Column, Money Matters

Rumors about Social Security

By Kevin Theissen

You’ve probably heard the rumors about Social Security:

“If you keep working you can’t collect benefits,” “The program is going broke,” and the old standby, “You’ll never get back what you put into it!”

If any of these rumors were true, it would be terrible for millions of Americans. However, if it sounds too bad to be true, it’s probably hype.

Let’s take a deep breath and look at these three myths one at a time.

First off, there’s the idea that if you work while collecting Social Security, you’ll lose your benefits. That’s simply not true. If you take benefits before full retirement age and choose to work during that time, you will still receive benefits, but they will be reduced by $1 for every $2 you earned. So, not only could you earn more but also gain satisfaction by working.

Second, the rumor that Social Security is going broke. No, not exactly. As long as payroll taxes are collected, the program can’t run out of funding. While it’s technically possible the benefits owed may start to outstrip payroll taxes collected, the soonest that could happen would be 2034. And, if that were to happen, the most extreme predictions show a 22% reduction to benefits and not anywhere near broke.

Finally, there’s the idea that you won’t get back what you put in. Here’s the thing, that’s not how it’s supposed to work. The amount of money recipients receive is based on when they start drawing benefits and how long they live after that. So while you may not receive all the money you put in, you could also end up receiving quite a bit more, depending on your situation. Remember when it comes to including Social Security in your retirement strategy, make sure you know the truth, the whole truth, and nothing but the truth.

Kevin Theissen is the owner of HWC Financial in Ludlow.

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