Retire Right: Social Security Misconceptions - Separating Fact from Fiction

Social Security is surrounded by myths and misconceptions that can lead to costly claiming mistakes. In this episode of Retire Right, we debunk common Social Security myths and provide the facts you need to make informed decisions about when and how to claim your benefits. 📋 Key Misconceptions Covered: "Social Security is going bankrupt and won't be there for me" "I should always claim at 62 to get money while I can" "My benefits are based on my last few years of work" "I can't work and collect Social Security" "Divorced spouses can't claim on their ex's record" "Social Security isn't taxable income" "Everyone should delay until 70 for maximum benefits" ❌ Myth #1: Social Security Is Going Broke The Truth: Social Security isn't going bankrupt Trust fund depletion doesn't mean zero benefits Even without changes, can pay about 80% of benefits Various reform options available before shortfall Your earned benefits have legal protections ❌ Myth #2: Always Claim at 62 The Truth: Age 62 = 25-30% permanent reduction Breaking even typically happens around age 78-80 Longevity and spousal situations matter greatly Early claiming reduces survivor benefits permanently Strategic waiting can mean hundreds of thousands more ❌ Myth #3: Benefits Based on Last Years Only The Truth: Based on highest 35 years of earnings Indexed for inflation over your career Lower earning years can drag down average Working longer can replace low-earning years Zeros count if you don't have 35 years ❌ Myth #4: Can't Work and Collect The Truth: You can, but earnings test applies before FRA After Full Retirement Age, no earnings limit Withheld benefits aren't lost - recalculated at FRA Earnings test only applies to your benefit, not spousal Working can increase your future benefit amount ❌ Myth #5: Divorced Can't Claim Ex's Benefits The Truth: Divorced spouses have claiming rights Marriage must have lasted 10+ years Must be unmarried currently to claim on ex Ex doesn't need to have filed yet (if divorced 2+ years) Doesn't reduce ex-spouse's benefit at all Can switch between own and spousal benefit ❌ Myth #6: Social Security Isn't Taxed The Truth: Up to 85% of benefits can be taxable Depends on "combined income" calculation Includes half of SS + other income + tax-exempt interest Thresholds haven't adjusted for inflation since 1983 State taxes may also apply depending on location Tax planning strategies can minimize impact ❌ Myth #7: Everyone Should Wait Until 70 The Truth: It depends on your situation Health and life expectancy are major factors Need for current income vs. future maximization Spousal and survivor benefit considerations Break-even analysis for your specific case Sometimes claiming earlier makes financial sense 💡 Other Common Misconceptions: File and suspend strategy (eliminated in 2015) Spousal benefit always 50% (it's up to 50% at FRA) Working while collecting hurts future COLAs (it doesn't) You automatically get Medicare at 62 (it's 65) Claiming suspends future cost-of-living adjustments (false) ✅ What You Should Know: Claiming decisions are personal and situation-specific Full Retirement Age varies by birth year (66-67) Delayed retirement credits = 8% increase per year Spousal benefits require other spouse to file first Survivor benefits have different rules than retirement You can change your mind within 12 months (with payback) Benefits adjust annually for inflation (COLA) ⚠️ Costly Mistakes to Avoid: Claiming without understanding full impact Not coordinating with spouse's strategy Ignoring survivor benefit implications Forgetting about taxation of benefits Not considering impact on Medicare premiums Missing out on delayed retirement credits Failing to review earnings record for errors 🔔 Subscribe for more retirement planning episodes. New videos every Tuesday and Thursday. Investment advisory services offered through RSG Investments, LLC, an investment advisory firm registered with the Securities and Exchange Commission (“SEC”) under the Investment Advisers Act of 1940.