Social Security is often seen as a guaranteed safety net, something you don’t need to think about until you’re close to retirement. But that assumption can be dangerously expensive. In fact, blindly trusting in outdated or misleading beliefs about Social Security could cost you six figures over the course of your retirement.
With Americans living longer and healthcare costs rising, it’s more important than ever to maximize every available dollar in your later years. Unfortunately, there’s a lot of misinformation floating around, especially from outdated advice, hearsay, or surface-level social media posts. Here’s a closer look at the most common Social Security myths and the truth behind them.
Myth #1: You Should Always Claim Benefits at 62
One of the most damaging myths is that you should start collecting Social Security benefits the moment you become eligible at age 62. While you can claim at this age, doing so comes at a steep cost. Your benefits will be permanently reduced by up to 30% compared to what you’d receive if you waited until your full retirement age (typically 66–67, depending on your birth year).
For those who wait until age 70, benefits grow by 8% each year past full retirement age. Over time, the difference between claiming early and waiting could amount to over $100,000 in lost income, especially if you live into your 80s or 90s. Claiming early might make sense for some, but it should be a strategic decision, not a default.
Myth #2: Social Security Will Run Out Before You Retire
While the Social Security trust fund is projected to be depleted in the 2030s, this doesn’t mean benefits will vanish. The truth is, even if the trust fund runs out, incoming payroll taxes will still cover around 75% to 80% of promised benefits. Congress has made adjustments to the system before and is likely to do so again.
Still, fear of losing out often drives people to claim early, locking in reduced benefits for life. Understanding the facts and planning accordingly is a far smarter move than panicking and making a costly decision based on fear.
Myth #3: You Can’t Work and Receive Benefits at the Same Time
Many people believe that once you start collecting Social Security, you must stop working. This is simply not true. You can work while receiving benefits, especially if you’ve reached full retirement age. However, if you claim before that and earn above a certain threshold ($22,320 in 2024), your benefits may be temporarily reduced.
The key word here is temporarily. Once you reach full retirement age, the withheld benefits are recalculated and added back to your monthly payments. So if you’re still earning income, Social Security doesn’t disappear. It just gets delayed and reshuffled.
Myth #4: Your Benefits Are Based Solely on Your Last Job
Your Social Security benefits aren’t determined by your last job or your most recent salary. Instead, they’re calculated based on your highest 35 years of earnings. If you haven’t worked 35 full years, the Social Security Administration fills in the gaps with zeros, which drags down your average.
That’s why continuing to work, even part-time, later in life can boost your eventual benefit. Adding more high-income years can push out earlier, lower-paying years and increase your monthly check. It’s not about how you finish but how you’ve performed over the long haul.
Myth #5: Social Security Benefits Aren’t Taxable
This is another costly misconception. Depending on your income level, up to 85% of your Social Security benefits may be subject to federal income tax. If you have other sources of retirement income, such as a pension, 401(k), or side job, your total income might exceed the threshold for taxation.
Currently, if your combined income is above $25,000 (single) or $32,000 (married), a portion of your benefits may be taxed. Planning for this in advance can help reduce surprises come tax season and help you structure your retirement income more efficiently.
Myth #6: Spousal Benefits Are Only for Stay-at-Home Spouses
Spousal benefits aren’t just for those who never worked. They can also help boost benefits for anyone who earned significantly less than their spouse. Even if both spouses worked, the lower earner may be eligible to receive up to 50% of the higher earner’s benefit amount at full retirement age.
What’s more, ex-spouses can also claim spousal benefits provided the marriage lasted at least 10 years and the person claiming is currently unmarried. Understanding this rule can unlock thousands of dollars over time, particularly for women or anyone who took time off from the workforce.
Myth #7: Once You Start, You’re Locked In
Many people don’t realize that you get one chance to undo your Social Security claim. If you claim early and regret it, you can withdraw your application within 12 months and pay back any benefits you’ve received. This lets you delay your claim and receive higher payments later.
While you can only do this once, it’s a valuable option for those who’ve had a change in circumstances or received new financial information. Don’t assume you’re stuck if you’ve already claimed. Look into your options.
Knowledge is Money
When it comes to Social Security, misinformation is more than just annoying. It’s expensive. Making the wrong decision at the wrong time can cost tens of thousands, even hundreds of thousands, over the course of your retirement. These myths often linger because they feel safe or familiar, but safe doesn’t always mean smart.
Whether you’re five years from retirement or still decades away, it pays to educate yourself. Consult with a financial planner, use Social Security calculators from the SSA website, and explore tools from reputable financial institutions like Fidelity.
Which of these myths surprised you the most? Have you made any Social Security decisions you’d do differently now?
Read More:
7 Social Security Benefits Boomers Are Quietly Leaving on the Table
The Best Age to Take Social Security, Based Upon Various Life Expectancy Scenarios
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