First, benefits aren’t based on your last few years of work. They’re calculated using your highest 35 years of earnings, adjusted for inflation. That means early career wages are scaled up. For example, $24,000 earned in 1985 would be counted as about $95,000 today when calculating your benefit. If you already have 35 years of earnings, retiring early doesn’t necessarily hurt you, because zeros don’t get added into the formula.

Social Security is also progressive by design, replacing a higher percentage of income for lower earners and a smaller percentage for higher earners. Someone with average monthly earnings of $5,000 might see a benefit of $2,300, while someone averaging $10,000 earns closer to $3,500. In other words, the system is structured to provide a bigger safety net for lower-income workers while still rewarding higher earners with lifetime benefits that can top $1 million during retirement.

Another big myth is that there’s a universal “best age” to claim Social Security. The truth? It depends on you your health, your financial situation, and your goals. Claiming early at 62 means smaller checks for life, but you start receiving income right away. Waiting until 70 gives you the biggest monthly payout, growing by about 8% each year you delay after full retirement age. For many people, the right choice comes down to whether they need income now or can afford to wait.

One of the most common fears I hear is that Social Security is going bankrupt. The trust fund reserves are projected to run out around 2034-2035, but that doesn’t mean benefits disappear. Payroll taxes will still cover 75-83% of promised benefits even in a worst-case scenario, and Congress has a history of stepping in like it did in 1983 to make reforms. If you’re close to retirement today, you’re highly unlikely to lose your benefits entirely.

Another misconception is that the trust fund has been “raided.” That’s simply not true. Excess Social Security revenue has been invested in U.S. Treasury bonds since 1983. The government uses those funds for general obligations, but it pays the trust fund back with interest, just like any investor holding Treasuries.

Working while claiming benefits also causes confusion. If you claim before full retirement age and earn above the annual limit, some benefits may be temporarily withheld but they aren’t lost forever. Once you reach full retirement age, your benefit is recalculated to pay you back over time. After full retirement age, there’s no earnings limit at all.

Even if you claim early, you still have flexibility. At full retirement age, you can suspend benefits and let them grow by 8% annually until age 70. This can significantly boost your monthly check, even after you initially locked in a reduced benefit.

Taxes are another surprise for many retirees. Up to 85% of your benefits can be taxed if your combined income is above $34,000 (single) or $44,000 (married). And because these thresholds aren’t adjusted for inflation, more retirees are being taxed each year. Planning for this is critical to avoid unpleasant surprises.

Spousal and ex-spousal benefits are also widely misunderstood. A spouse who didn’t work or earned little can still claim up to 50% of their partner’s full benefit. Divorced? If your marriage lasted 10 years or more, you can claim based on your ex’s record (as long as you’re not remarried), and it won’t reduce their benefits. Even those who never worked outside the home may qualify thanks to spousal eligibility rules, which recognize the value of caregiving and family support.

At the end of the day, Social Security is about more than just a monthly check. It’s guaranteed income for life, adjusted for inflation, with survivor protections for spouses. It won’t solve every retirement challenge, but it’s far too important to get wrong because of myths or misinformation. The smartest move is to view Social Security as part of your larger plan, make informed decisions about when to claim, and understand how it works so you can get the most from the benefits you’ve earned.

All writings are for educational and entertainment purposes only and does not provide investment or financial advice of any kind.

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