and if I could get every penny back, dollar per dollar, no interest, I'd do it tomorow.  One of the things that makes it so criminal, is you never get back what you pay in.  And, if you happen to die, everything you paid in is gone and doesn't go to your estate. 
Oct 2, 2012 5:26PM
DJ (Skiman) -- precisely why I intend to start collecting when I turn 62, next year.  Yes, I will still work part time, to keep myself out of trouble and bring in a little more monthly income.  But I'm not waiting.  No way, no how.  I've paid in for years and years, and who knows what will happen tomorrow?
Oct 2, 2012 3:16PM
You can thank your democratic president Johnson for taking the social security money and putting it in the general fund back in the 60's, so he could fund Kennedy's vietnam war.
Oct 3, 2012 11:25AM
Retired to a foreign country where I can live on less than Social Security.  Healhcare $50 a month including prescriptions. Perfect climate and free bus service (over 65). My expat friends and I have had the same experiences with those in the U.S. mostly being told we are crazy, or traitors or worse.  I would not go back except to see some family members and a couple close, true friends.
Oct 3, 2012 1:04PM
For the last 47 years, the SS Money has been put in the general tax fund.
Then tell the world how broke SS is.
The politicians who increased payments, refused to increase deductions
Just to get votes for their slimey ****  no working lazy selves, should 
lose their federal pensions for efffin up something that could have
worked.  But GREED and their own **** came first. 
Oct 3, 2012 3:19AM
Everyone should understand how Social Security or more specifically, the Social Security portion of the payroll taxes are used. First, the money current workers put in is used to pay out current benefits. Then the extra amount left over (in the years that there is a surplus) is invested in government bonds to pay for future benefits.  All that really means is that by using an accounting trick any surplus that should be saved for future beneficiaries is used just the same as any other tax revenue.  This is because when the government buys its own bonds "to save for future payouts," all they are doing is promising to pay back the principal and interest on those bonds at a later date, and they must do this the same way they bay of any other debt; they use tax revenue to repay it.  It would be like a couple saving for retirement by writing themselves an IOU for say 10% of their income plus a certain rate of interest each year, and then spending that money the year they make it. Then when they retire, they would just redeem the IOU's that they wrote to themselves.  Obviously they could not this because they spent the money. So the only way they could "redeem the IOU's" would be to go back to work and use the money they make to pay for their "retirement." I understand this is ridiculous, but the sad truth is that this is exactly how Social Security is set up only with even more flaws that I will not get into.
Oct 3, 2012 7:25AM
The reasons for the SS going "broke" isn't the workers, in a sense.  It is, however, the lack of workers here in this country today.  Practically everything is outsourced, thus China benefits, all Asian countries benefit, but NOT America.  It's true, most companies/corporations can't afford to pay $30+/hr for workers.  The Big 3 can't do it.  So, if you want to get back to work and increase the longevity of SS, you'll have to accept less in wages.  By accepting less, you will put this country back on it's feet where it belongs.  And get rid of "Presidents" who would rather break the bank of this country, and get one who will help mobilize the Federal Reserve.  Simple statistics -- if you don't have the "gold" to back up making paper money, then you don't make it and/or spend or send $13 trillion overseas.

The fact that every government unit feels sanctioned to "borrow" from the SS fund -- but people, that unit needs to replace what they "borrow".  It isn't "borrowing" if you take, but don't replace.  Basically, it's theft.  And, you are robbing the American people.

You pay into SS all the years you work, say 30 or 40, but what you get out is less than what you input.  Even waiters and waitresses are supposed to contribute to SS, but many manage to understate their tips (cash is easily understated), so they don't pay their full share.  But they sure want it there when they need it.. SS that is.

I don't even get the average SS benefit, and I earned good money.  My income is way short of $25,000/yr today, yet I'm considered as having too much income to be eligible for many side benefits.  They withheld our receiving COLA benefits for two years, in order that the Senate could collect COLA benefits.  What?  But it is true.  You withhold from the people who have worked and made SS available for retirees.  I don't understand why the US Senate was getting a COLA, when they are supposed to have fixed income limits to perform their duties, plus perks.  If they can't live on $200,000+/yr, get them a minimum wage, then they might deserve COLA.

The COL right now is atrocious, yet people who receive the average SS benefit or less, have to make it in this country, too.  I'm not complaining about what I do get, as it gives me, for the most part, what I need (not what I want).  No extras, no buying clothes, or other necessities, etc.  I even pay out $200+/mo in secondary insurance so I won't have to pay all the deductibles and co-pays Medicare has put into place.  Doctors and hospitals don't even tell you what part of your treatment Medicare isn't going to cover, so you get stuck with a "balance due" bill you never expected to see.  And, they can lie and get away with it.  Am I frustrated?  You bet.   

Oct 3, 2012 3:06PM

Give back the 15% YOU STOLED politicians!

Oct 2, 2012 7:56PM

All of us need to live just a little below our means.  We CAN do this, People!  Starting with our first job, we can map out a program that will carry us through.


We limit our possibilities when we entrust our future to a government that can't possibly do for us what we can do for ourselves.


As for those who absolutely have severe disabilities and can't possibly have "means" in any form . . . this is AMERICA! . . . we will keep your human dignity intact. 


The key here is "opportunity."  Government is a source . . . but not a good or reliable source.  We have to believe in ourselves and act upon those beliefs.  America is still the greatest country on earth . . . and America just happens to be inhabited by some of the greatest people on earth.

Oct 2, 2012 6:50PM

"But experts insist that it pays to wait. For each year you hold off on collecting Social Security after reaching full retirement age -- which is typically age 66 for baby boomers -- you'll get an 8% increase in benefits. So waiting till 70 means about a third more income."



True...........but! the 8% is being closely looked and you can guarantee this will be reduced. The age to collect full benefits is also being looked at and it will be moved up............guarantee.



Right now SSDI is going crazy with applications................Americans are fat, lazy and too dumb to get into shape or take care of themselves..............so they suck the government tit instead...........

Oct 2, 2012 4:27PM
there is a old saying that sucess brings sucess. time for a change at the top.
Oct 3, 2012 11:20AM
Folks, Social security is a TAX. It is not a savings or trust fund. This is a fallacy. NO such fund exists or is set aside in your name for your individual retirement like a 401(k) or IRA. You didn't pay into anything but a tax. In actuality there is nothing really owed to you or anyone else, let's get that through some of your thick skulls. You tax the younger generations at an 'x' rate for 'y' amount of years. The money collected is then distributed to the older generations (those eligible for retirement) and the process is repeated over and over again. It can work in theory if it were not for three elemental and flawed conditions, #1-you have enough people paying taxes into the system, #2-the government doesn't pillage or borrow from the taxes collected for other Federal projects and #3-the retirees do not outnumber the tax payers and/or collect more benefits for an extended period of time(longevity) than taxes collected. Unfortunately, these 3 reasons are why the system is insolvent.  It is essentially a legal ponzi scheme created by the government for nothing else than to lure voters and condition people on government dependency. That's why so many Democraps have such a large voter base, if nothing else. If you were given the option of opting out of social security and used those pre-tax dollars on your own to fund other retirement options of your choice like an annuity. You would blow the doors off the government's benefits and actually earn a decent retirement without putting a burden on the system.Keep dreaming that the government will honor & take care of you in your Socialist utopian world. Good luck with that.
Oct 3, 2012 4:50PM
If those ****es in Washington would have left it alone, stop giving it to illegal's and remove all the politicians and get new ones.
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