5 Social Security Myths That Could Keep You From Getting More Money
Anyone close to retirement must consider when to begin taking Social Security benefits. While you can claim them as early as age 62, your benefit goes up each year until you hit the full retirement age (FRA) of 67 and the maximum you can wait is age 70.
Because Social Security can be confusing, many myths abound. Joel Callagan, a senior vice president, financial advisor and certified exit planner (CEP) at Wealth Enhancement Group, busts five common myths about this important safety net for retirees.
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As soon as you hit 62, if you've earned Social Security credits, you can begin to draw on your benefits, Callagan said. If you're still working, Social Security subjects you to what he called 'two earnings tests.'
Depending on how much money you make, and what year it is that you're drawing benefits, your Social Security benefits will be reduced by a certain amount for every dollar you earn above a certain limit. Social Security announces that limit each year.
For 2025, the limit is $23,500. So, if you're working in 2025 and you're 62 years old, for every $2 you make above $23,400, your Social Security will be reduced by $1, he explained.
The noteworthy point here is that you don't necessarily lose that money; you just won't get the rest of it until you reach your full retirement age.
'At that point, they're going to recalculate your benefit to not only include the dollars that were withheld, but also, if you were still working and earning at a higher level than you had been in one of your previous 35 years, then your Social Security benefit, when it's recalculated, could even increase.'
This myth persists, he said, because most people rely on word of mouth for their retirement information rather than visiting the Social Security website or speaking with a financial advisor.
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This leads into a second, related, myth, which is that one has to be retired in order to draw Social Security. This is also not true. He finds that a lot of retirees are ready to phase down work but still want to keep bringing in money. 'They think that retiring and taking Social Security are happen synonymously. '
In general, there are a lot of misconceptions around stopping working, receiving benefits and their general alignment, he said.
'One of my wealthiest clients works at Ace Hardware. He doesn't need the money. He just really loves the job and he'd go crazy if he had to sit around and play golf all day. So he's working, he's receiving Social Security and there's nothing wrong with that.'
Spousal benefits entitle a spouse who has been married to their partner for 10 years or more to take the higher Social Security amount — either their own benefit, or half of their spouse's.
It's not uncommon for ex-spouses to think that their divorced ex is taking half of their retirement benefits, but that's incorrect, he said. 'I get a lot of angry calls saying, 'My ex told me that she was about to file for a spousal benefit and she's not getting another cent from me.' And that's when I get to tell people that their spouse benefit does not affect your benefit.'
If spouse A is receiving full benefits, and spouse B takes spousal benefits at 50% of spouse A, this does not reduce spouse A's benefits, Callagan explained. 'It's on top of.'
He said it's also important to note 'that if you're taking a benefit for yourself, you can take it as early as 62 or if you wait until age 70, that benefit will increase.'
The spousal benefit caps at your full retirement age benefit. 'And even if you wait and get a higher amount, your spouse still only gets 50% of your FRA — your full retirement age benefit — which for most people, especially ones retiring now, will be 67,' he said.
In December, 2024, one of the last acts of the Biden administration was to pass the Social Security Fairness Act. This removed the Government Pension Offset and the Windfall Elimination Provision, which limited people receiving government pensions, or spousal pension benefits, from also taking Social Security.
Their removal added a significant amount of income to people's lives, often in sectors like government, education and healthcare, a major boon.
One of the other myths Callagan frequently sees is that you should always wait to collect Social Security until full retirement age or as late as possible (age 70).
For some people, taking Social Security early, even at a reduced benefit, can remove the stress of the transition from a working income to a retirement-based income, he said.
'Those years before you start to withdraw [from retirement accounts] can be very stressful because you go from receiving consistent income to having to draw money from your savings,' he explained. 'The lack of an income can be causing sleepless nights and they want that certainty of having some money coming in.'
Callagan said sometimes peace of mind is more important to people over the highest possible payout.
Additionally, people with health conditions that may shorten their life expectancy may opt to get a reduced benefit while they are still alive rather than not getting any before they pass.
There are also complications related to Medicare, which people can begin taking at age 65 (and FRA is 67). 'Medicare comes with Part B costs, and that's an expense that a lot of retirees aren't necessarily expecting to pick up,' Callagan said.
Thus, people may try to align their Social Security benefits with when they take Medicare to pay for it.
Because many Social Security decisions are irreversible once you make them, be sure to consult with an advisor who is savvy in these rules before you take yours.
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This article originally appeared on GOBankingRates.com: 5 Social Security Myths That Could Keep You From Getting More Money
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