Social Security is one of the most important sources of retirement income for millions of Americans. Yet it is also surrounded by misconceptions.
Questions such as "Does Social Security run out?", "Should I always claim at 62?", and "Do I lose Social Security if I keep working?" can influence major retirement decisions.
The problem is that acting on an inaccurate assumption can have lasting financial consequences. Your claiming age, earnings history, tax situation, marital status, and other retirement income sources can all affect how Social Security fits into your overall financial plan.
Below are some of the most common Social Security myths—and what the facts actually tell us.
This is one of the most persistent Social Security misconceptions.
The Social Security program does face a significant long-term financing challenge. However, saying that Social Security is simply "going bankrupt" or that benefits will disappear entirely is not an accurate description of the program's current financial outlook.
According to the 2026 Social Security Trustees Report, the combined Social Security trust funds are projected to have sufficient reserves to pay scheduled benefits until 2034. If Congress does not make changes before then, continuing program income is currently projected to cover approximately 83% of scheduled benefits at that point.
That distinction matters.
The projected depletion of trust fund reserves does not mean Social Security would stop collecting payroll taxes or stop paying benefits altogether.
It means the program would have less money available from accumulated reserves to supplement incoming revenue.
Is Social Security going bankrupt?
The program has a significant funding shortfall that will require legislative action. But "Social Security is going bankrupt and benefits will disappear" is not what the Trustees' projections say.
For retirement planning purposes, it may be reasonable to consider potential changes to future benefits—but that is different from assuming Social Security will no longer exist.
There is no universal rule that says everyone should claim Social Security at 62.
You can generally begin receiving retirement benefits at age 62, but claiming before your full retirement age results in a permanent reduction in your monthly benefit.
Whether claiming early makes sense depends on your individual circumstances.
Factors to consider include:
For some retirees, claiming early may be appropriate. For others, delaying benefits can provide a larger monthly income later in life.
The important question isn't simply:
"Should I claim Social Security at 62?"
It is:
"Which claiming strategy best fits my overall retirement plan?"
This is another common misconception.
You can work while receiving Social Security retirement benefits.
However, if you are younger than full retirement age and your earnings exceed the applicable annual limit, Social Security may temporarily withhold some of your benefits under the earnings test.
For 2026, if you are under full retirement age for the entire year, the earnings limit is $24,480. Social Security generally withholds $1 in benefits for every $2 earned above that limit.
If you reach full retirement age during 2026, a different, higher earnings limit applies for the months before you reach full retirement age. Beginning with the month you reach full retirement age, there is no earnings limit.
Importantly, benefits withheld because of the earnings test aren't simply lost forever. Social Security adjusts your benefit at full retirement age to account for months in which benefits were withheld due to excess earnings.
Your continued work may also increase your eventual benefit if the new earnings replace one of the lower years in your earnings record.
Do I lose Social Security if I keep working?
Not necessarily. Working and collecting Social Security can occur at the same time, but the earnings test can affect benefits before full retirement age.
Social Security benefits aren't a flat payment that everyone receives.
Your retirement benefit is influenced by factors including your earnings history and the age at which you claim benefits.
Social Security maintains an individual's earnings record, which forms the basis for determining eligibility and benefit amounts.
This is why two people retiring at the same age can receive significantly different Social Security benefits.
Other factors can also affect the benefits available to a household, including:
Does everyone get the same Social Security benefit?
No. Benefits are based on individual circumstances, including your earnings history and claiming decisions.
Social Security benefits can be subject to federal income tax, but the idea that everyone automatically pays tax on all of their benefits is incorrect.
The IRS determines whether Social Security benefits are taxable based on your benefits and other income.
For example, the IRS generally considers:
to determine whether benefits may be taxable.
Depending on income and filing status, up to 85% of Social Security benefits may be included in taxable income.
That does not mean you pay an 85% tax rate. It means that up to 85% of the benefit may be included when calculating federal taxable income.
This is more complicated than a simple yes-or-no answer.
Workers generally pay Social Security payroll taxes during their working years, and some retirees may later owe federal income tax on a portion of their benefits. That can feel like being taxed twice, but the taxes are different: payroll taxes fund Social Security coverage during your working years, while federal income tax on benefits is determined under separate tax rules.
The IRS provides specific rules for determining whether your benefits are taxable.
Do I have to pay taxes on Social Security?
Possibly. Your benefits may be partially taxable depending on your total income and filing status.
This statement is too broad.
Some government employees receive Social Security benefits, while others may have employment that was not covered by Social Security.
For example, the Social Security Administration explains that all federal employees hired after 1983 are covered by Social Security, while some employees hired before 1983 may also be covered.
State and local government employees can have different coverage depending on their employer, pension system, and applicable agreements.
Some state and local employees are covered by both Social Security and a government pension. Others may participate in a public retirement system without Social Security coverage for that employment.
Do government employees not get Social Security?
Some do, and some don't. Government employment should be evaluated based on the specific position and Social Security coverage rules that apply.
Social Security isn't structured like an individual investment account where you receive back exactly what you paid in.
Your payroll taxes help fund a broader social insurance program that provides retirement, disability, and survivor benefits.
If a worker dies, qualifying family members may be eligible for Social Security survivor benefits, depending on the worker's earnings record and the family member's circumstances.
This is one reason Social Security planning should consider more than just the retiree's individual monthly benefit.
For married couples in particular, the claiming decision of the higher earner can have important implications for the surviving spouse.
Does Social Security run out if I die early?
Your personal payroll taxes don't become an individual account balance that is paid back at death. However, qualifying family members may be eligible for survivor benefits based on your work record.
The opposite assumption can also be dangerous.
Social Security is governed by federal law, and Congress has historically made changes to the program.
The current Trustees' projections demonstrate that the program faces a substantial long-term financing gap. Under current law and the Trustees' intermediate assumptions, the combined trust fund reserves are projected to be depleted in 2034, at which point ongoing revenue would be sufficient to pay approximately 83% of scheduled benefits.
That does not tell us exactly what future legislation will look like.
Potential changes could involve some combination of:
No one can say with certainty what Congress will do in the future.
What can be said is that the current Trustees' projections indicate that scheduled benefits are not fully financed over the long term under current law.
For retirement planning purposes, it can be prudent to consider Social Security as an important income source while also developing other sources of retirement income.
There isn't one mistake that applies to everyone.
However, one of the biggest mistakes can be making a Social Security claiming decision without considering the rest of your retirement plan.
For example, automatically claiming at 62 without considering:
could result in a strategy that doesn't fit your circumstances.
Likewise, automatically delaying to age 70 without considering your health, cash-flow needs, and other financial resources may not necessarily be appropriate either.
Social Security should generally be viewed as one component of a broader retirement income strategy.
Social Security is more than a monthly check.
It can provide a source of income that lasts for life, and the claiming decision can affect the amount of income available to you and potentially your spouse or surviving spouse.
That makes Social Security planning particularly important when you're coordinating:
The goal isn't necessarily to maximize Social Security benefits at all costs. The goal is to determine how Social Security can work alongside your other financial resources.
Social Security myths can make retirement planning more confusing than it needs to be.
Remember:
The program faces a significant financing shortfall, but current projections do not indicate that benefits will simply disappear.
Your health, finances, family circumstances, and long-term income needs should all be considered.
Before full retirement age, however, the earnings test may temporarily reduce benefits if your earnings exceed the applicable limit.
Your earnings history and claiming decisions play important roles in determining your benefit.
Depending on your income and filing status, a portion of your benefits may be subject to federal income tax.
Coverage depends on the specific employment and applicable federal, state, or local rules.
For married couples, claiming decisions can have implications for spousal and survivor benefits.
At Legacy Wealth Management, we help individuals and families evaluate Social Security as part of a broader retirement income strategy.
Our retirement planning process can include consideration of:
Whether you're asking "Should I claim Social Security at 62?", wondering "Does Social Security run out?", or simply looking for reliable retirement planning information, understanding the facts can help you make more informed decisions.
If you'd like help reviewing your retirement strategy and understanding how Social Security fits into your overall financial plan, you can schedule a complimentary meeting by visiting www.lwealthmanagement.com/contact or calling (877) 650-4738.
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