Do you feel like you have a handle on what to expect when it comes to Social Security? Are you clear on what your benefits may be and when the best time is to start taking them? If not, this is a good place to start as we review the top five common Social Security misunderstandings.
(Click the featured times below to jump forward in the episode)
Misinformation about Social Security is unfortunately very common. For a lot of your lifetime, you may not feel a need to follow it closely. When you get to your 60s, there is a lot more to know and a few myths and misunderstandings to untangle (although some of these misunderstandings may have some elements of truth). So how do you know what’s right?
In a sense, Social Security is a pay-as-you-go retirement system. Workers pay retirees as they retire. That said, the economics are quite different from when Social Security was originally created. At the time when it was created, there were far more people paying into it than there were taking money out than today. So, does this mean it is going to run out of money altogether? Most likely, Social Security will still be there later on, but it will most likely look a lot different than it does today. This might mean a later start date or a few more limits.
You may feel like starting Social Security as soon as possible (especially if you don’t like your job). Is this the best strategy though? Depending on your situation, this might not be best. Alternatively, waiting until the very last moment might not be the best strategy either.
How can you determine when to take Social Security? How about by asking the Social Security Administration, will they be able to guide you? Nope! You’ll need to talk with a financial advisor to think through what will be best for you. Be sure to take into account your health, your savings, and your feelings on taxes. Ultimately, you’ll want to make sure you have a strategy in place to maximize your benefits for you and your family.
Listen to the full episode or click on one of the timestamps below to hear more about a specific misunderstanding.
[2:51] – Misunderstanding #1 – Social Security is going broke.
[7:28] – Misunderstanding #2 – Starting Social Security as early as possible is usually best.
[8:50] – Misunderstanding #3 – Waiting as long as possible is the best route.
[10:49] – Misunderstanding #4 – The Social Security Administration can help you make the right decision.
[12:45] – Misunderstanding #5 – You don’t have to pay taxes on Social Security benefits, right?
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