Retirement & Financial Planning Report

Social Security is a big program with a lot of parts and many rumors floating around. Image: larry1235/

Two of the most dangerous places for retirement planning are the water cooler and internet chat rooms.

Rumors love those places.

And with a program as large as Social Security, the myths can get crazy.

Here are 4 of the biggest myths that I see federal employees fall for all the time.

Myth 1: Social Security is going broke in 2033

This myth has a sliver of truth to it. Social Security is predicting that their trust fund will be depleted by 2033 but that is far from going broke.

Social Security is funded by payroll taxes which means that more money comes in every year.

So even if no changes were made to fix the shortfall, Social Security would still be able to pay about 75% of benefits indefinitely.

And there are already many proposed changes that would fix the shortfall.

In my opinion, because Social Security is such a popular program amongst a massive voting block it is very likely that something will be done to fix it.

Myth 2: My ex-spouse’s actions could impact my Social Security benefits

As an ex-spouse you may be eligible for spousal benefits based on your ex-spouse’s working history however, when your ex-spouse chooses to start benefits won’t affect you at all.

When you are ready to file for benefits just let Social Security know that you were married and divorced and they will check to see if you can get spousal benefits.

Normally you would have had to be married for at least 10 years to be eligible.

And if you are eligible for benefits based on your own working history as well then they’ll give you whichever benefit is higher.

For example, if your benefit based on your work is $1,200/month but spousal benefits would be $1,500/month then you would get the $1,500/month (whichever one is bigger).

Myth 3: I’m not going to live a long time so I’m going to take my benefits as soon as possible

This statement could be true but you’ll want to be careful.

If you are single and have health issues that will seriously impact your life expectancy then taking benefits early probably makes the most sense.

But if you are married and are the higher earner between you and your spouse, even if you have a shortened life expectancy, then there is more to think about.

Social Security has a benefit called Survivor Benefits which is paid to the surviving spouse when one spouse dies.

Survivor benefits are normally equal to whomever’s benefit was higher between the surviving spouse’s and the deceased spouse’s.

For example, let’s say spouse 1 gets $2,000/month and spouse 2 is getting $1,500/month. If spouse 1 dies then spouse 2 would start receiving $2,000/month as that was the bigger of the both of their benefits.

But if spouse 2 would have died first then spouse 1’s benefit wouldn’t change because their benefit was bigger anyway.

Main Point: If you are the higher earner your benefits will not only affect you during your lifetime but also for your spouse’s lifetime as well. This is why someone might delay their own benefits to get an increased amount even if they have a shortened life expectancy in efforts to ensure their spouse will have a bigger benefit for the rest of their life as well.

Myth 4: You’ll never get back all the money you put in

If you live a long time then it is very probable that you will receive more money out of Social Security than you put in.

But if you die early then you probably paid more into the system than you got out.

The system works because it all evens out across the population.

Final Thoughts

Social Security is a big program with a lot of parts and many rumors floating around.

You’ll want to make sure to do your research before deciding which strategy is best for you.

Dallen Haws is a Financial Advisor who is dedicated to helping federal employees live their best life and plan an incredible retirement. He hosts a podcast and YouTube channel all about federal benefits and retirement. You can learn more about him at Haws Federal Advisors.


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