Not everyone enjoys talking about retirement. People like to think that they will never get old, so some put off educating themselves about financial security. This can lead to misunderstanding. Social security retirement income is not as complicated as you may think. Here are some common myths, and the truth about social security.
Myth 1 – Social Security Is Going Broke
Although the Social Security system will likely face some challenges in the future, it is presently running at a surplus of $2.8 trillion. It has sufficient funds to pay all retirees and prospective retirees through 2034 and can cover almost 80% of benefits through 2090. Likely, there will be a policy change, such as an increase in the retirement age. Speaking of which — how old is retirement age anyway?
Myth 2 – Retirement Age Is 65
When Social Security began in 1935, you had to be 65 to get full benefits. Now, however, amendments in the 1980s changed retirement ages on a sliding scale. For those who were born after 1960, retirement age is 67. You can receive reduced benefits at 62 if you wish to retire early, but you are stuck with the lowered benefit for life.
Myth 3 – If You Retire Early, You’ll Get a Bump In Pay Later
A big misconception is that retiring young gives you a lowered monthly payment that increases to a full benefit amount when you get older. This shocks many who take a reduced benefit, such as 70% at age 62, to find out that later the amount does not increase. So consider early retirement carefully, or you may have to pick up a side job to make ends meet.
Myth 4 – Retirees Cannot Work
Another myth is that once you start collecting social security, you are not allowed also to have a job. As long as you are at full retirement age, you keep your side hustle and claim your full benefit. If you retire early, your benefits will be reduced a little, so stick it out until full benefit age before jumping back into the grind.
Myth 5 – Retirees Must Live In the United States
With only a few exceptions—such as North Korea and Cuba—you are free to retire anywhere you want all over the globe and stick get your Social Security check. There is a helpful online quiz that’ll let you know if the country you reside in affects your ability to receive payments. Medicare health insurance is another story though, so make sure you know all of the limitations before you retire abroad.