The Social Security Administration is fraught with complicated rules and procedures, so it's understandable that the general public holds a lot of misconceptions about how the system works. Hopefully, our explanations of the following five myths will put your mind at rest.
Myth 1: Your payroll taxes are placed in an account under your name. When you retire and claim your Social Security benefits, you get that money back plus interest.
The truth: Benefits paid out today are covered by taxes collected today. Current retirees are supported by current workers. There is no individual account, set aside with your money in it.
Myth 2: If you're disabled by a serious disease, it can take years to receive Social Security disability benefits.
The truth: A program called Compassionate Allowances will speed up your disability claim, if you have one of the conditions specified by the program. Compassionate Allowances covers over 200 medical conditions. There are situations in which disability claims take years to process, but it's usually because those cases fall outside of the Compassionate Allowances program.
Myth 3: If you've never worked, you aren't eligible for Social Security benefits.
The truth: This myth comes from the fact that you must earn 40 work credits before you qualify for retirement benefits. However, someone who has never earned a single work credit can qualify based on their spouse's work record.
Myth 4: It's best to take your retirement benefits immediately when you turn 62. You could die before you reach full retirement age, and lose thousands of dollars.
The truth: Every situation is different, so there is no “right” time that everyone should claim their Social Security benefits. But the average life expectancy for men is 84, and for women it's 86. So unless you're in poor health already, you're unlikely to pass away before you receive your benefits.
Myth 5: If you continue working after you claim your benefits, Social Security will withhold some of the money each month and you'll lose it forever.
The truth: First of all, the earnings limit only applies to people who take their benefits before the full retirement age. After you reach your full retirement age, you can earn as much money as you want without fear of Social Security withholding part of your checks. But if you are subject to the earnings limit withholding, Social Security will recalculate your benefits after you reach full retirement age. You will likely receive credit for the amounts withheld.
If you hear any rumors or frightening news about Social Security, check with your financial advisor or Social Security representative. In many cases the story may have been false or very distorted, so there is no sense worrying about untrue myths!
14247 - 2015/3/10
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