Social Security is one of the most important financial safety nets in retirement, but it’s also one of the most misunderstood. Myths and half-truths about how the system works can lead to costly mistakes, smaller checks, and unnecessary stress. Whether you’re nearing retirement or just planning ahead, understanding the real rules can help you make smarter decisions about when and how to claim benefits. Here are some of the most common Social Security myths that could cost you serious money, and what the truth really is.
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Social Security Will Completely Run Out of Money
Many people believe Social Security is on the verge of collapse, but that’s not true. While the program faces funding challenges, it’s not going bankrupt. Payroll taxes still fund the majority of benefits, and even if the trust fund reserves are depleted, the system would still pay roughly 75–80% of promised benefits. The real issue is potential benefit reductions, not total insolvency. Staying informed about possible policy changes and planning additional sources of retirement income can help you prepare for future adjustments without falling for doomsday myths about the program disappearing entirely.
Your Benefits Aren’t Taxed
It surprises many retirees to learn that Social Security benefits can be taxed. Depending on your combined income, you may owe federal taxes on up to 85% of your benefits. Some states also tax Social Security income. Understanding how your benefits interact with other income sources can help you plan withdrawals strategically and avoid unexpected tax bills. Proper planning can also help reduce taxable income through methods like Roth conversions or adjusting the timing of retirement account distributions.
See the states that don't tax retirement income.
Social Security Covers All of Your Retirement Needs
Social Security was never designed to replace your full income in retirement. It’s meant to supplement other savings. On average, benefits replace about 40% of pre-retirement income, which is rarely enough to maintain your lifestyle. Relying solely on Social Security can lead to financial strain, especially as living costs rise. Building additional income streams, such as a pension, retirement accounts, or part-time work, can provide the security and flexibility that Social Security alone cannot. The earlier you start saving, the easier it will be to ensure that your golden years are comfortable and financially stable.
If You’re Divorced, You Can’t Collect on Your Ex’s Record
You may still qualify for spousal benefits based on your ex’s earnings record, even after divorce. If your marriage lasted at least 10 years, you’re unmarried, and you’re 62 or older, you can claim benefits up to 50% of your former spouse’s full retirement benefit. Importantly, your ex won’t lose any money or be notified of your claim. Many divorced individuals miss out on extra income because they don’t realize this rule exists. Checking your eligibility can make a big difference, especially if your ex earned significantly more than you did.
You Can’t Change Your Claiming Decision Once You Start
While Social Security claiming decisions are important, they’re not always permanent. You have a few options to make changes. Within 12 months of first claiming, you can withdraw your application, repay benefits received, and restart later for a higher amount. Alternatively, after reaching full retirement age, you can suspend your benefits to earn delayed credits until age 70. Both options can increase your future monthly income if your financial situation changes or you realize you claimed too early. Knowing your flexibility helps you make smarter long-term choices about when and how to collect benefits.
Claiming Early Is Always Better
Taking Social Security at 62 might seem appealing, but it permanently reduces your monthly benefits. For each year you claim before your full retirement age, your payments drop by about 6–7%. While early claiming makes sense if you need income right away or have health concerns, it often costs you tens of thousands of dollars over time. Waiting, if possible, allows your benefit to grow and provides a higher monthly income for life. It’s best to run the numbers or consult a financial planner before deciding when to file.
Waiting Until 70 Always Yields the Best Outcome
Delaying benefits until age 70 increases your monthly payout by roughly 8% per year after full retirement age, but that doesn’t mean waiting is always best. If you have health issues, need income sooner, or have a shorter life expectancy, claiming earlier might yield more total lifetime benefits. Additionally, waiting too long could deplete your savings unnecessarily. The optimal claiming age depends on your financial situation, health, and family circumstances. The key is to balance long-term income security with your current financial needs and quality of life.
Here's more on whether or not you should delay claiming Social Security benefits.
Social Security Benefits Automatically Increase with Inflation
Social Security includes a cost-of-living adjustment (COLA) most years, but it doesn’t always keep pace with real inflation. The COLA is based on the Consumer Price Index for Urban Wage Earners (CPI-W), which doesn’t fully reflect the rising costs seniors face, particularly for healthcare. As a result, the purchasing power of benefits has declined over time. Retirees should plan for additional savings or income to offset these gaps. Understanding how COLA works helps prevent overreliance on benefit increases that may not fully protect against inflation.
You Can’t Collect Benefits If You Haven’t Worked 40 Years
You don’t need to work 40 years. You only need to earn 40 credits to qualify for Social Security retirement benefits. In 2025, one credit equals $1,730 in earnings, and you can earn up to four credits per year. That means just 10 years of work can make you eligible for benefits. However, your benefit amount is based on your highest 35 years of earnings, so fewer years of work may lower your monthly payments. Understanding how credits and earnings affect your benefit can help you plan effectively for retirement.
Your Benefits Stop If You Move Abroad
Many Americans assume they’ll lose their Social Security benefits if they retire overseas, but in most cases, that’s false. U.S. citizens can receive benefits in more than 100 countries. There are exceptions for certain nations or if you’re not a U.S. citizen, but most retirees living abroad continue to collect payments without interruption. You may need to fill out extra paperwork or verify your address periodically. Before moving, check the Social Security Administration’s rules for your destination country to ensure your benefits continue smoothly.
The Government Will Notify You When You’re Eligible
The Social Security Administration doesn’t automatically notify you when it’s time to claim benefits. It’s your responsibility to apply when you’re ready. Relying on an automatic notice could lead to missed payments or a poorly timed claiming decision. To stay informed, create a “my Social Security” account to track your estimated benefits and earnings record. Reviewing it regularly ensures you understand your options and can choose the best age to file based on your financial goals.
Your Spouse’s Death Benefit Reduces Your Own
Survivor benefits don’t reduce your own Social Security payments. If your spouse passes away, you may be eligible to receive up to 100% of their benefit amount, or your own benefit, whichever is higher. You can’t collect both at once, but you can switch between benefits strategically to maximize income. For example, you might take a survivor benefit first and switch to your own later if it grows. Understanding these rules helps widows and widowers make informed choices and avoid losing valuable income.
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