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The ins and outs of Social Security benefits can seem as complicated as they are crucial to Americans’ financial comfort — or even survival — in retirement.
Personal finance experts like Suze Orman will tell you that your comfort in retirement hinges on what you can put away out of your paycheck using tools like a 401(k) or an IRA.
She put it plainly in an interview with Moneywise in late 2023 when she talked about the plight of the Social Security program and the dangers of not saving and investing for retirement.
“How are you going to pay for those exact same bills later on in life, when you no longer have a paycheck coming in?”
For many, the answer is their eventual Social Security benefits, a program you pay into out of those paychecks. But common misconceptions about those benefits can lead to significant, long-term financial hurdles that can tarnish your golden years.
You can maximize your benefits and gain more security in retirement if you sidestep these five common Social Security myths.
1. Social Security benefits are not taxed
Don’t assume you’ll get to keep all of your Social Security check. In all likelihood, you’ll pay taxes based on your "combined income," which the SSA defines as 50% of your Social Security benefit, plus any other earned income.
Suze Orman warns that 40% of Social Security beneficiaries pay taxes on their benefits, so there’s a good chance you’ll get hit with what [she calls the "tax torpedo"](https://moneywise.com/retirement/retirement/suze-orman-retirement-social-security-tax-torpedo). If your combined income on your federal tax return is:
between $25,000 and $34,000 as an individual or between $32,000 and $44,000 if you file jointly with your spouse, you can expect to pay taxes on 50% of your benefits. more than $34,000 as an individual and $44,000 for joint filers, you could pay taxes on up to 85% of your benefits
People who are married and file separately may also have to pay taxes on Social Security, regardless of income level.
Sounds complicated? Consulting a financial advisor can help you maximize your social security benefits as well as ease your tax burden.
WiserAdvisor makes this easy by matching you with a vetted financial advisor best suited to your financial needs.
With no fees to get started, you can sort through your advisor matches with the comparison tool and book a free consultation before making a commitment.
2. There’s no way to calculate how much you qualify for
It’s true you can’t predict your exact Social Security benefit far in advance. That’s because the amount depends on variables that can change leading up to retirement, including your income, new government rules and the program’s status and fund reserves at the time you start collecting.
For instance, the average monthly benefit for retired individuals amounted to $1,876.95 in Nov. 2024.
3. Your Social Security benefit is set in stone
You probably have more control over your social Security benefit than you think — even if you’re retired already.
Here are a few ways you could increase the amount you’re eligible to receive:
- Retire later: You can start drawing retirement benefits between age 62 and 70 and the longer you wait, the higher your benefit will be.
- Increase your pre-retirement income: Your benefit is based on 35 of your highest-earning years. So if you increase your income before retiring, your SS benefit can increase too.
- Check your records: Your benefit amount could be reduced if the SSA has incorrect records of your income. If you find an error in your Social Security statement, request a correction at ssa.gov or call 1-800-772-1213.
- Look into family benefits: Check to see if you qualify for additional benefits based on a family member’s work, including benefits earned by a former spouse.
4. Social Security will replace your paycheck
Even though experts like Suze Orman and Dave Ramsey constantly tell their viewers otherwise, many people believe Social Security alone will sustain them in retirement — but the benefit is only meant to supplement it.
This is why starting the process of planning for retirement with investments and savings as early as you can is so important if you hope to keep up your lifestyle.
Depending on your financials and retirement goals, a Roth IRA account can help you maximize your savings so that you don’t have to rely on social security paychecks. You can consult vetted financial advisors specializing in retirement planning through RothIRA.org to guide you.
RothIRA.org will match you with two to three FINRA/SEC financial advisors near you for free. You can then set up an initial consultation with no obligation to hire to see if they’re the right fit for you.
You may not know that you can invest your retirement savings in commodities through your IRA, and that many investors are attracted by gold’s stability as an investment relative to the stock market. For example, while the market crashed in 2008, gold prices rose, cushioning the portfolios of investors who were savvy enough to diversify.
With the help of Preserve Gold, you can open an IRA that allows you to benefit from the tax advantages of this retirement savings plan, along with the inflation-hedging properties of gold.
A gold IRA gives you the opportunity to diversify your portfolio by investing directly in precious metals. The best part? You don’t have to pay any fees on your gold IRA account for the first five years with Preserve Gold, and you’ll be eligible for a free home safe when you sign up.
To keep as much money in your retirement savings as possible, even after you begin drawing on your nest egg, consider making the most of each moment you spend by downloading the Acorns app.
With Acorns, the app automatically rounds up the total cost of each of your purchases to the nearest dollar, investing the remainder in a diversified portfolio of stocks.
For those looking to enhance their investing strategy, Acorns offers tiered memberships, including a gold tier that allows you to customize your portfolio by adding individual stocks, and a retirement account with a 3% IRA match .
Sign up today and you can receive a $20 bonus investment.
5. You can collect your dead spouse’s benefits and your own at the same time
Don’t count on receiving a double payment if your spouse passes before you. If you’re entitled to both a retirement benefit and the survivors benefit, you’ll receive only one — the larger — of the two amounts.
If the surviving spouse is at full retirement age or older, they can receive 100% of the deceased’s benefit amount. If they’re between 60 and full retirement age, they’ll get between 71.5% and 99%.
To offset any social security income losses when your spouse passes, consider purchasing life insurance.
By opting for term life insurance through a provider like Ethos, you are helping to ensure that your family will be taken care of after you’re gone. Term life insurance offers flexibility when you’re seeking affordable coverage while balancing other financial responsibilities.
Ethos offers an easy online process that allows you to get up to $2 million in coverage with terms ranging from 10 to 30 years.
To get a free quote, all you have to do is answer a few questions about yourself. Then, you can compare coverage and choose the right policy that best suits your needs.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
