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Offbeat 3 Social Security Myths You Can't Afford to Believe

15:39  11 june  2018
15:39  11 june  2018 Source:   fool.com

Will Social Security be standing by the time you can take it?

  Will Social Security be standing by the time you can take it? Is Social Security actually on the verge of going bankrupt? Or is that just a glaring myth?Social Security's shaky path

As a result, many Americans fall into the trap of believing Social Security myths rather than digging deeper to find the truth. Let's look at three popular Social Security myths that can lead you to make major mistakes in your retirement planning.

3 Social Security myths debunked. Dan Caplinger, The Motley Fool Published 9:33 a.m. ET Oct. Even in a worst-case scenario, the SSA believes that it will be able to keep paying about 77% of all benefits due after that date, using Social Security tax revenue to fund payments.

Serious older man against a black background © Getty Images Serious older man against a black background Millions of seniors collect Social Security and depend on those benefits to cover the bills in retirement. But there's a lot of misinformation circulating with regard to Social Security, and if you don't learn to recognize fact from fiction, you won't make the most of those benefits. With that in mind, here are three glaring myths it pays to get to the bottom of.

Myth #1: Social Security will soon be bankrupt

Reality: It's true that Social Security is facing a future shortfall that, if left unaddressed, could cause benefits to get slashed as much as 23% come 2034. But there's a big difference between that worst-case scenario and the program running out of money completely, and buying into the latter might cause you to act hastily with regard to your benefits.

5 dangerous myths about Social Security

  5 dangerous myths about Social Security A new warning that the program is dipping into its reserves fuels misconceptions many have about its futurePlenty of workers may take this development with a grain of salt because of the widespread belief that they'll never see a Social Security check in their lifetime. More than half of working Americans don't think they'll receive a benefit when they retire, according to a Gallup poll in 2015.

Don' t be a sucker to credit myths . These are just three examples of many credit myths that can prevent you from maximizing your own credit score. But a handful of little-known " Social Security secrets" could help ensure a boost in your retirement income.

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The fact of the matter is that Social Security can never truly go broke because its funding comes from payroll taxes. Therefore, as long as we have a workforce and continue to collect those taxes, it will remain standing. Furthermore, Congress has a good 16 years to step in, address the aforementioned shortfall, and prevent benefits from getting slashed. Therefore, if you're thinking of filing for Social Security as early as possible to ensure that you get some of that money while it's still available, don't do it. Filing early will slash your benefits, and that's a good way to ensure a lower income stream for the remainder of your golden years.

Myth #2: It doesn't matter when you file for benefits

Reality: Social Security is technically designed to pay you the same amount in lifetime benefits whether you file at the earliest possible age of 62, the latest age of 70, or somewhere in the middle. The logic is that any reduction you receive in your monthly payments by filing early will be offset by the greater number of individual payments you collect. Similarly, holding off on benefits will boost your payments, but you'll collect fewer individual payments as a result.

This one number can fool you when claiming Social Security

  This one number can fool you when claiming Social Security Just how much you will receive from the Social Security Administration over your lifetime should be one calculation you use when deciding when to claim benefits.It generally pays to wait to claim Social Security retirement benefits.

3 . You can rely on Social Security . While Social Security is not going anywhere anytime soon, it is struggling. According to the Social Security Board of Trustees, the program will be facing a cash Compare Brokers. Current. 4 Retirement Myths You Can ' t Afford to Believe @themotleyfool #stocks.

With this in mind, here are four retirement myths you can ' t afford to believe . But a handful of little-known " Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as ,122 more each year!

This formula, however, assumes that you live an average life expectancy, so if you have reason to believe you won't live a very long life, you're actually better off filing as early as possible. On the flipside, if your health is great and you have a strong family history of longevity, you'll generally come out ahead financially by waiting as long as possible to file.

Here's an example. Imagine you're looking at a full retirement age of 67, at which point you'd collect $1,500 a month. Claiming benefits at 62 will reduce your monthly payments to $1,050 each, but you'll collect 60 more of them. If you live until age 78 1/2, you'll wind up with roughly the same total lifetime benefit under either scenario. But if you pass away at 75, you'll come out nearly $20,000 ahead by filing early.

Similarly, if you delay benefits until 70, you'll increase each individual payment you get from $1,500 to $1,860. If you live until 82 1/2, you'll break even under either filing scenario. But if you live until 90, you'll come out over $32,000 ahead by taking benefits at 70 rather than 67. The point is that it does matter when you file for benefits, so think long and hard about the state of your health and use that to help guide your decision.

Concerned about Social Security cuts? Here's a bigger worry

  Concerned about Social Security cuts? Here's a bigger worry The problem goes well beyond a potential reduction in benefits.But troubling as that news might be, an even greater concern is that 34% of current recipients rely on Social Security to provide 90% to 100% of their income. And the fact that nearly half of households have no retirement savings means that millions of Americans will come to depend on those benefits just as heavily. And that's a mistake that could ruin them in retirement, even if benefits don't get cut at all.

As a result, many Americans fall into the trap of believing Social Security myths rather than digging deeper to find the truth. Let's look at three popular Social Security myths that can lead you to make major mistakes in your retirement planning.

,122 Social Security Bonus. Already Retired. 5. 10% of borrowers believe you don't have to start paying your loans back if you can ' t find a job after graduation. Finally, while this one isn't a widespread myth , it is rather dangerous for those who believe it.

Myth #3: Social Security's cost-of-living increases will help you keep up with your expenses

Reality: Since 1975, Social Security recipients have been getting automatic annual cost-of-living adjustments, or COLAs, to help their benefits keep pace with inflation. Therefore, you might think you can rest easy knowing that the amount you start out collecting will slowly but surely go up over time.

The problem, however, is that COLAs in recent years have failed to match the rate of inflation, thereby putting seniors at an automatic disadvantage. Furthermore, most COLAs get swallowed by Medicare premiums as a result of Social Security's "hold harmless" provision, which means seniors frequently see little to no extra money in their hands once those COLAs are put into place.

The "hold harmless" provision states that Social Security recipients can't see their benefits go down due to Medicare premium increases, and while it's designed to protect seniors, it also means that they typically don't benefit from COLAs in the form of disposable, accessible income. Therefore, if you want a shot at retaining your buying power in retirement, invest your savings wisely so that your IRA or 401(k) returns are able to well outpace inflation and compensate for Social Security's flawed COLAs.

Disturbing percentage of Americans fear never being able to retire

  Disturbing percentage of Americans fear never being able to retire Find out the top reasons Americans have anxiety about retirement.When you think about retirement, is it something you look forward to? Or do the ugly truths about retirement actually make you feel anxious?

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It can be easy to have these misunderstandings, whether because of social media, friends and family, or simply your own interpretations. These are five credit score myths that you just simply can ’ t afford to believe .

The more you know about Social Security, the greater your chances of maximizing your benefits. So do yourself a favor and read up on how the program works. This way, you'll be in a better position to separate myth from reality going forward.

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If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $16,728 more...each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies .

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