Retirement planning can get complicated, and it doesn’t help that Social Security is such a massive, confusing organization. Who can keep up with all of those different rules and regulations and procedures?
Well, that’s part of our job. As with any large, complex system, myths about Social Security often make the rounds. As you continue to prepare for your retirement, learning the truth about these common myths might help you make sound decisions.
Myth 1: Your taxes are set aside in an account under your name. That money becomes your benefits when you file for Social Security.
The truth: Current benefits are funded by current taxes, meaning workers today are supporting those on Social Security today. There is no special account in your name, where your benefits are compounding.
Myth 2:If you become disabled, claiming your Social Security disability benefits will take years.
The truth: In some cases that can happen. However, a program called Compassionate Allowances fast-tracks certain disabilities to a quick decision that usually lasts only two or three months. Since over 200 conditions are covered under this program, most claims are approved quickly. Those that drag out for years are often quite unique claims that take time to evaluate.
Myth 3: If you’ve never held a job, you can’t get Social Security benefits.
The truth: It is true that Social Security benefits are based upon your work record. However, you can file a claim for spousal benefits under your husband’s or wife’s record.
Myth 4: You should claim your Social Security benefits as early as possible, at age 62, because you could die before your full retirement age.
The truth: None of us can predict the future, but that’s a pretty unlikely scenario unless you have good reason to believe your time is limited. The current average life expectancy for men is 84, and for women it is 86. Most people will have plenty of time to enjoy their benefits.
Myth 5: If you work in retirement, Social Security will withhold some of your money. That money is lost forever.
The truth: There is some truth behind this statement, but it’s based on a misunderstanding of the rules. If you claim benefits but continue to work, some of your Social Security checks could be withheld depending upon an earnings limit. Once you reach your full retirement age, you will receive all of your benefits no matter how much you earn. And, depending upon your circumstances, you might also receive credit for the money previously withheld.
We know that Social Security can be a confusing web to navigate. Remember, we’re here to answer your questions. Schedule an appointment with us, and we can discuss your concerns in more detail.