A lot of people have a lot of things to say about Social Security benefits. However, not everything that may be floating around in the public consciousness about this program is true. If you want to ensure you're well prepared for retirement, it's important you have accurate information upon which to base your decision making. Here's the truth about two common myths about Social Security.
Myth #1 - Social Security Is Going Bankrupt
Due to a lot of misunderstanding about how the Social Security program works, many younger people believe the Social Security program is not financially viable and will run out of money before they reach retirement age. While it's true the trustees of the Social Security trust fund do project the fund will be depleted by 2034, that doesn't mean there won't be any money to pay benefits. What many individuals don't understand is that workers will still be paying into the system, so there will be cash for future beneficiaries.
That's not to say there isn't a reason to be concerned. According to current projections, it's believed there will only be enough money to pay about 79 percent of the scheduled benefits. Therefore, it's a good idea to set more money aside or develop additional sources of income that will help fund your retirement to prepare for the shortfall.
Myth #2 – You Should Collect Social Security As Soon As You're Able
Perhaps spurred by the previous myth, many people believe the best financial move they can make is to start collecting Social Security benefits as soon as they become eligible. After all, if there won't be any money left, you might as well collect what you can. Unfortunately, cashing out early can actually hurt you more in the long run.
While the earliest you can start collecting Social Security benefits is 62, you won't receive the full amount. According to the agency, your check will be reduced by 25 to 30 percent if you retire at age 62. The hit to your benefits lessens with each year you wait to retire, and you'll be eligible for full benefits if you choose to start collecting at age 66.
Additionally, if you opt to delay retirement, you'll earn an addition 8 percent in benefits each year until age 70. With people living longer and longer, it's a good idea to maximize your retirement savings as much as possible to ensure you'll have enough money to support your needs to the end of your life.
For more information about these and other Social Security myths, contact a Social Security lawyer.Share