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Don’t Believe These Social Security Myths
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Don’t Believe These Social Security Myths
There's a lot of misinformation out there about when to file. We'll help you check the facts.
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Expertise Personal finance credit scores economicsLiz Weston, CFP®, is a former NerdWallet personal finance columnist and co-host of the "Smart Money" podcast. She is an award-winning journalist and author of five books about money, including the bestselling "Your Credit Score." Liz has appeared on numerous national television and radio programs, including the "Today" show, "NBC Nightly News," the "Dr. Phil" show and "All Things Considered." Her NerdWallet columns were carried by The Associated Press, appearing in hundreds of media outlets each week. Prior to NerdWallet, she wrote for MSN, Reuters, AARP The Magazine and the Los Angeles Times.
Liz Weston, CFP®, is a former NerdWallet personal finance columnist and co-host of the "Smart Money" podcast. She is an award-winning journalist and author of five books about money, including the bestselling "Your Credit Score." Liz has appeared on numerous national television and radio programs, including the "Today" show, "NBC Nightly News," the "Dr. Phil" show and "All Things Considered." Her NerdWallet columns were carried by The Associated Press, appearing in hundreds of media outlets each week. Prior to NerdWallet, she wrote for MSN, Reuters, AARP The Magazine and the Los Angeles Times. Published in Senior Writer + more + more
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43 years of experience Expertise Financial journalism Editing Audience engagementRick VanderKnyff leads the news team at NerdWallet. Previously, he has worked as a channel manager at MSN.com, as a web manager at University of California San Diego, and as a copy editor and staff writer at the Los Angeles Times. He holds a Bachelor of Arts in communications and a Master of Arts in anthropology.
Rick VanderKnyff leads the news team at NerdWallet. Previously, he has worked as a channel manager at MSN.com, as a web manager at University of California San Diego, and as a copy editor and staff writer at the Los Angeles Times. He holds a Bachelor of Arts in communications and a Master of Arts in anthropology. Senior Editor & Content Strategist + more + moreResearchers tell us that most people would be better off waiting to claim Social Security benefits. Yet most people file early.
Researchers tell us that most people would be better off waiting to claim Social Security benefits. Yet most people file early.More than half apply for Social Security before they reach full retirement age, which is currently 66 and rising to 67 for people born in 1960 and later. More than 30% apply as soon as they can — at age 62. Only about one in 25 applicants waits until age 70, when monthly benefits max out.
More than half apply for Social Security before they reach full retirement age, which is currently 66 and rising to 67 for people born in 1960 and later. More than 30% apply as soon as they can — at age 62. Only about one in 25 applicants waits until age 70, when monthly benefits max out.Some people have little choice, of course. They may have no savings and no job. Others have better options than applying early, but don’t realize it.
Some people have little choice, of course. They may have no savings and no job. Others have better options than applying early, but don’t realize it.That’s due in part to the many, many myths surrounding Social Security — and people’s tendency to think they know more about this program than they actually do. A 2013 survey by Financial Engines found that 77% of pre-retirees felt confident about their Social Security knowledge, but 95% could not correctly answer eight questions about how the program works.
That’s due in part to the many, many myths surrounding Social Security — and people’s tendency to think they know more about this program than they actually do. A 2013 survey by Financial Engines found that 77% of pre-retirees felt confident about their Social Security knowledge, but 95% could not correctly answer eight questions about how the program works.Here are the myths most likely to cost you money:
Here are the myths most likely to cost you money:‘It doesn’t matter when I take Social Security’
‘It doesn’t matter when I take Social Security’Social Security benefits increase by about 7% each year between 62 and your full retirement age, and by 8% each year between full retirement age and 70. This actuarial adjustment aims to ensure that people who opt for larger checks for a shorter period don’t get less than those who get smaller checks for longer periods.
Social Security benefits increase by about 7% each year between 62 and your full retirement age , and by 8% each year between full retirement age and 70. This actuarial adjustment aims to ensure that people who opt for larger checks for a shorter period don’t get less than those who get smaller checks for longer periods.But longer life expectancies, current low interest rates and rules regarding survivor benefits mean that most people are better off delaying, says researcher Sita Slavov, a professor of public policy at George Mason University in Arlington, Virginia, and a faculty research fellow at the National Bureau of Economic Research.
But longer life expectancies, current low interest rates and rules regarding survivor benefits mean that most people are better off delaying, says researcher Sita Slavov, a professor of public policy at George Mason University in Arlington, Virginia, and a faculty research fellow at the National Bureau of Economic Research.Social Security also provides insurance against longevity. People who live longer than expected can run out of savings and wind up depending mostly or even entirely on Social Security. That alone is a good reason for most people to delay their applications.
Social Security also provides insurance against longevity. People who live longer than expected can run out of savings and wind up depending mostly or even entirely on Social Security. That alone is a good reason for most people to delay their applications.‘If I have a shorter-than-average life expectancy, I should claim benefits early’
‘If I have a shorter-than-average life expectancy, I should claim benefits early’Most people underestimate how long they are likely to live, according to the Stanford Center on Longevity. A 65-year-old man today can expect to live to 84, according to the Social Security Administration. A 65-year-old woman can expect to live to 86.5. Couples who are 65 today stand a 50% chance of having one spouse live to 92, according to the Society of Actuaries. Life expectancies are even longer for those now in their mid-50s. One in two women and one in three men will live past 90, the actuaries say.
Most people underestimate how long they are likely to live, according to the Stanford Center on Longevity. A 65-year-old man today can expect to live to 84, according to the Social Security Administration. A 65-year-old woman can expect to live to 86.5. Couples who are 65 today stand a 50% chance of having one spouse live to 92, according to the Society of Actuaries. Life expectancies are even longer for those now in their mid-50s. One in two women and one in three men will live past 90, the actuaries say.Even if you’re right about having a shorter life expectancy, though, claiming early could shortchange your mate. Married couples will lose one of their checks when the first spouse dies, which can cause a serious drop in income. The survivor will get the larger of the two checks the couple was receiving. That gives the higher earner in a couple — the one whose check will be the largest — a strong incentive to delay so that the survivor’s benefit is larger.
Even if you’re right about having a shorter life expectancy, though, claiming early could shortchange your mate. Married couples will lose one of their checks when the first spouse dies, which can cause a serious drop in income. The survivor will get the larger of the two checks the couple was receiving. That gives the higher earner in a couple — the one whose check will be the largest — a strong incentive to delay so that the survivor’s benefit is larger.‘If I claim benefits early and invest them, I’ll come out ahead’
‘If I claim benefits early and invest them, I’ll come out ahead’No investment offers a guaranteed return as high as what you can get from delaying your Social Security application. To match that return, you’d have to take a lot of risk. Even the most prudent investor can get shellacked by a bear market or real estate downturn.
No investment offers a guaranteed return as high as what you can get from delaying your Social Security application. To match that return, you’d have to take a lot of risk. Even the most prudent investor can get shellacked by a bear market or real estate downturn.Brokerage firms
Brokerage firms
Brokerage firmson Charles Schwab's website
on E*TRADE's website
on Vanguard's website
on Fidelity's website
‘I have to claim Social Security as soon as I quit working’
‘I have to claim Social Security as soon as I quit working’You don’t have to start Social Security when you stop working, or vice versa. Financial planners often suggest people tap their retirement funds or other savings if that allows them to delay their applications.
You don’t have to start Social Security when you stop working, or vice versa. Financial planners often suggest people tap their retirement funds or other savings if that allows them to delay their applications.Also, you don’t have to wait until 70 to get substantial returns. Delaying four years, from 62 to 66, can translate into a 33% sustainable, annual increase in your standard of living, Slavov says.
Also, you don’t have to wait until 70 to get substantial returns. Delaying four years, from 62 to 66, can translate into a 33% sustainable, annual increase in your standard of living, Slavov says.‘I need to apply before Social Security goes bankrupt’
‘I need to apply before Social Security goes bankrupt’Social Security is not “going bankrupt.” If Congress doesn’t act, in 2035 the system will be able to pay only about 80% of promised benefits — and 80% clearly is not the same as zero. If and when Congress does get around to fixing Social Security, the changes are likely to affect people further from retirement. “Locking in” your benefit early just means settling for smaller checks for life.
Social Security is not “going bankrupt.” If Congress doesn’t act, in 2035 the system will be able to pay only about 80% of promised benefits — and 80% clearly is not the same as zero. If and when Congress does get around to fixing Social Security, the changes are likely to affect people further from retirement. “Locking in” your benefit early just means settling for smaller checks for life.This article was written by NerdWallet and was originally published by The Associated Press.
This article was written by NerdWallet and was originally published by The Associated Press. This article was written by NerdWallet and was originally published by The Associated Press. About the author Liz Weston, CFP® Liz Weston, CFP® Liz is a former NerdWallet personal finance columnist and co-host of the "Smart Money" podcast. She is a certified financial planner and author of five money books, including "Your Credit Score." See full bio.Helpful resources
Helpful resources Medicare and Social Security: What You Need to Know How Do I Sign Up for Medicare? Social Security Calculator 2026: Estimate Your Benefits More like this Investment Basics Investing Social Security What Is Medicare, and How Does It Work? Medicare can help cover rising health care costs as you age. But it’s not one size fits all. 2 By Kate Ashford, WMS™, Elizabeth Aldrich When Can I Retire? The earliest you can get Social Security retirement benefits is age 62, but other factors affect retirement planning. Liz Weston, CFP®