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Social Security is an essential program, but it is often misunderstood. By separating fact from fiction, you can better navigate your retirement planning. Myths surrounding Social Security can lead to costly mistakes, so it’s important to be well-informed. If you have questions or need guidance on how Social Security fits into your overall financial picture, consulting with a social security lawyer can be invaluable. Below is a guide to debunk some of the most common myths surrounding Social Security and clarify the facts so that you can have a better understanding of how it works.
Social Security Is Going Bankrupt
One of the most pervasive myths is that Social Security is running out of money and will soon be bankrupt. While it’s true that Social Security faces funding challenges, it is unlikely to disappear entirely. The program is funded through payroll taxes, which are continuously collected from workers and their employers. Even if the reserves in the Social Security Trust Fund are depleted, payroll taxes will still provide a significant portion of benefits. The concern is more about potential reductions in benefits, not a complete shutdown of the system.
It is important to stay informed about potential changes in the Social Security landscape, but fearing the program’s total collapse is not realistic. Policymakers continue to debate reforms that could sustain the program for future generations.
You Can’t Work And Receive Social Security Benefits
Many people believe that once they start collecting Social Security, they are not allowed to work. This is not true. You can work while receiving Social Security benefits, but your benefits may be affected depending on your age and earnings. If you begin receiving benefits before your full retirement age and continue to work, your benefits might be reduced temporarily if your income exceeds a certain threshold. However, once you reach full retirement age, there is no penalty for working while receiving benefits.
The key here is to plan carefully if you want to work and collect benefits at the same time. Understanding how your benefits will be impacted by your earnings can help you make an informed decision.
You Should Always Take Benefits At 62
Another common myth is that everyone should start taking Social Security benefits as soon as they turn 62. While this may seem appealing, it may not be the best option for everyone. Taking benefits at 62 results in a permanent reduction in monthly payments, as compared to waiting until your full retirement age or even beyond that. Each year you delay receiving benefits after your full retirement age increases your monthly payout.
When to start collecting Social Security is a personal decision that depends on various factors, such as your financial needs, health, and longevity. It is not a one-size-fits-all situation, and rushing to collect early may cost you in the long run.
If you want more information or are unsure how Social Security applies to your specific situation, reach out to trusted advisors like Hurwitz, Whitcher & Molloy for clarity. Planning now can help you avoid surprises later and give you peace of mind as you approach retirement.
