Social Security Myths Debunked

Each month, the Social Security Administration pays out $112 billion a month to some 66 million retirees, people with disabilities and their family members, and nearly half of America’s seniors rely on it as a primary source of income. While the Social Security program is widely valued, it isn’t without its own set of issues, and changes to the program since its introduction in 1935 have opened the door for a myriad of misconceptions related to how it is funded and how it works. Here are the facts behind the most persistent myths about Social Security.

Myth 1: Social Security Is Out of Money

As the retiree population continues to grow and people live longer, the Social Security trust fund does face some funding challenges, but as long as workers and employers pay payroll taxes, the program will not run out of money. For more than 80 years, scheduled benefits have always been paid in full

Myth 2: You Lose Your Benefits If You Continue to Work

While Social Security does have a rule that can temporarily reduce the benefits of people who still work, it doesn't apply to all working beneficiaries, and it isn’t permanent. As it stands, the rule only applies to people who claim benefits before full retirement age and continue working. In those cases, Social Security withholds a portion of benefits if earnings from work exceed a set cap, which changes every year and varies depending on age.

Myth 3: Social Security Benefits Aren’t Taxed

This is one myth that was true up until 1984 when the Social Security overhaul passed by Congress included a provision that made a portion of Social Security benefits taxable, depending on your income level. You will pay Social Security tax on up to 50 percent of your benefits if your income for the year is $25,000 to $34,000 for an individual filer and $32,000 to $44,000 for a couple filing jointly.

Myth 4: Social Security Will Fully Fund My Retirement

The Social Security Retirement benefit replaces only part of your income when you reduce your hours or stop working altogether. It isn’t meant to cover all of your living expenses, which is why it is so important to build a retirement savings account of your own.  Contributing to an employer-sponsored retirement plan or an IRA is a big step on the road to retirement, but contributing to both can significantly boost your retirement assets. If you aren’t sure where to start, your local Farm Bureau agent is here to help. 

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