Social Security Myths Debunked

Each month, the Social Security Administration pays out billions of dollars to some 71 million Social Security beneficiaries, which includes retirees, people with disabilities and their family members. Many 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 variety of misconceptions related to how it is funded and how it works.

Many people have questions about Social Security. Is Social Security taxable? How many years must you have worked for Social Security benefits to begin? And what is your Social Security amount based on?

Here are the facts behind the most persistent myths about Social Security — and the truth, too. And as you look toward your retirement years, reach out to Farm Bureau for sound advice and help.

Myth #1: Social Security Is Out of Money

It’s true that Social Security is facing funding challenges. The retiree population is growing, and people are living longer, which means more people are collecting benefits for more time. But as long as workers and employers pay payroll taxes, the program will not run out of money.

Myth #2: You Lose Your Social Security Benefits if You Continue to Work

There is a rule that Social Security will temporarily reduce the benefits of people who still work, but that 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

Until 1984, this myth was actually true! But in 1984, Congress passed a Social Security overhaul that included a provision which made a portion of Social Security benefits taxable, depending on your income level.

Under current guidelines, you will pay Social Security tax on a portion of your income — see the guidelines for the most up-to-date information based on your filing situation.

Myth #4: Social Security Will Fully Fund My Retirement

This myth is a bad one to believe. In fact, 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. It’s just meant to supplement them.

That’s why it’s so important to build a retirement savings account of your own, and to start as early as you’re able so that the money has time to grow. Contributing to an employer-sponsored retirement plan such as a 401(k) or an IRA is a big step on the road to retirement. Contributing to both can significantly boost your retirement assets.

All of these savings will keep you comfortable in retirement. And if you aren’t sure where to start, check with Farm Bureau for guidance on the best place to begin. 

Create a Retirement Plan That Works for You

Your retirement won’t look like anyone else’s — so why should your retirement plan? Our agents and financial advisors can help you make a retirement plan and find the solutions that fit your needs. Reach out to Farm Bureau to begin the conversation today.