Social Security provides a guaranteed monthly payout to over 62 million retired workers. If you're counting on those benefits to help pay the bills in retirement, then you'll need to get your facts straight on how the program works. Here are a few misconceptions you can't afford to buy into.
1. You must file for benefits once you reach full retirement age
Workers are often told to wait until full retirement age to claim Social Security. Why? Doing so ensures that you'll get the full monthly benefit you're entitled to based on your earnings record. Filing ahead of full retirement age, on the other hand, results in a reduction in benefits.
That said, you don't have to take benefits once you reach full retirement age, and if you delay past that point, you'll accrue credits that increase your payments by 8 percent for each year you wait. This incentive only lasts until age 70, but it's still a good opportunity to boost your benefits and collect a higher payout.
2. You can live off Social Security alone
It's no secret that Americans are glaringly behind on retirement savings, with nearly half of U.S. households having no nest egg to speak of. And while part of that boils down to maxing out their paychecks on living expenses, it's also a matter of misaligned thinking—namely, that Social Security will be enough to cover the bills in retirement.
Contrary to what you may have heard, the typical senior can't live off Social Security alone. At present, the average monthly benefit is just over $1,400, which amounts to less than $17,000 a year of income. Given that healthcare alone might eat up half of that sum, the need for independent savings should be pretty clear.
3. You should claim benefits early because they might be going away
For years, rumors have been floating around warning of Social Security's pending demise. But while it's true that future recipients might see a decrease in benefits, the program is by no means going away. Therefore, if you're planning to file for benefits as early as possible (age 62) to avoid losing out on that income completely, don't buy into that line of thinking.
Remember, Social Security can never truly go broke, and the reason is that it's funded by payroll taxes. That said, Social Security is facing a serious shortfall, and if Congress doesn't address it by the time the program's trust funds run dry, future recipients might see lower payouts. But there is a key difference between losing out on some benefits versus having them go away completely. Therefore, you shouldn't rush to file for benefits early unless you have a good reason to do so.
No matter your age, it pays to be well-informed about Social Security so you can maximize your benefits when the time comes to claim them. Don't believe the various myths you hear about the program. Rather, do your own research and arm yourself with knowledge. You'll be thankful you did once the time comes to retire.
If you have been denied Social Security Disability (SSD) benefits or believe you have been wrongfully terminated by the SSA, contact the Law Firm of Hoskins, Turco, Lloyd and Lloyd. When it comes to SSD, having the right attorney on your side can make all the difference. By working with our experienced team of legal professionals, you will improve your chances of winning disability benefits.
Don’t fight this stressful situation on your own. Filing for Social Security benefits is a time-sensitive process, so do not delay in calling us today at 1-866-460-1990.