Fact or Fiction? The Truth About Social Security

Social Security is a vital part of retirement planning for millions of Americans. Yet, misunderstandings about how it works can lead to costly mistakes. Understanding the facts can help you make better decisions and maximize this essential benefit.

Myth 1: Social Security Will Cover All My Retirement Needs

Social Security replaces only about 40% of pre-retirement income for average earners(1). It’s not designed to cover all your retirement expenses. Focus on building a diversified retirement strategy that includes personal savings, 401(k)’s, IRA’s, or other investment options. While Social Security provides a foundation, your other savings will give you the financial security you need.

Myth 2: I Should Claim Benefits as Soon as I’m Eligible

While you can claim Social Security at age 62, doing so means accepting a permanent reduction in your monthly benefits. Waiting until age 70 can increase your payments by up to 32%(2). If possible, delay claiming to maximize your benefit. Evaluate your health, financial needs and other income sources to choose the best timing for your situation.

Myth 3: If I Work After Claiming, I’ll Lose Benefits

If you claim benefits before full retirement age (FRA) and continue to work, part of your benefit may be temporarily withheld if you earn above a certain limit. However, this is not a permanent loss. Once you reach FRA, your reduced benefits will be recalculated to include what was withheld(3). If you plan to work while receiving Social Security, familiarize yourself with the earnings limit and how it might affect your benefits.

Myth 4: Social Security Is Going Bankrupt

While the program faces significant funding challenges, it’s not disappearing anytime soon. Social Security is supported by payroll taxes, and even if Congress does nothing to address the shortfall, the program will still be able to pay approximately 77% of scheduled benefits starting in 2034(4). This means that while adjustments may be needed, Social Security will continue to provide a safety net for millions of Americans in the years to come.

Myth 5: I Don’t Qualify Because I Haven’t Worked Enough

Even if you haven’t earned the required 40 credits, you may still qualify for benefits through spousal or survivor benefits. Spouses can receive up to 50% of their partner’s benefits, and surviving spouses may receive even more(5). Explore your eligibility options. And, if married, make sure both partners are aware of each other’s benefit opportunities.

Actionable Tips for Making Informed Decisions:

1. Review your earnings record to ensure accuracy.

2. Plan for health-related costs not covered by Medicare.

3. Stay updated on Social Security policy changes.

1 Center on Budget and Policy Priorities. Policy Basics. May 31, 2024. “TopTen Facts About Social Security. ”https://www.cbpp.org/sites/default/files/atoms/files/8-8-16socsec.pdf. Accessed Feb. 11, 2025.

2 Social Security Administration. Retirement Age and Benefit Reduction. “Starting Your Retirement Benefits Early.” https://www.ssa.gov/benefits/retirement/planner/agereduction.html. Accessed Feb. 11, 2025.

3 Social Security Administration. 2025. “How Work Affects Your Benefits.”https://www.ssa.gov/pubs/EN-05-10069.pdf.Accessed Feb. 11, 2025

4 U.S. Government Accountability Office. August 06, 2024. “There Are Options for Reforming Social Security, But Action is Needed Now.” https://www.gao.gov/blog/there-are-options-reforming-social-security-actionneeded-now. Accessed Feb. 11, 2025.

5 Social Security Administration. Social Security Matters. July 15, 2024. “Do You Qualify for Social Security Spouse’s Benefits? https://blog.ssa.gov/do-you-qualify-for-social-security-spouses-benefits-2/#:~:text=Last%20Updated:%20July%2015%2C%202024,benefits%20on%20your%20spouse’s%20record. Accessed Feb. 11, 2025.