7 Facts Most People Get Wrong About Social Security

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Social Safety is a big supply of revenue for a lot of retirees, however folks typically misunderstand even primary ideas behind this authorities program.

For the Nationwide Retirement Institute’s 2022 Social Security Survey, 1,853 adults age 26 and older had been requested about their attitudes and information concerning Social Safety. It uncovered important gaps in respondents’ understanding of the nation’s retirement program.

Right here’s a take a look at just a few of the details {that a} majority of individuals get incorrect about Social Safety.

Work historical past

Senior worker is concerned
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True or false: In the event you work lower than 35 years, your profit quantity shall be lowered.

Respondents who answered accurately: 38%

Fewer than 4 in 10 folks knew this assertion is true. When you don’t have to work 35 years to obtain Social Safety advantages, you do have to work that lengthy to get the biggest profit quantity potential.

That’s as a result of your Social Safety retirement profit quantity is predicated in your highest 35 years of earnings. In the event you labored fewer than 35 years, the federal government uses a zero for every year with out earnings. Every zero lowers your profit quantity.

Early claiming and spousal advantages

Older couple worried about Social Security and expenses
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True or false: In the event you declare early, any spousal advantages your companion is eligible for shall be lowered.

Respondents who answered accurately: 35%

This assertion is true. In the event you begin your Social Safety advantages early, you’ll obtain a lowered quantity and your husband’s or spouse’s spousal advantages may also be lowered. The only exception is that if your partner is caring for a qualifying baby.

Medicare sign-up

Medicare enrollment
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True or false: You may’t join Medicare until you might be enrolled for Social Safety.

Respondents who answered accurately: 34%

This assertion is fake. You don’t have to be enrolled in Social Safety to obtain Medicare. The truth is, in case you aren’t receiving Social Safety advantages and fail to enroll in Medicare throughout your preliminary enrollment interval at age 65, you might get hit with a hefty penalty.

We clarify extra in “4 Pitfalls for First-Time Medicare Enrollees.”

Undoing a declare

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True or false: You may undo a claiming resolution inside 12 months.

Respondents who answered accurately: 32%

That is true. You may cancel your software for Social Safety inside 12 months in case you change your thoughts. This is named a withdrawal, and also you’re allowed to do it as soon as in your lifetime. It can require you to pay again any advantages obtained, but it surely is perhaps worthwhile in case you claimed early however then determined you needed to attend till your full retirement age or past to beef up your month-to-month funds.

To be taught extra in regards to the withdrawal course of, try “How to Undo Your Social Security Claim in 4 Steps.”

Inflation safety

Uncle Sam holding a percent sign
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True or false: Social Safety isn’t protected towards inflation.

Respondents who answered accurately: 32%

Solely about one-third of respondents knew this assertion is fake. Social Safety funds are, in reality, protected towards inflation because of annual cost-of-living changes.

Also known as COLAs, these annual bumps in advantages are tied to the Client Worth Index for City Wage Earners and Clerical Staff, which is without doubt one of the federal authorities’s gauges of inflation. In 2022, Social Safety beneficiaries received a 5.9% increase in benefits, the biggest improve in a long time. The COLA for 2023 is shaping up to be even bigger.

Wage base

Worker installing electrical wires
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True or false: Staff pay Social Safety taxes on all of their revenue.

Respondents who answered accurately: 27%

False. There’s a cap on how a lot of your earnings is topic to Social Safety payroll taxes, however not many individuals appear to know that. Referred to as a contribution and base benefit, this cover is ready at $147,000 for 2022. Something earned above that quantity is exempt from Social Safety payroll taxes.

Claiming spousal advantages by way of an ex

Older woman filing her taxes
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True or false: You would possibly be capable to declare advantages on a former partner’s earnings document in case your spousal profit is lower than the quantity you’d obtain based mostly by yourself document.

Respondents who answered accurately: 14%

A mere 14% of survey respondents knew this assertion is fake. It’s a little bit tough, although.

You may obtain spousal advantages based mostly on an ex-spouse’s earnings document, however you need to meet certain criteria. One requirement is that the spousal profit is better than what you’d obtain based mostly by yourself document — not much less than, as said within the Nationwide survey. Tough, proper?

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