By Mike Batista, AARP Montana
In the last column, we examined three myths about Social Security. We looked at whether Social Security is going broke, whether members of Congress pay into Social Security and whether you get more Social Security benefits if you collect early.
In this column, we will explore three more myths that continue to persist about Social Security.
Myth #1: The government raids Social Security to pay for other programs. The facts: Social Security is primarily funded with workers’ and employers’ payroll taxes and has never been part of the federal government’s general fund. The federal government does, however, borrow from Social Security and in return issues Treasury bonds. The federal government has to pay back any money it borrows from Social Security with interest. The government has always paid it back in full, and annual interest payments increase Social Security’s assets, to the tune of $66.3 billion in 2022.
Myth #2: You lose a portion of your benefits permanently if you take benefits and keep working. The facts: Not true. Social Security does have a rule, called the “earnings limit” or “earnings test,” that can temporarily reduce your payments if you are still working. But it doesn’t apply to all working beneficiaries, and it is not permanent. The rule only covers people who claim benefits before full retirement age and continue working. In this circumstance, Social Security withholds a portion of your payments if your earnings from work exceed a set cap, which changes every year and differs based on how close you are to full retirement age. However, any withheld money is credited back to you, and the benefits you receive later will be higher.
Myth #3: The Social Security retirement age is 65. The facts: Full retirement age, or FRA—the age when a worker qualifies to file for 100 percent of the benefit calculated from lifetime earnings history—is 66 and 6 months for people born in 1957, 66 and 8 months for those born in 1958 and will settle at 67 for those born in 1960 and after.
The 65 threshold is a longtime Social Security truth that became a myth. When Social Security was created in 1935, 65 was set as the age of eligibility. In later decades the minimum eligibility age was lowered to 62, when people could claim a reduced benefit, but 65 remained the standard for full retirement.
That changed with the 1983 overhaul, which raised the retirement age to reduce Social Security’s costs. The increase is being phased in over time; 2002 was the last year in which people turning 65 could claim their full benefit. MSN
Mike Batista leads the advocacy efforts for AARP Montana. About AARP Montana: For over 50 years, AARP has been working right here in big sky country to improve the lives of Montanans 50 plus. As one of Montanan’s largest non-profit membership organizations, with more than 134,000 members, we advocate for what matters most to families: personal fulfillment, health security and financial stability. We’re committed to helping already great communities across Montana become even better places for people of all ages by granting funds through our Community Challenge Grant Program. We fund small dollar, big impact projects for public parks & trails, transportation, safe streets, housing and more. We also connect Montanans with information and resources as well as help people connect with others who share their interests and passions–like music! As a main sponsor of the Helena Symphony’s Masterworks Series, we’re proud to help bring quality concerts to the community. By fighting on issues that matter most to Montana families and providing trusted information, we’re helping to empower Montanans to choose how they live as they age. As a nonpartisan organization, AARP does not endorse candidates for public office or make contributions to candidates, campaigns, or political action committees. Visit us at aarp.org/MT or follow @AARPMontana on social media. Facebook: FB.com/AARPMontana
