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!