by Bill Mullen
Nearly every retirement plan will rely on Social Security to help provide income each monthso it’s natural to feel a level of concern when you hear so much uncertainty around the benefits you’ll receive after you stop working.
But you shouldn’t buy into everything you hear when it comes to Social Security. Believe it or not, there’s quite a bit of misinformation floating around about the future of the program and what you need to know when claiming the benefit. Our job is to help put you in the strongest position possible for retirement and a big piece of that is getting Social Security right.
So let’s talk about the myths you might have heard through the years.
The first few deal with claiming your benefit, which needs your full attention because it’s typically a decision you can only make once.
The first myth is the Social Security Administration will help you make the best decision about when you should start your benefit.
Simply put, it’s not their job to help you strategize. They are there to assist you in finding the appropriate forms and making sure everything is filed correctly, but they won’t be able to tell you if it’s better to file now or wait for a few years. An advisor can provide that guidance but don’t expect it from the SSA.
The second myth is stay-at-home parents won’t receive any benefits since they didn’t work enough outside of the home.
Don’t ever assume anything when it comes to your finances. Quite often people are pleasantly surprised by what they learn when we meet with them. That’s the case in this scenario as well. Even if you haven’t worked enough to qualify for a full benefit, there are options for married people to receive a benefit equal to a portion of their spouse’s Social Security.
The third myth is that you won’t have to pay taxes on Social Security because you’ve been paying taxes on that money throughout your life as you paid into the system.
We wish this was true but it’s not. Your Social Security benefits could be taxable and you should be working with your advisor to understand what that might look like on your income in retirement. If you’re expecting to rely on the full amount of your benefit, you might be caught by surprise.
The fourth myth is that there won’t be any Social Security money left by the time you retire.
This might be the one you hear most often because projections are thrown out all the time about when Social Security will run out of money. Sure, those projections might be accurate, but it doesn’t mean the government will sit on its hands while all the funds are depleted. Adjustments to the system have been made in the past and will surely be made again moving forward to ensure this assistance is there for retirees.
The fifth myth is that you should claim your benefit as soon as you’re eligible.
This might be true for you but it should never be assumed. You need to have a plan for how and when you’ll claim because it’s difficult to make an adjustment after you’ve filed. Too many Americans leave money on the table by claiming as soon as possible so make sure you are taking the appropriate steps to maximize your benefit.
If you have any additional questions about Social Security and the benefits you can expect in retirement, please reach out and we’ll be happy to look at your situation.