The 13 Worst Social Security Myths You Should Stop Believing Immediately

Social Security benefits are one of the most important financial lifelines that older Americans have available to them. The program was formed in 1935 and began paying out benefits for the first time in 1937. In the years since, Social Security has provided all manner of benefits to retirees and their family members. The program lifts over 16 million people above the poverty line, more than any other federal initiative.

The retirement program has morphed into a much larger project than it was initially conceived to be. This has resulted in a raft of benefits and support services for all manner of Americans, from disability insurance benefits to Medicare and other tertiary functions. But with these additional functions and sprawling network of offices, services, and regulations, it's easy to get lost in the minutiae. There are plenty of important things to keep in mind about the Social Security Administration (chief among them is the reality that it will continue to pay benefits even if its trust fund becomes insolvent), and even more myths to stop believing.

It might be worthwhile to begin with one myth that perhaps has its roots in an outright lie rather than a misunderstanding. You may have heard from a cold caller that your Social Security number or card is set to expire, but they'll offer to extend it or replace it for you. Purveyors of this myth are lying to you and are almost certainly scammers.

The Social Security Administration has issued somewhere in the neighborhood of 500 million Social Security numbers to people throughout its history, and each one of those numbers corresponds to a single individual that is either still alive today or has died. You will only get one Social Security number and it will never expire. It's worth noting that exceptions to this rule can be made in the event that you are identity has been stolen or some other very unique circumstances have taken place that warrant a change. However, because of this truly limited use case, you will never be contacted by someone about anything resembling a renewal or change to your Social Security information and instead must initiate that conversation yourself. It's also important to note that your card will not expire, but if you lose it you can get a new one issued to you.

Another myth that has become relatively popular is the idea that dead people are collecting Social Security checks, with their ranks numbering in the tens of millions. This idea is patently false, and probably gets it basis from the reality that the Social Security Administration maintains records on all 500 or so million Social Security numbers it has issued. The result is a database of people that includes individuals who are purportedly 150 or older. Some of these individuals do not have reported death dates, leaving to the myth that the Social Security Administration is still paying these people even though they are certainly no longer living.

However, the truth about this database and the issuance of Social Security checks speaks to a different situation. The Social Security Administration has records for roughly 90,000 Social Security numbers corresponding to people who are 100 or older, and Census data places the number of living centenarians in America at nearly the same figure (in the ballpark of 85,000). Administrators note that the missing death data is limited almost exclusively to those who died before this type of information was digitized, creating a prospective mountain of effort to resolve a problem that simply isn't occurring.

Shifting gears, one important myth that you should stop believing about Social Security involves your own benefit and how it personally affects your retirement planning. Those who aren't clear eyed about how Social Security benefits work may assume that these checks will replace their income entirely. The reality is that Social Security was never meant as a full-income replacement. Even though medical expenses and some other facets of life become more costly with age, plenty of expenses fall away when you leave the workforce. For instance, older Americans typically don't support young children financially (although this certainly isn't the rule, and Social Security even makes provisions for these kinds of situations). Retirees are also less likely than younger adults to carry an ongoing (or large) mortgage repayment burden. Then there's the lack of commuting and other work-related expenses that no longer need to be considered.

General wisdom suggests that retirees need roughly 75% of their pre-retirement income in order to maintain their lifestyle once they leave the workforce. On average, Social Security replaces about 40% of a typical retiree's income figure. This means that generally speaking your Social Security benefits will cover about half of your retirement budget. It certainly goes a long way to making ends meet, but it's absolutely not enough on its own. Those who want to retire and not have to take a step back financially or socially will need to come up with a plan to deliver on the other half of their retirement income needs.

The idea that Social Security participation is voluntary is perhaps a response to something President Roosevelt once said in the buildup to the program's creation. It's also worth noting that's not all jobs and sectors were covered by Social Security in the early days of its rollout. This led to a two-fold reasoning for potential misunderstandings. Firstly, in practice an individual could have avoided paying into the Social Security program in its infancy by taking a job in a non-covered industry. As well, even with Roosevelt's comments in mind, the project was never a voluntary experiment and legislation quickly expanded its purview to include virtually all jobs in the United States.

The only workers who remained exempt were federal employees who joined the workforce up until 1983. People who joined the federal workforce before 1984 paid into a different kind of federal pension program (the Civil Service Retirement System) and were therefore exempt from an additional contribution to Social Security. Anyone joining the governments ranks after January of 1984 we're not eligible to use this alternative and would have begun their career taking into Social Security just like everyone else. Interestingly, there are five members of Congress (four in the House and one in the Senate) who have served continuously since before this cutoff, and therefore remain a part of CSRS rather than Social Security. However, no one can exempt themselves from contributing today.

This myth is predicated on the fact that the Social Security Administration has known for years that its trust fund would eventually become insolvent. Since 2010, expenses have outpaced earnings on an annual basis and therefore the Old-Age and Survivors Insurance Trust Fund (OASI) has been shrinking rather than growing ever since. On a base level, it's partially true that Social Security will indeed "run out of money" by 2035 at the latest if nothing is done to shore up or augment its funding sources. However, this doesn't mean that the program will keel over and die, "running out of money" in another, more dramatic sense.

Instead, because of the way Social Security benefits are funded, payouts are essentially guaranteed even without this critical source of trust fund wealth. However, losing the income that the trust fund generates will create a severe effect for those who rely on Social Security to support their retirement lifestyle. Estimates suggest that benefits will be cut by almost 20% if no change is made to protect the trust fund's solvency. FICA taxes will still be collected on paychecks from workers and delivered as Social Security benefits to recipients, but their diminished value is something of a silver lining to an otherwise terrible turn of events. Even so, the idea that Social Security benefits will dry up entirely remains a myth in the present fiscal environment.

Social Security benefit recipients are likely well aware of the impact that the annual cost of living adjustment brings to their monthly checks. This adjustment (or COLA), takes place automatically at the end of every year and factors in the inflation rate affecting the consumer price index on a rolling basis between the third quarter of the preceding year and that of the current year. When this calculation is done, the Social Security Administration announces the adjustments that will be added to checks beginning in the new calendar year. For reference, COLA increases over the last few years have been 2.5%, 3.2%, and a whopping 8.7%.

Adjustments are guaranteed by legislation that was enacted in 1975. Every year since then the benefit has been altered to keep pace with inflation and maintain parity between spending power and the benefit value that recipients enjoy. But this legislation doesn't guarantee an actual increase. In fact, in the last 15 years, a 0% increase has been enacted three times. This isn't particularly likely in any given year considering the persistence of inflation as a feature of the economy rather than a bug, but a 20% incidence rate in recent times suggests that it's something to keep an eye on.

Undocumented immigrants sometimes get a bad rap. They are occasionally blamed for things they have absolutely nothing to do with. Even though immigration of this nature is certainly a problem that must be dealt with, their impact on the Social Security benefits that workers hope to receive one day, and retirees take advantage of in the present, is actually a net positive one.

Undocumented immigrants generally interact with the job market in one of two ways. Some will work for cash payments under the table, taking low-paying jobs and not paying taxes as a result. The other option is to secure a fraudulent Social Security number and work in a seemingly legitimate fashion. Either way, undocumented immigrants won't receive Social Security benefits when they reach retirement age. Benefits aren't automatically turned on like a faucet when you hit 67, and the documentation required to initiate these benefit checks goes beyond what a theoretical undocumented person who worked their entire life in America with a fraudulent Social Security number can provide. As a result, undocumented workers paid a collective $25.7 billion into Social Security in 2022, but won't take anything back out of the system later down the line, regardless of the avenue they use to enter the U.S. job market.

The Social Security trust fund and its disability insurance fund are by law supported as independent entities within the totality of the federal budget. At certain points in American history, these funds and the expenses of the Social Security program as a whole have been either included or excluded from the overarching federal budgetary math, but this is an accounting question more so than a financing one.

In reality, these funds are segregated from the federal government's overall budget and can only be used for benefit payouts and other Social Security Administration business, as legislated. The government has no ability to reappropriate these funds and use them for other projects. This will bring some reassurance to those who may have believed the myth that suggests otherwise. However, it is worth noting that the government can borrow money from the Social Security administration, and has done so to the tune of roughly $2.6 trillion. This is the largest volume of federal debt owed to any single agency, and it's nearly $1 trillion larger than the combined federal debt held by all other government entities combined.

You might assume that since a 100% benefit amount is paid out at "full retirement age," Recipients must wait until they reach this magic number to begin taking their benefits. Indeed, the terminology might suggest that full retirement age is perhaps a sort of legitimate retirement age. However, beneficiaries can begin receiving their Social Security checks as early as 62 (meaning the youngest among the Baby Boomer generation can begin drawing checks in 2026). Likewise, you could opt to delay the start to your Social Security benefits.

The rationale for taking benefits early might be obvious, rather than waiting you can leave the workforce behind and start enjoying your retirement early. Of course, this comes with some caveats and you'll need to make additional financial contributions yourself because your benefit amount will be cut down to 70% if you begin drawing at 62, and you'll have fewer years available to contribute to your own retirement accounts while you're still working and taking a paycheck. Waiting to begin the flow of Social Security funds will see a payout increase, on the other hand. At 70 you'll enjoy the greatest payout rate, currently standing at 124% of your full benefit amount.

In considering the age at which you should personally retire, it's worth noting that a common myth among workers involves what "full retirement age" actually is. For much of its existence, the Social Security Administration and federal government together have pegged 65 as retirement age. However, legislation in 1983 began to gradually increase this number. It has been slowly creeping upward, month by month in the years since. Today, full retirement age has reached 67 for virtually everyone in the workforce (as well as those who will join it in the coming years).

This is important to keep in mind for two reasons. First, you may be operating under the false assumption that full retirement age remains at 65. This can drastically hinder your retirement planning efforts by painting an incorrect picture of when you should leave the workforce and what your benefit amount will look like when you do. On the other hand, because the federal government has changed the age at which you'll receive a full Social Security benefit before, it can do it again.

That 1983 legislation also changed another aspect of the Social Security picture for recipients. Modern recipients of Social Security benefits have a tax burden to consider when pairing Social Security checks with other forms of retirement income. Specifically, if your income figure is between $25,000 and $34,000 as an individual taxpayer or $32,000 and $44,000 as a joint tax filer, up to 50% of your benefits may be considered taxable income (dollars that extend beyond the low end of the threshold, not the entire benefit amount). These figures rise to 85% beyond those thresholds.

Moreover, state obligations factor into the picture in nine jurisdictions. The states you'll pay additional tax in are Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Vermont, Utah, and West Virginia. However, the way that each state deals with this obligation is unique and so if you are a resident of one of them you'll need to explore your tax burden personally.

Some people may have heard the myth that your Social Security benefits can be temporarily or permanently revoked if you decide to go back to work. Some retirees will need to return to the workforce in order to make ends meet, while others might find that they are bored without this daily task and choose to take on part time work or some other paid commitment. Fortunately, this myth is false. You are not at risk of losing your benefits if you decide to continue working.

But this isn't the entire story, and there are some things to keep in mind. For those who haven't yet reached full retirement age, continuing to work while taking benefits can yield a temporary reduction in the amount you receive. Money that you earn above $23,400 yields a reduction of $1 for every $2 earned above that number. If you will turn 67 this year, those figures are different, and you'll see a reduction of $1 from your benefit for every $3 earned above a $62,160 threshold. Once again, these reductions only take place if you are working before you hit full retirement age and have started taking Social Security benefits as well. After you arrive at full retirement age these reductions are eliminated. Moreover, any money that's been withheld from your Social Security benefit checks will be returned to you as additional money lumped in with future payments.

Finally, you may have heard the mistaken assertion that your Social Security benefits can end once you reach a certain age. This isn't correct. Once you begin taking Social Security benefits, unless you fall under very narrow categories that can temporarily limit your eligibility (like becoming incarcerated for an extended period of time or moving to Cuba or North Korea) You will continue receiving checks for as long as you live.

Social Security benefits have no end date, and so you will receive these checks for the rest of your life. If you live for just one month beyond the date that you start taking Social Security, you'll receive one check. On the other hand, if you manage to actually live to that mythical 150 that the Social Security Administration incorrectly notes that some people have reached, you'll continue receiving checks until then. The then-oldest person in America died in late 2024 at 115, and one of just 29 to reach the age of 116 lived in Pennsylvania in early 2024. They would have each continued to receive Social Security checks long after the average person's passing (with combined life expectancy in the United States standing today at 77.5 years).