Social Security is not actually going bankrupt, for one.
With a system as complex as Social Security, it’s inevitable that misinformation will spread. It’s hard to understand what’s true and what’s not, and often, our brains prefer the version of events that feel intuitively more simple to understand.People tend to repeat some of these not-quite-true tidbits and downright falsehoods so often that they’ve reached mythical status and are often accepted without question.
Myth No. 1: Illegal immigrants collect Social Security My YouTube channel is absolutely inundated with these kinds of comments. The belief that illegal immigrants can come to the United States and immediately receive Social Security benefits is simply not true. Here’s the truth: There has never been any change in the way Social Security payroll taxes are used by the federal government.
None of these movements had anything to do with the actual operations of the trust fund; it was purely a change of accounting practices. For every dollar that comes in from Social Security taxes, a special-issue Treasury bond takes its place. These bonds earn interest — which is a good thing. When your paycheck is deposited, that bank uses that money and makes an accounting entry. When you need your money, the bank pulls it from the institution’s account and notes a debit to your account. But no one gets hooked on conspiracy theories about banks misusing funds.
For many years, more people paid in taxes than the system needed to pay out at the same time. More money came in than went out, and the excess started to accumulate in the trust fund that we hear so much about. Myth No. 4: Members of Congress don’t pay into the Social Security system Many people believe that members of Congress, being the ones who wrote the rules, carved out a special retirement plan just for themselves. They get to live above Social Security, and don’t have to rely on its benefits — and therefore, don’t care what happens to it.
To do this, I looked at the dollars I would put into Social Security over my working career, versus the dollars that I would take out. Then I looked at four different income levels during that time period. To get a baseline I used the National Average Wage Index published by the Social Security Administration.
In fact, the amount of taxes paid in pales in comparison to the average amount of lifetime benefits paid out! That makes this myth wildly untrue.Myth No. 6: Social Security benefits are an earned right This would be really nice. If it were true. Unfortunately, Social Security payments are not guaranteed, and laws can be changed at any time that impact what you’ll receive in benefits.
“The proceeds of both taxes are to be paid into the treasury like internal-revenue taxes generally, and are not earmarked in any way.” But just in case people forget that benefits can be changed or stopped altogether at any time, the Social Security Administration puts this reminder on every statement they create:
Not necessarily, and certainly not in every single case. You can’t apply this blanket rule to all situations, because there are multiple scenarios where filing early makes more sense than filing later. Another situation in which filing early could be the best route is in the case of a few different spousal issues. The first is if your spouse is the higher earner and has health concerns which will shorten their life expectancy.
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