10 Social Security Myths That Aren’t True (Part 2)
As a result of economic concerns in these uncertain times, many people misunderstand or have misconceptions that cause them to worry about how the Social Security system is funded and/or how it works.
In this two part article the experienced Social Security attorneys at Cantrell Green in Orange County, CA take a look at 10 of the most common myths about Social Security – to help put your mind at ease.
CLICK HERE for Part 1 of “10 Social Security Myths That Aren’t True”
Myth #6: Undocumented Immigrants are Draining Social Security
This flat-out lie is part of the rhetoric used to incite fear and divide political parties.
It is true that noncitizens who live and work in the U.S. – and who pay into Social Security – can legally can qualify for Social Security benefits the same way native-born or naturalized Americans can. But, again, they must be in the US and must have paid into the system.
But, undocumented individuals are not allowed to claim Social Security benefits.
Myth #7: Social Security is like a Good Retirement Savings Account
This is also untrue. The government does not simply “save” the exact amount of the payroll taxes you have put into Social Security in a separate personal account for you, that is then paid back with interest when you retire.
The benefit amount you receive is calculated on how much money you earned over your working life, and is not how much you paid into the system. If you live a very long time you may even receive more in benefits that you paid in.
But Social Security is not meant to replace your entire work income. Social Security should not be relied on for all of your expenses when you retire as it likely will not be enough to live on, on its own. On average, Social Security benefits provide about 40 percent of a retiree’s pre-retirement income.
Myth #8: There’s no Tax on Social Security Benefits
Until 1984 this was true – so many people think its still the case that Social Security Benefits are no taxed. But a sweeping Social Security “overhaul” passed by Congress and during the Reagan administration that made a portion of Social Security benefits subject to tax, depending on the recipient’s income level.
Here’s how taxes on Social Security Benefits Work:
- Individual filer with income less than $25,000 – pays NO federal income tax on Social Security benefits.
- Joint filer with income less than $32,000 – pays NO federal income tax on Social Security benefits.
- Individual filer with income of $25,000 to $34,000 – pays federal income tax on up to 50 percent of Social Security benefits.
- Joint filer with income of $32,000 to $44,000 – pays federal income tax on up to 50 percent of Social Security benefits.
- Individual filer with income more than $34,000 – pays federal income tax on up to 85percent of Social Security benefits.
- Joint filer with income of more than $44,000 – pays federal income tax on up to 85 percent of Social Security benefits.
Generally, money received from these sources counts as income: money you get from working; income from pensions and investments; any nontaxable interest; and, half of your Social Security benefits.
Some states also impose taxes on Social Security income. These are: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Vermont, Utah and West Virginia. The rules on taxing Social Security benefits vary widely from state to state – so consult an attorney or accountant if you live in one of these states.
Myth #9: Your “Ex’s” Social Security Benefits come out of Yours
If you are divorced, your ex-spouse may indeed be eligible to collect Social Security benefits based on your record of lifetime earnings. Or you may be able to collect based on their pay-in to Social Security.
But your ex-spouse’s benefits don NOT reduce your Social Security benefits under any circumstances. You get your same benefit to which you are entitled, based on your earnings history and age at filing – even your current spouse, and/or a former spouse, or even multiple former spouses are collecting benefits based on their marriage to you.
Myth #10: You Will Lose Your Social Security if You Continue Working
You Can still work and collect Social Security – but there is a Social Security rule, called the “earnings limit” or “earnings test,” that can temporarily reduce benefits of people who are still working only IF they are earning above a certain limit.
This reduction in benefits ONLY applies to people who:
#1. have claimed benefits before full retirement age, and
#2. continue working, and
#3. have earnings from work that exceed the earnings cap for that year – which changes every year
Experienced Social Security Attorneys – Orange County
As you can see there is a lot of misinformation out there about Social Security Benefits! Our experienced Social Security Disability attorneys are here to help you understand your benefits, and obtain the maximum compensation for which you qualify under the law.
The Law Office of Cantrell Green is a group of highly qualified and experienced disability attorneys who have obtained millions of dollars in Social Security Disability benefits for thousands of clients in Long Beach, Orange County and the greater Los Angeles. Our Social Security lawyers care about every client, and will fight tirelessly to obtain the benefits you deserve.