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4 Myths About Social Security That Could Cost You

Social Security is one of the most important government programs ever created as it has single-handedly kept millions of seniors out of poverty. Unfortunately, it’s also a complicated program that many people don’t know the intricacies of. 

Not only are many Americans in the dark about some major Social Security realities, but millions have also bought into falsehoods about this benefits program that could end up costing them. 

You don’t want to make decisions based on inaccurate assumptions, only to learn the truth too late, so read on to make sure you haven’t fallen for any of the following four common myths and misconceptions

1. Social Security is going broke

One of the biggest myths that exist is that Social Security benefits are going to run dry. This simply isn’t the case. 

This myth has taken hold because it is somewhat grounded in reality. The issue is that Social Security has a trust fund, which the most recent Trustee’s Report revealed is expected to be out of money as early as 2033. Because the trust fund is in trouble, future retirees often believe money won’t be available to pay their Social Security benefits by the time they reach old age. 

The truth, however, is that current workers continually pay taxes to fund Social Security, as do retirees with higher incomes. The revenue collected is enough to pay out approximately 76% of promised benefits, according to the Trustees report. So, while a benefits cut would need to occur if the trust fund ran out and no changes were made by lawmakers, seniors would still get most of their expected income.

This misconception about Social Security’s future can be a problem if it prompts you to make the wrong choices about when to start your Social Security checks. Unfortunately, the Center for Retirement Research revealed that many future retirees are planning to claim Social Security early due to concerns about its future — and an early claim can result in a substantial decrease in your standard benefit.

2. Social Security is enough to live on

Another common misconception about Social Security is that the benefits it provides will be sufficient to cover costs in retirement. 

The truth is, while your retirement income from the Social Security Administration can help you pay the bills, it’s definitely not going to be sufficient to fund a comfortable life.

Social Security benefits are meant to replace 40% of what you were earning before leaving work, which is about half of the amount you’ll need — or less, if you were a high earner, if you incur significant medical costs as a senior, or if you expect to engage in expensive hobbies in your golden years. 

If you anticipate that you won’t need extra funds beyond what Social Security can provide, you’re setting yourself up for a substantial amount of financial worries after you have become too old to work. Rather than ending up in this unpleasant situation, you should work to build enough savings that you won’t rely on Social Security as a primary income source.

3. Full retirement age is 65 

Many people also incorrectly believe that they can retire at 65 and get their full benefit. This myth, also, has some basis in reality. Sixty-five did used to be the “full retirement age” for every senior, which meant that people could start checks then without being subject to early filing penalties that reduce their standard benefit.

However,  amendments to Social Security that were made in 1983 pushed back the age when you become entitled to your standard benefit. The change was made gradually, and FRA is now based on birth year. If you were born in 1960 or later, you’ll now need to wait until the age of 67 in order to avoid reducing your benefit amount.. Others born sooner can retire as early as 66 and four months and get their standard benefit. 

Since Social Security can be started as early as age 62, failing to understand your full retirement age — or the early filing penalties that apply if you claim before it — could be a costly mistake. These penalties apply each month and can shrink checks by as much as 30% if you retire at the earliest eligibility age when your FRA isn’t until 67.  

4. Your benefits will increase at full retirement age if you claim them early

Research has shown that millions of Americans believe an early Social Security claim will have only a temporary impact. Specifically, many people incorrectly assume they can start checks before full retirement age and will see their benefits recalculated and increased once they hit FRA.

Sadly, if you buy into this myth, you could end up with a check that’s permanently reduced and with far less retirement money than you’d planned on. The truth is that once you’ve accepted a reduction in benefits due to claiming Social Security early, your checks will always be smaller than they would have been if you had waited.  

The early filing penalties are permanent. And while you get the same periodic cost of living adjustments any other retiree does to help benefits keep pace with inflation, there is no additional bump up in benefits. The only way to get back to receiving your standard benefit after an early claim is to rescind it within 12 months of first filing for benefits and to pay back all the income received to-date. 

You don’t want to make the mistake of claiming ahead of schedule because you don’t know your FRA or assume benefits will be increased later, nor do you want to claim early due to a false belief that Social Security benefits won’t be there for you. 

Fortunately, now that you know the truth about these four big myths, you won’t make misguided Social Security decisions based on them and can instead make informed choices that maximize your income in the long-run. 

As a next step in your learning about this topic, you should consider joining the nearly 400,000 subscribers on my YouTube channel! This is where I break down the complex rules and help you figure out how to use them to your advantage. 

And don’t leave without getting your FREE copy of my Social Security Cheat Sheet. The most important stuff from the 100,000 page website is all condensed down to just ONE PAGE! Get your FREE copy here.




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