Social Security is often one of the most important income sources in retirement. Yet widespread myths about how it works can lead to confusion, unnecessary worry and poor planning decisions. Here’s the truth behind five of the most common misconceptions.
Myth 1: Social Security is going broke. You’ve probably heard this one, but the full picture is more nuanced. According to the 2026 Social Security Board of Trustees Report, if Congress does nothing, the program would need to reduce benefits starting in 2032, paying roughly 78 cents for every dollar owed.
But that’s just one scenario. Congress could raise the combined payroll tax from 12.4% to 16.65%, which the trustees estimate would secure full benefits through 2100. Other options include eliminating the earnings cap subject to payroll tax or adjusting retirement ages. Lawmakers have tools to address this.
Myth 2: Social Security will cover all your retirement needs. Think of Social Security as a financial foundation, not the full building. According to the Social Security Administration, benefits replace only about 40% of pre-retirement income for a median earner. That means you’ll likely need to account for most of your retirement income yourself. Building a strong personal savings strategy now can help close that gap.
Myth 3: You lose benefits permanently if you keep working. Not true. Social Security does have an “earnings test” that can temporarily reduce benefits for people who claim early and keep working. If your earnings exceed a set annual cap — which changes each year — Social Security will withhold a portion of your benefits. But once you reach full retirement age, the Social Security Administration adjusts your monthly check higher to repay those withheld amounts over time.
Myth 4: An ex-spouse’s benefits come out of your own. If you were married for at least 10 years and are currently unmarried, your former spouse may be eligible to collect on your earnings record, or you may be able to collect on theirs. Divorced spouse benefits can be up to 50% of the other person’s full retirement benefit. But those payments don’t affect yours. Your monthly benefit is not reduced by anything paid to an ex-spouse or even a current spouse.
Myth 5: Social Security benefits are no longer taxed. Recent legislation caused some confusion here. The One Big Beautiful Bill Act did not eliminate taxes on Social Security benefits. If your combined income exceeds certain thresholds, you’ll still owe taxes on a portion of your benefits.
The law also created a temporary deduction (available through 2028) for people 65 and older. Eligible taxpayers can deduct $6,000 per qualifying filer if their modified adjusted gross income is $75,000 or less for singles or $150,000 for couples. The deduction phases out at $175,000 for singles and $250,000 for joint filers.
The more you understand Social Security, the more control you have over your retirement outcome. Grounding your decisions in facts rather than assumptions can make a meaningful difference in your long-term financial security.
This article was written by Edward Jones for use by your local Edward Jones Financial Adviser. Edward Jones, its employees and financial advisers cannot provide tax or legal advice. You should consult your attorney or qualified tax adviser regarding your situation.
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