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While many people know that Social Security provides a regular paycheck in retirement, there are a number of myths about the program that persist. Common misconceptions range from the belief that you can’t work while collecting benefits to the fear that the program is about to completely “dry up.”
Beyond the rumors lies an important truth: While Social Security is complex, it is a powerful retirement asset that offers a steady source of income throughout retirement. Sorting myth from reality is the first step toward maximizing your benefits and securing your financial future.
Key Points
• The earliest age to claim Social Security is 62, but delaying up until age 70 will increase your monthly benefit.
• Social Security is designed to be a foundation, replacing only about 40% of pre-retirement income, which is typically less than what is needed.
• Though Social Security trust funds face depletion projections, the system will not completely run out of money.
• Your Social Security benefits can be taxable if your total income (including half of your benefits) exceeds a certain threshold.
• Self-employed individuals and freelancers are fully eligible for benefits because they pay the required 12.4% Social Security tax on their earnings.
What Is Social Security?
Social Security is a U.S. federal insurance program designed to provide monthly income to retirees, disabled workers, and the families of those who have passed away. Although it started in 1935 under President Franklin D. Roosevelt to help people 65 and older, the program has since expanded to cover disabled workers and provide survivor benefits for children and families.
While Social Security offers a steady income based on lifetime earnings and payroll taxes paid, it was never intended to be a retiree’s sole financial resource. Financial experts often describe a stable retirement as a “three-legged stool,” where Social Security is just one leg. The other two legs consist of employer-sponsored retirement plans and personal savings or investments, such as an Individual Retirement Account (IRA).
9 Common Social Security Myths
With the basics covered, let’s dive into the myths that often cloud retirement planning. A clearer picture of how Social Security benefits work can help you develop a smart retirement plan. However, because maximizing your payout can be complicated, speaking with a professional is often the best way to ensure you aren’t leaving money on the table.
1. You Need to Start Claiming Social Security at Age 62
While age 62 is the earliest you can file, it is by no means a mandatory start date. In fact, claiming early is often a trade-off: you get checks sooner, but they will be significantly smaller.
If you file for Social Security at age 62, your monthly payment is permanently reduced. To receive 100% of the benefit you’ve earned, you must wait until your Full Retirement Age (FRA), which is 67 for anyone born in 1960 or later. Starting at 62 reduces your monthly benefit by 30% relative to your FRA amount.
However, the incentive to wait doesn’t stop at 67. Delaying your claim up until age 70 will further increase your monthly payment through delayed retirement credits. Ultimately, the right time to file depends on your health, savings, and whether you prefer a longer stream of smaller checks or a shorter stream of larger ones.
2. Social Security Will Cover All Your Income Needs in Retirement
It’s a common misconception that Social Security is a “one-and-done” retirement plan. In reality, it was designed to be a foundation or a supplemental source of income rather than a full replacement for a working salary.
On average, Social Security benefits replace only about 40% of a worker’s pre-retirement income. Since experts generally recommend aiming for a 70% to 80% replacement rate to maintain your lifestyle, relying solely on these checks can lead to a significant budget gap. For a comfortable retirement, most people will also need personal savings (such a 401(k), traditional or Roth IRA, or a taxable investment portfolio) and/or other income sources.
3. Social Security Is Going Away
Many Americans are worried that Social Security will run out and not be there for them when they’re ready. While it is true that the Social Security trust funds are projected to be depleted by roughly 2035, this does not mean the system will vanish. Even if the reserves are exhausted, the program will continue to receive ongoing revenue through payroll taxes paid by active workers. According to the latest projections, this income would still be sufficient to pay approximately 75% to 80% of scheduled benefits. To avoid any potential cuts, Congress is considering several solutions, such as adjusting the payroll tax cap or gradually raising the full retirement age.
4. You Can’t Claim Social Security If You’re Still Working
You can absolutely collect Social Security benefits while remaining in the workforce. However, if you claim benefits before reaching FRA, you may face a temporary reduction in your monthly payments if your earnings exceed certain annual limits ($23,400 in 2026).
The amount that your benefits are reduced, however, isn’t lost. The Social Security Administration (SSA) will recalculate your benefit amount at your FRA to give you credit for those months. Once you reach FRA, the earnings limit disappears and you can receive your full benefit regardless of your salary.
5. You Can’t Collect Social Security If You Retire and Live Abroad
U.S. citizens can typically receive Social Security benefits while living outside the United States. There are a few exceptions, however. Federal regulations prohibit the SSA from sending payments to individuals in Cuba or North Korea. Payments to Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Uzbekistan, and Ukraine are also generally restricted unless you agree to strict conditions, such as personally appearing at a U.S. embassy.
If you reside in one of these locations and cannot receive your benefits, the SSA will withhold your payments until you move to a country where they can legally send funds.
6. If You’re Self-Employed, You Won’t Qualify for Social Security
Freelancers, consultants, and independent contractors pay Social Security taxes just like traditional employees, making them fully eligible for benefits. While W-2 workers split the cost with an employer, self-employed individuals pay the full 12.4% tax on their own earnings. This ensures they earn the same credits toward future retirement benefits as anyone else.
However, since Social Security only replaces a portion of your income, it’s important for independent workers to supplement it with personal savings. Tools like a SEP IRA or a traditional IRA can help you build a nest egg while also lowering your current tax bill.
7. You Don’t Pay Taxes on Social Security
In reality, many beneficiaries are surprised to learn that Social Security benefits can be taxable. If you file as an individual and your “combined income” — which includes your adjusted gross income, tax-exempt interest, and half of your annual Social Security payments — exceeds $25,000, you may owe taxes on up to 85% of your benefits. For those married and filing jointly, this threshold is $32,000. To avoid a large bill at year-end, you can proactively request that the SSA withhold funds from your monthly checks to cover your federal tax obligations.
8. Divorce Reduces Social Security Benefits
Getting a divorce doesn’t automatically reduce your Social Security benefits. For starters, you always keep your own Social Security benefits regardless of a divorce. If your own benefit is higher than what you’d receive based on your ex-spouse’s record, you simply receive your full amount.
If you were married for at least ten years and are currently unmarried, you may be eligible to claim benefits based on your ex-spouse’s earnings record. This “divorced spouse benefit” is between one-third and one-half of their full retirement amount. Importantly, claiming this does not impact or reduce the benefits your ex-spouse or their current partner receives. It is an independent entitlement designed to provide financial security, ensuring you aren’t penalized for the end of a long-term marriage.
When you apply for benefits, the SSA calculates both your personal retirement amount and your potential divorced spousal benefit and pays you the higher amount (but not both).
9. You’ll Never Get the Money Back You Put Into the Program
How much you get back in Social Security is highly variable, but you could potentially get more than you put in. The program is structured as social insurance, rather than a personal savings account; your taxes pay for current retirees, and future workers’ taxes will fund your benefits.
Your total lifetime payout ultimately depends on how long you worked, your highest-earning years, the age at which you choose to begin claiming benefits, and how long you live. Whether you draw from your own record or a spouse’s also significantly impacts the final amount. While some retirees will receive more than they ever paid in, others may receive less. Understanding all of the rules around social security can help you maximize your return.
How Much Can I Earn on Social Security?
The estimated average monthly Social Security retirement benefit for January 2026 is $2,071. The maximum Social Security benefit the government will pay out is $5,251 per month, but this requires earning the taxable maximum in each year beginning at age 22 and claiming benefits at age 70 in 2026.
Here’s a closer look at the factors that impact how much you can earn on Social security:
Your Income History
Your Social Security benefit is based on a complex calculation that factors in how much you earned in 35 of your working years, indexed against the national average income for each year.
Because each person’s income is different, and can vary from year to year, this calculation is specific to each individual, and is one reason that it’s difficult to compare your Social Security benefit to anyone else’s.
Your Age When You First Claim Benefits
One of the biggest Social Security misconceptions is that you have to retire at age 62 or 65 or 67 to be able to claim benefits (as discussed above). In fact, you can claim Social Security at any of those ages, but the reason that the age when you first claim benefits is important is that it determines the amount you’ll receive.
According to the SSA, your benefits increase by a certain percentage for each month you wait to claim benefits after you reach your full retirement age. The older you are, the more money you’ll get — with those who claim at age 70 getting their maximum benefit.
Recommended: What Is the Average Retirement Age?
Your Marital Status
Whether you’re married, divorced, or widowed can also have an impact on the amount of your benefits.
A married couple with two working spouses, for example, would qualify for separate benefits based on each person’s earning history. If one spouse worked and the other didn’t (or didn’t for a period of time), they might be able to claim up to 50% of the other spouse’s benefit or their own, whichever amount is higher.
A divorced or widowed person may be able to claim Social Security based on their spouse’s income history, if their own benefit is lower.
Because the spousal rules that govern Social Security are complicated — and people may have more options than they realize — it might be wise to consult a professional in order to understand which strategy will help you maximize your benefits.
Where Can You Access Your Benefits Statement?
You can access your Social Security Statement online by creating a personal “my Social Security” account at ssa.gov/myaccount. This is a secure online portal that allows you to view, download, and print your statement, which includes earnings history and personalized benefit estimates for retirement, disability, and survivor benefits.
The Takeaway
Social Security is a cornerstone of retirement, but it’s easy to leave money on the table if you’re guided by myths. Whether you’re worried the program is disappearing or feel pressured to claim the moment you turn 62, the reality is far more flexible. By treating Social Security as a strategic piece of your broader income puzzle — rather than your only safety net — you can maximize your lifetime payout and set yourself up for a more secure financial future.
Prepare for your retirement with an individual retirement account (IRA). It’s easy to get started when you open a traditional or Roth IRA with SoFi. Whether you prefer a hands-on self-directed IRA through SoFi Securities or an automated robo IRA with SoFi Wealth, you can build a portfolio to help support your long-term goals while gaining access to tax-advantaged savings strategies.
FAQ
Is there really a Social Security bonus?
There is no official “Social Security bonus,” but you can significantly increase your monthly payment by delaying when you start claiming benefits. These increases are called Delayed Retirement Credits. If you wait past your Full Retirement Age (FRA) up until age 70, you will receive a larger check every month. Waiting can increase your monthly benefit by up to 30% compared to claiming at age 62, essentially acting as an incentive for delaying retirement.
How much does the government borrow from Social Security?
The revenue paid to Social Security, from workers’ payroll withholdings, is invested in special U.S. Treasury bonds, by law, which the federal government must pay back with interest. So while the government in effect borrows from Social Security, it must pay back the money — and the interest also helps to keep the system going.
Which president started Social Security?
President Franklin D. Roosevelt signed the Social Security Act into law on August 14, 1935. While he made it the “law of the land,” the program was the culmination of years of advocacy for a federal safety net to protect the elderly against poverty.
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