Social Security Myth Busters

Debunking Common Social Security Myths and Misunderstandings

Social Security Myth Busters
March 7, 2014

Social Security has become a hot-button issue in the United States today. Politicians on both sides of the political spectrum often try to “spin” statistics about Social Security so that they support their political position. Worse yet, members of different demographic groups sometimes do the same thing.

For example, many baby boomers and senior citizens point out that they have been paying into the Social Security system for their entire lives, so they deserve to receive the full amount of their promised benefits when they retire — regardless of concerns about the future solvency of Social Security. Younger Gen X and Gen Y workers, meanwhile, worry that Social Security might not even be there by the time they retire, so benefit payments should be reduced for everyone, or the Social Security retirement age should be raised, to help ensure the long-term solvency of the system.

Top 3 Social Security Myths

Given all the rhetoric that often is thrown around, we thought we would take this opportunity to debunk a few of the most common misunderstandings and myths that currently exist about Social Security:

  • Myth #1: “The Social Security system is going broke.” While the Old Age, Survivors and Disability Insurance (OASDI) federal program — most common referred to simply as Social Security — is certainly facing financial challenges due to the changing demographic makeup of the U.S. population, it is not necessarily going broke.

    This myth has arisen out of the often-quoted projection that, according to current estimates, Social Security will become insolvent by 2033 unless changes are made to the system. However, there is a big difference between “insolvency” and “going broke.” What this projection actually means is that the Social Security Trust fund will only be able to pay three-quarters of promised benefits — or 75 cents for every dollar — after the date of insolvency.

    The Social Security Administration (SSA) acknowledges that the Social Security system is “facing serious financial problems, and action is needed soon to make sure the system will be sound when today’s younger workers are ready for retirement.” Some experts have noted that relatively minor tweaks to the system, like increasing the Social Security retirement age by just a year or two, could keep Social Security solvent for many more years. But it remains to be seen whether such changes are politically feasible in the current highly partisan political atmosphere in Washington.
  • Myth #2: “Social Security was established to serve as the primary source of income for retirees.” When the federal government first established Social Security in 1935, its intention was to provide a financial safety net for senior citizens, among whom the poverty rate was greater than 50 percent, and the unemployed, widowed and fatherless children. It was designed to provide supplemental retirement income in addition to pensions and individual savings, not serve as the primary or sole source of retirement income for Americans.

    According to the SSA, the average retiree’s Social Security payment today is $1,234, or just a little bit more than minimum wage for a full month of work. This likely is not enough money to support a comfortable retirement lifestyle for most people — especially those living in high-cost cities and parts of the country.

    Unfortunately, this could end up being a very costly myth for many Americans. Only a little more than half (58 percent) of Americans say they are saving any money for retirement, according to the Employee Benefits Research Institute. Moreover, among those who are saving for retirement, a full 60 percent have accumulated less than $25,000 in retirement savings (outside of defined benefit pension plans).

  • Myth #3: “I can’t start receiving Social Security benefits until I turn 65 years old.” In fact, there are several different options for when you can start receiving Social Security benefits:
      1. When you turn 62 years of age,
      2. When you reach your “full retirement age,” or
      3. When you turn 70 years of age.
  • Your full retirement age depends on when you were born. If you were born in 1937 or earlier, your full retirement age is 65. If you were born after 1937, your full retirement age will be somewhere between 65 and 67. Keep in mind that if you start receiving benefits before your full retirement age, your monthly benefit amount will be reduced a fraction of a percent for each month that you are short of reaching your full retirement age.

    Conversely, you may be able to increase your Social Security benefits by waiting until after your full retirement age to start receiving benefits. In this case, you may be eligible for delayed retirement credits that would increase your monthly benefit. But there’s no benefit to waiting past age 70, so there is no reason to delay receiving benefits past this age.

Avoid Confusion and Misunderstandings

Social Security is too important for the future of every American to get caught up in all the rhetoric and spin and confused by common myths and misunderstandings. If you have more questions about Social Security, visit the Social Security Administration’s website at

Let the free Retirement Planner by MoneyTips help you calculate when you can retire without jeopardizing your lifestyle.

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