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Social Security Misconceptions

There are some aspects of retirement that can be planned for, and some that cannot. Most Americans plan to use Social Security income when they retire, and is usually the largest source of income for those in their retirement years. However, Social Security is one of the most neglected forms of financial planning, and as such, is shrouded in myths.

Common Social Security Myths

Social Security provides benefits to many people, and can even provide assistance when a person faces an unexpected illness or disability. Since it has such a wide reach, it should be more widely understood.

Some of the most common misunderstandings about Social Security are:

  • All money paid into Social Security goes into an account with a person's name on it
  • Current statistics say Social Security will be depleted by 2033
  • Only the past 10 years of employment matter for Social Security benefits
  • Only those that have worked outside of the home are eligible for Social Security
  • Benefits will be fully taxed
  • There are penalties for those that work while collecting Social Security
  • Collecting Social Security at youngest eligibility is best

While many of these myths have some truth behind them, many can be quickly disproved. All money paid into Social Security is paid out to those currently collecting, and relies on future and present taxpayers to exist. So while there is no account with a person's name on it that collects their money, a person's benefits rely on their highest-earning 35 years of employment. Therefore, any work, part-time or full-time can help increase the benefit amount that a person receives. Those that have never worked outside of the home are eligible for spousal benefits, which entitle the person to half of the benefits a person's spouse or ex-spouse receive.

Further, taxing Social Security largely depends on a person's entire income. For those with limited incomes, it may not be taxed at all. If a person remains working, their benefits may be taxed higher, but once a person reaches full retirement age, benefits will be increased to account for the amount that was withheld, and benefits may increase the longer a person works.

Collecting Social Security can be complicated, and the best bet would be to consult with a Social Security attorney in order to ensure that a person is getting the benefits they deserve!