Two Common Social Security Benefits Myths that May Have Confused You
The entire concept of social security benefits can be confusing. There are so many rules and formulas to know and use. And to make things worse, you know that a wrong decision can lead to your not receiving anything.
Even if you decide to learn the ins and outs of these benefits it’s very likely that you will come across some confusing myths. So here’s an attempt at clearing some common misconceptions about social security benefits.
Myth No.1: You Can Make Claims Only Upon Reaching the Age of 62.
Unfortunately, most people believe it.
They think that they should start claiming their social security benefits when they turn 62 and not later. It is however not true because 62 is just the EARLIEST AGE for claiming your benefits.
You can always claim later on!
The Social Security Administration calculates your case benefits based on your ‘full retirement age,’ (FRA) which your date of birth ascertains. It is also calculated based on the maximum social security taxes you had paid every month for your 35 working years.
Typically, those born between 1943 and 1954 have an FRA of 66. The FRA of those born later is 66 and a half, or 67.
You end up locking a permanent reduction in your monthly income if you make social security benefits claims before reaching your FRA. So any claims made at 62 translates to a reduced payment of 25-30% of your FRA monthly benefit.
You thus end up receiving less as monthly retirement income annually.
Most people are okay with this because they assume they won’t live too long to receive their benefits.
Unfortunately, most people live quite long! Men today generally live up to 93 and women to 95.
Remembering this point before claiming your social security benefits ensures you continue receiving your retirement payment for much longer.
Did you know that you can also receive a ‘bonus’ if you claim your social security benefits after 62?
You get about 8% more in monthly income annually for each extra year you wait before claiming, till you reach 70. You get about a 32% increment if you wait till an FRA of 66 and about a 24% increase till your FRA is 67.
Myth no.2: You Do Not Receive the Amount Invested in the Program.
Many assume that they will not receive the money paid to the program. However, it is wrong.
Though each person’s case is different, you end up collecting much more than you had contributed to the system if you live a long life.
Social security benefits provide the retired, disabled, and spouses of deceased insured workers a stable source of income. Whatever you and your employer contribute to the program while you were working provides you with a lifetime of income benefits upon retirement.
Indeed, the government does not have any specific account for your FICA payment towards Medicare and Social Security taxes.
However, you instead have the social security’s inflation protected guaranteed income stream for your retirement.
It protects you from the risk of your outliving your savings.
It means that you will continue receiving your income every month, even if you are a century old. And in case you die, your spouse receives survivor benefits till their death
Now you should have more clarity, and a better understanding of social security benefits with these two common myths debunked. If you need more help, you can always turn to your Burbank social security attorney for guidance.