It’s a wildly popular entity. More than 90% of U.S. adults across the political spectrum support the program, according to a 2021 AARP survey.

The Social Security Administration was created by former President Franklin D. Roosevelt in 1935 and has served seniors for around eight decades. However, despite its long history and widespread use, there are still misconceptions about the program. 

Here are five myths about social security debunked. 

Social Security will run out of money

As long as the U.S. workforce continues to pay payroll taxes to the SSA, the agency will not run out of money. 

It does, however, face challenges with its funding since the amount being doled out to seniors outpaced the amount of money coming in. For decades, the administration collected more money than it paid out and had a surplus of $2.9 trillion at the end of 2019. Now, the SSA is starting to pay out more than it takes in from taxes, in large part because the retirement population of the country is growing faster than the working population. Medical advancements also mean retirees are living longer than they have historically. 

Without funding changes, the surplus is expected to run dry by 2035. Still, it won’t run completely dry as the administration will continue tax revenue and pay benefits. If that were the case, estimates show the agency would only have the funds to pay 79% of scheduled benefits.

In order to avoid that scenario, Congress will need to make moves to increase Social Security’s finances, which it did in 1983 after the agency nearly ran dry. 

Undocumented immigrants are draining Social Security benefits

While some people scapegoat financial problems the SSA may be facing on undocumented immigrants claiming social security benefits, it is entirely false. Those who reside in the U.S. unlawfully have no ability to claim Social Security, as they do not have a Social Security number issued to them. 

Naturalized American citizens or visa and green card holders receive a Social Security number when they become citizens or authorized to work and, therefore, can begin receiving benefits when their time comes. Non-citizens who live and work in the U.S. legally can qualify for Social Security under the same terms as native-born and naturalized Americans, but undocumented immigrants are not allowed nor able to claim benefits.

One report even found undocumented immigrants boost the funds of Social Security. A 2010 report from Social Security actuaries said undocumented immigrants made a net contribution of around $12 billion to the program, and their earnings would likely continue to “benefit the financial status” of Social Security.

Social Security income isn’t subject to taxes

This was true until 1983, when the Social Security overhaul was passed by Congress. Former President Ronald Reagan signed a provision that made a portion of Social Security benefits taxable, depending on a person’s income level.

Now, beneficiaries must pay taxes on their income if their total modified adjusted gross income is above certain thresholds. 

Beneficiaries will need to pay federal income tax on up to 50% of their benefits if their income for the year is $25,000 to $34,000 for an individual filer and $32,000 to $44,000 for a couple filing jointly, according to AARP. Above those thresholds, up to 85% of benefits are taxable, but exact amounts can vary depending on the amount of income they may have from other sources, such as a part-time job or other assistance programs.

Around 40% of people who receive social security are required to pay income taxes on their benefits.

Inflation outpaces Social Security benefits 

Social Security payments are unlike other retirement income sources in that they are designed to keep pace with the rising cost of living.

Every year, the SSA evaluates inflation data and decides whether to institute a benefit increase, called a cost-of-living adjustment. Beginning in 1975, COLAs ranged from as high as 14.3% in 1980 to as low as 0.0% in 2009 and 2010 during the 2008 recession.

This year, Social Security benefits are set to increase by 3.2% to keep up with inflation.

Social Security benefits start at age 65

The full retirement age is currently 66 years and 2 months. This is the age, determined by the SSA, when a worker is qualified to file and can claim 100% of the benefits calculated from their lifetime earnings history. Those born in 1955 reach the milestone this year (or in the first two months of next year). Over the next five years, the full retirement age will increase by two months at a time, settling at 67 years old for those born in 1960 and after.

Sixty-five years old was the longtime standard retirement age set when the SSA began in 1935. As part of the 1983 congressional changes made to the administration, the age was increased to the current full retirement age. This change was phased in over time, with 2002 being the last time retirees could claim full benefits at age 65.

People can still begin claiming social security benefits once they hit the age of 62, although that would decrease their maximum income and give them only the minimum amount of earnings.

People should wait as long as possible to claim Social Security benefits

While people can begin claiming Social Security benefits at the age of 62, the longer they wait to begin claiming, the more money they will receive each month. Therefore, many retirees hold off on claiming benefits and choose to continue to work until they turn 70 years old because that is the longest they must wait to maximize their benefits. 

​​

Holding out can be beneficial to some retirees, but there are certain factors that should be taken into account before continuing to work until 70 years old. Any looming personal health problems should be considered, as well as the average life expectancy in their family history. 

It is considered wise to speak with a financial adviser to find the best time to begin claiming Social Security benefits in order to maximize not only monthly income but also quality of life. Financial advisers can help people understand how things, such as capital gains and individual retirement account withdrawals, play into retirement income and tax rates for Social Security income.