Tags: social security | myths | retirement | motley fool

3 Social Security Urban Legends You Shouldn't Believe

3 Social Security Urban Legends You Shouldn't Believe

(Getty Images/William Thomas Cain)

By    |   Wednesday, 24 August 2016 09:29 AM

 

Millions of Americans are planning their “golden years” of retirement based on what they expect to receive monthly based on their Social Security benefits.

The majority of elderly beneficiaries get 50% or more of their incomes from Social Security, while 22% of married elderly beneficiaries and 47% of unmarried ones get fully 90% or more of their incomes from it, according to the Social Security Administration.


Motley Fool’s Selena Maranjian recently debunked a host of myths. Let’s look at three:

It's always best to delay collecting Social Security until age 70

For every year beyond your full retirement age that you delay, your benefits will grow by about 8%, the Fool explained. As the Social Security Administration has explained, "If you live to the average life expectancy for someone your age, you will receive about the same amount in lifetime benefits no matter whether you choose to start receiving benefits at age 62, full retirement age, age 70 or any age in between." But sometimes it can make sense to delay collecting the payments. “If, for example, people in your family tend to live extra-long lives, and you're able to do without benefit checks for a while,” the Fool explained.

Social Security will be enough to support you in retirement

“The maximum benefit for those retiring at their full retirement age was recently $2,639 per month (about $32,000 for the whole year) -- still not a hefty sum. If you're married and collect two sets of Social Security checks in retirement, you may be able to live comfortably on that income, but the death of one spouse can result in financial hardship for the other,” the Fool reported. In short, do your financial homework and meet with a professional planner before you make those “golden year” decisions.

Inflation will shrink your benefits

Social Security payments technically aren't fixed despite public misconception. They're adjusted regularly to keep up with the cost of living, the Fool reported. “If inflation is steep, your benefits will be significantly increased. If it's modest, as it has been recently, there will be small increases or no increases in your benefits. This is an especially wonderful aspect of Social Security benefits.” 

And while taking Social Security benefits early comes with a price, more than 4 in 10 Americans who are 50 and over say they'll dip into the program before reaching full retirement age, a recent poll found.

An Associated Press-NORC Center for Public Affairs Research poll found that 44 percent report Social Security will be their biggest source of income during their retirement years.

Full benefits begin at 65 or 66 for those born between 1943 and 1954. Americans can begin collecting as early as age 62, but with benefits reduced by up to 30 percent, according to the Social Security Administration.

"One thing we know for certain is that claiming early can have long-term repercussions on your fiscal security as you age," said Gary Koenig, vice president of Financial security at the AARP Public Policy Institute.

Koenig said benefits increase significantly for those who wait, rising around 8 percent more for each additional year past age 66 and up to 70, when benefits max out.

"So we encourage people to delay as long as possible," he said. 

However, retirees may face much more dire financial problems if Newsmax Finance Insider David Stockman's gloomy prediction comes true.

"Measured by the only thing that matters — hard cash income and outgo — the Social Security system has already gone bust. What’s more, even under the White House’s rosy scenario budget forecasts, general fund outlays will exceed general revenues (excluding payroll taxes) by $8 trillion over the next 12 years," he recently wrote. 

"Stated differently, the OASDI (Old-Age, Survivors, and Disability Insurance) trust funds could be empty as soon as 2026, thereby triggering a devastating 33% across the board cut in benefits to affluent duffers living on Florida golf courses and destitute widows alike." 

(Newsmax wire services contributed to this report).

© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
StreetTalk
Millions of Americans are planning their "golden years" of retirement based on what they expect to receive monthly based on their Social Security benefits.
social security, myths, retirement, motley fool
662
2016-29-24
Wednesday, 24 August 2016 09:29 AM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved