Nothing about retirement planning is easy or uncomplicated, but Social Security really takes the cake. As you would expect from any large government-run program, the system is fraught with complicated rules and procedures. This tangled web of rules, along with a degree of media hype, often spins myths and misconceptions. As you plan for retirement, it will help to learn the truth about these popular Social Security myths.
All the money I pay into Social Security today is held in an account for me. When I retire, I will draw benefits from that account. Social Security taxes collected today go toward benefits paid out today. In other words, current workers are supporting those who have retired and claimed their benefits. Your taxes aren’t sitting in an account somewhere, collecting interest. You are supporting current retirees, and younger workers will continue to support you when you retire.
Social Security is running out of money, and my benefits won’t be there when I need to retire. It is true that the Social Security trust fund is running out of money, and that the influx of Baby Boomers claiming their benefits is causing a strain on the system. But since the majority of Social Security benefits are paid through current taxes from those who work, your benefits won’t disappear. At worst, they will be reduced by one-third in 2035 when the extra money runs out. But policy makers are diligently working on a solution to the shortfall. It is likely we will all receive every penny of our scheduled benefits.
If I become disabled and unable to work, it will take years for me to receive Social Security disability payments. The Social Security disability program has earned a reputation for slow processing of approvals, but that is mostly due to the number of claims due to exceedingly rare conditions or outright fraud. The Administration actually created a program called Compassionate Allowances, which provides automatic approval for individuals who have one of about 200 qualifying conditions. If your condition falls outside of this list, you could be one of the rare exceptions for whom an approval is a lengthy process. But most likely, disability benefits will be there if you ever need them.
If I continue to work while receiving Social Security benefits, my payments will be reduced and I will lose that money forever. If you file for benefits before full retirement age, part of your benefits could be withheld if you continue to work and earn more than a certain limit. However, you will receive credit for this withheld money when you reach full retirement age, so you have not actually lost the money. Once you reach your full retirement age, you can earn as much money as you want, and none of your benefits will be withheld.
This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
15042 – 2015/11/16
