10 Social Security Myths That Aren’t True (Part 1)
The Social Security system is enormous and complicated – paying more than $90 billion every month to 64 million retirees, disabled workers, and their family or dependents. With 4 in 5 of retirees expecting to rely on Social Security during their later years, and millions of disabled workers relying on SSD, the topic of Social Security is a hot button for many people.
As a result of economic worries in these uncertain times, many men and women misunderstand or have misconceptions about how the Social Security system is funded and/or how it works.
In this two part article the experienced Social Security lawyers 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.
Myth #1: The Social Security System is Broke
Since workers and employers will always continue to pay payroll taxes, Social Security will never completely run out of money. But, as people are living longer, and the number of retirees is outpacing the number of new workers, Social Security does face funding challenges.
In past decades more was collected is Social Security taxes than was paid out – leading to a large and comfortable surplus of $2.9 trillion at the end of 2019. However, the Social Security system is now paying out more than it takes in. Without adjustments in how Social Security is financed, the surplus is projected to run out in 2035 – leaving the SSA only able to pay 79 percent of scheduled benefits.
Congress is currently exploring steps to remedy this imbalance, and options include: raising the full retirement age; increasing the payroll tax rate; and/or imposing income tax on benefits.
Myth #2: 65 is the Age for Social Security Retirement
Full retirement age (FRA) is the age at which a worker qualifies to file for 100 percent of their Social Security retirement benefit. Back when Social Security was created in 1935, the age of eligibility was set at 65 for all retirees. But this has changed over the years.
As one effort to reduce the upcoming Social Security deficit, an increase in the age of full retirement has been being phased in gradually. Currently the FRA is 66. So those born in 1954 will qualify for full benefits this year.
Over the next five years the Full retirement Age will increase by two months at a time, until it reaches age 67 – which will apply to those born in 1960 and after.
Myth #3: There is an Increase in Social Security Benefits Every Year
In 1975, Social Security law changed to require that benefit amounts be adjusted annually to keep up with inflation – the increasing cost-of-living. So, in many years, since the price of consumer goods and services has increased, there has been a COLA increase in benefits. In 2021 there will be an increase in Social Security benefits of 1.3%.
But in years where the Consumer Price Index (CPI) does not show a statistically measurable rise in prices, then there’s no adjustment to benefits. In fact, in 2010, 2011 and 2016 there was no COLA increase in Social Security benefits.
Myth #4: Congressmen & Congresswomen do Not Pay into Social Security
When tempers are running high over current concerns about the future of Social Security, many people argue that members of Congress don’t bother fixing the program because it doesn’t cover them.
This erroneous belief is based on the fact that, before 1984, members of Congress (along with much of the rest of the federal workforce) were fully covered by a pension plan called the Civil Service Retirement System (CSRS). However, since 1984 elected officials pay into Social Security system just like the rest of American workers.
Those in office on Jan. 1, 1984, were “grandfathered” to be allowed to stay in CSRS, but only in conjunction with Social Security. (And at this point, there are only two remaining Senators and five House members that are “grandfathered” in.)
Myth #5: Social Security is Being “Raided” to Pay for other Government Programs
There are two separate and protected “trust funds” that pay out Social Security benefits — one for retirees and their survivors, and one for disabled workers. This money is kept completely separate from the federal government’s general fund. So, it is never used to directly pay for other programs.
But, the Social Security funds are invested in special U.S. Treasury securities. So, the federal government can and does, from time-to-time borrow from Social Security. However, as with any bondholder, the US Treasury has to pay the money back, with interest.
To date, the US Government has always made full repayment of any funds borrowed from the SSA fund. And, in fact, the interest the government has to pay on these loans increases Social Security’s assets. In 2019 alone, Social Security made more than $80 billion in interest repayment on loans made from its fund.
CLICK HERE for Part 1 of “10 Social Security Myths That Aren’t True”
Social Security Disability Lawyers – Orange County
If you or a loved one is unable to work due to a disabling injury, medical condition or disease our skilled and experienced lawyers are here to help you get the maximum Social Security Disability benefits for which you qualify.
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 lawyers care about every client, and fight tirelessly to obtain the benefits you deserve.
Orange County Social Security Disability Lawyers: 800-964-8047