5 Social Security Myths

by Craig Moser on June 29, 2018

With all the misinformation, complex benefit formulas and individual opinions, navigating Social Security can feel like a mine field.  An even worse, selecting the wrong path can lead to a costly mistake.  Before you make your decision, here are 5 Social Security Myths I’d like to clear up:

MYTH 1:  You must claim Social Security benefits at age 62.

Although many people believe this myth, age 62 is the earliest age you can claim Social Security benefits.  It isn’t the only age you can claim benefits.  You may claim Social Security benefits at any time between the ages of 62 and 70 years old. However, the sooner you claim benefits, the less your benefit amount.

The Social Security Administration (SSA) calculates your monthly benefit amount using two key components:  your full retirement age (FRA), and your earnings record.

So, for example, claiming benefits at age 62 can result in reduced monthly benefit amount of 25%-30% depending on your FRA.  Conversely, waiting to claim Social Security benefits until after your FRA can result in an additional 8% monthly income depending on your FRA.

Timing is Everything

MYTH 2:  You can claim early, then get a “bump” once you reach full retirement age.

Some people who claim benefits at age 62 understand the benefit amount is lower for filing early. However, they also believe benefits automatically increase when they reach full retirement age. This is a costly myth.

Social Security benefits don’t increase due to attaining a certain age. However, you can voluntarily suspend your benefit amount after reaching FRA and resume benefits as late as age 70.  If you do this, your benefit increases by 8% per month until you reach age 70[1].  After obtaining age 70, you no longer receive an increase in your base benefit amount.

Finally, you can cancel your Social Security claim within 12 months of receiving your initial benefit.  You must repay the full amount you (and/or a current spouse or family member) received based on your benefit.  Once done, you can claim again at a later date.  In this scenario, you receive a large monthly payment.  However, you can only cancel a claim once in your lifetime.

MYTH 3: Your monthly Social Security benefits is reduced or denied if your ex-spouse claims on your earnings record.

An ex-spouse might do may things to make your life more complicated.  However, Social Security is not something they have any influence or control over.

If you were married for 10 consecutive years and haven’t remarried, you are entitled to claim either your own Social Security benefit, or 50% of your ex-spouse’s benefit once you obtain FRA.  If your ex-spouse’s benefit is higher, you simply make an appointment at your local SSA office and take documents proving your marriage and divorce.  They calculate your benefit options, and when you submit your SS claim, you receive the higher benefit amount.

You don’t need to discuss this with your ex-spouse.  A claim on a former spouse’s earning record doesn’t affect that spouse’s benefit amount in any way.

MYTH 4: Your benefits are only based on wages earned before age 65.

Calculating your Social Security benefits may seem mysterious.  You can use tools on the website to help determine your benefit amount. In the meantime, knowing a few essential facts can help your claiming strategy:

  • The Social Security Administration calculates your benefit using your highest 35 years of earning. Those years don’t have to be consecutive, and they don’t have to be prior to your turning 65 years old.
  • If working past age 65, those years are included in your benefits calculation (provided you earn enough for them to be included in the highest 35 years of earnings).
  • Part-time work after age 65 is also included in your highest earning 35 years.
  • You must have a minimum of 40 Social Security credits to be eligible for Social Security. This is the same as 10 years of covered employment.

MYTH 5: You never get as much back from Social Security as you put in.

Everyone’s situation is different, so naturally your benefit amount will be different from mine.  However, if you live a long time, it’s possible you may collect more from Social Security than you actually put in.

It’s true you don’t receive benefits from an account set aside specifically for you.  Furthermore, that fictitious account doesn’t contain all the FICA contributions (taxes for Social Security and Medicare) you’ve made.  However, Social Security does provide a guaranteed retirement income stream you can’t outlive.  It also allows your spouse to receive survivor benefits if they outlive you.

Social Security benefits are an important part of planning your retirement income.  Know your numbers, do the math, and have a claiming strategy that works for you!

[1] In general, you can cancel your Social Security claim if you do so within the first 12 months of receiving benefits. You must repay the full amount you’ve received, and the full amount a current spouse or family member received. Then, you are eligible to claim again at a later date and will receive a larger monthly payment. Each individual can only cancel a claim once in their lifetime.


NOTE:  Not affiliated with the U.S. Government or any governmental agency.  This blog has not been approved, produced, or endorsed by the U.S. Government.

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