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Social Security: 6 Myths Debunked

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by Glen D. Smith

Filing for Social Security can seem like an intimidating process.  There’s a plethora of paperwork and an ocean of misinformation out there that can leave a person feeling confused and unsure as to what to do. Facebook posts, blog articles, and even well-meaning friends offer advice that is either half-true or downright false.

We’ve come up with the most common Social Security myths we’ve heard over the years. We’re going to try to clear up some common misconceptions, so you get a clearer picture of what it’s all about. 

  1. Social Security Will Cover Everything”

Around half of all Americans expect that Social Security will be a proverbial money tree that will ultimately fund their retirement.

Social Security was initially intended to supplement retirement savings – not replace.  The average retiree received around $1,372 per month in 2018.

Social Security is no replacement for a good retirement plan.  This is why it’s so important to visit a financial planner, so they can help you plan for a decades-long retirement.

  1. Social Security Won’t Be Around for Me”

Social Security is continually refreshed by younger Americans paying into the system along with interest earned on its bond portfolio.  Your financial contributions to Social Security do, however, go to current beneficiaries instead of a private bank account reserved for you.

Trustees have reported that an existing surplus could potentially be depleted by the year ~ 2033 unless the government intervenes with legislative action.  At this point, that scenario would most likely mean that retirees in the future will be paid a portion (75% – 80%) of the promised benefits. The chances of zero money being paid out are highly unlikely. 

  1. You Need to File the Second You’re Eligible

Many people think that you should file for Social Security as soon as possible. If you do so, it could potentially mean that your benefits will be permanently reduced – nowadays people are living longer than ever so what happens if you’re around for another 30 to 40 years?

A qualified financial advisor can help you calculate a break even point based on family history and your statistical life expectancy. For example, a spouse that earns a higher income might want to delay filing as long as possible, so that their widower or widow will receive a higher payout. Delaying filing will also maximize your benefits.

  1. Benefits are Lost if You Work after Filing a Claim

If you are still working and file before your retirement age, the benefits you receive will be reduced temporarily based on how much you’re earning. Once you hit full retirement age, your monthly payments will be increased to cover the difference. There is a possibility that you could increase your annual benefit because Social Security is based on your 35 highest years of income. 

  1. You Can’t Collect if You Haven’t Paid into Social Security

Currently, you need an employment record of at least 40 quarters to be eligible to receive regular benefits. However, if you haven’t worked that long, you still might be able to receive half of what an ex or current spouse would receive provided that you were married for ten years.

If your spouse has passed away, you might be able to receive full benefits from going off of your spouse’s employment record. As long as you were married for ten years, and never remarried before they passed away, you can still file a claim.

  1. Taking Well-Meaning Advice from Friends and Family

Your friends and family will offer advice on how and when to file for social security.

If they’re not a certified financial planner, they could be giving you well-meaning advice that is entirely wrong.

A financial planner can help maximize benefits as well as layout a sound retirement strategy that will be there when you need it most.  

Social Security Planning in Flower Mound

At Glen D. Smith and Associates, we can help you strategize your filing of Social Security as well as offer financial retirement planning advice that will complement your Social Security income. Call us today at (469) 212-8072 or contact us via our website to learn more about the various financial planning services that we offer.

Any opinions are those of Glen D. Smith and not necessarily those of RJFS or Raymond James. Securities offered through Raymond James Financial Services, Inc., member FINRA/ SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. Glen D. Smith & Associates is not a registered broker/dealer and is independent of Raymond James Financial Services.

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