Social Security Myths vs. Reality
When it comes to Social Security, many people have more questions than answers. By separating facts from fiction, you can make more informed decisions about your retirement planning.
Myth 1: Social Security Won't Exist When I Retire
The Social Security Board of Trustees releases yearly reports on the program’s financial health. In their latest report, they acknowledged ongoing financing challenges but projected that full benefits are expected to be paid through 2035.1
Myth 2: The Age to Qualify for Full Benefits is 65
There is a common misconception that 65 is the universal age for receiving full Social Security benefits. In reality, the full retirement age (FRA) now varies based on birth year. Most people's FRA falls between 66 and 67.
Myth 3: Social Security Replaces the Need for Other Retirement Savings
Social Security is designed to supplement retirement income, not replace your earned income entirely. On average, the program replaces only about 40%2 of pre-retirement earnings. While cost-of-living adjustments (COLA) help benefits keep pace with inflation, they may still fall short of covering all expenses or enabling you to maintain your preferred lifestyle.
Myth 4: You Don't Pay Taxes on Social Security Benefits
Contrary to popular belief, Social Security benefits can be taxable. Whether your benefits are taxed depends on your combined income. Tax thresholds vary by filing status.
Myth 5: You Lose Benefits Permanently if You Keep Working
Working during retirement doesn't mean permanently losing benefits. Though your benefits might be temporarily reduced if you earn above certain limits, these amounts are later recalculated into higher monthly payments once you reach FRA.
Work With an Advisor
Social Security is just one piece of the retirement planning puzzle. Work with a CCR financial professional to navigate your benefit options, tax implications, and income strategies. Contact us today at 508-475-3880 to get started.
Sources:
1) “A Summary of the 2024 Annual Reports,” Social Security Administration, retrieved January 22, 2025, from https://www.ssa.gov/oact/trsum/.
2) The Future Financial Status of the Social Security Program, Social Security Administration, January 22, 2025, https://www.ssa.gov/policy/docs/ssb/v68n2/v68n2p1.html
Disclosures:
This material was developed and prepared by a third party for use by your Registered Representative. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. The content is developed from sources believed to be providing accurate information.
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