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Marc A. Hebert's Money Sense: Exploring some facts and myths about Social Security

February 02. 2018 7:06PM

Myth 1: Social Security is all the money I need to retire on.

The truth is that Social Security was never meant to be the sole source of retirement income. As President Dwight D. Eisenhower said, "The system is not intended as a substitute for private savings, pension plans, and insurance protection. It is, rather, intended as the foundation upon which these other forms of protection can be soundly built."

In other words, it was just meant to be one part of the retirement income puzzle. The other parts are savings in IRAs, 401(k)s and other retirement plans, as well as pension benefits, if you are lucky enough to still have this type of plan.

Myth 2: Social Security will only help me in retirement.

The truth here is that Social Security also offers disability and survivors benefits. Once a person receives disability benefits, other members of the family may receive benefits, too. A similar situation exists with survivors benefits. Certain members of a family, including a spouse, children and dependent parents, might be eligible for survivors benefits to help replace lost income.

Myth 3: Any money I earn after retirement will cause me to lose my benefits.

This is actually partially true. If you are under your full retirement age, part of your benefit will be withheld. For 2018, it is $1 for every $2 you earn above an annual limit, which in 2018 is $17,040.

In the calendar year that you reach the full retirement age, $1 in benefits will be withheld for every $3 you earn above a certain annual limit until the month you reach full retirement age. If you reach full retirement age in 2018, the limit is $45,360.

The loss in benefits isn't permanent though. The Social Security Administration will recalculate your benefits when you reach full retirement age and give you credit for any months in which you did not receive a benefit because of your earnings.

The good news is that once you reach full retirement age, you can earn as much as you would like and your Social Security benefit isn't impacted.

Myth 4: Social Security benefits are not taxable.

Whether or not Social Security benefits are taxable depends on your income level. Earnings or investment income, for example, could bring your income up to the level in which it becomes taxable. Up to 85 percent may be taxable depending on your tax filing status (single or married filing jointly) and the total amount of income you have.

This particular subject is covered in IRS Publication 915, Social Security and Equivalent Railroad Retirement Benefits.

Myth 5: Monthly Social Security benefits can be reduced or denied if an ex-spouse claims Social Security

While ex-spouses can make life complicated, Social Security benefits isn't on the list of possibilities to do so. Their claim does not reduce or impact your benefits in any way.

Myth 6: Social Security benefits must be claimed at age 62.

Age 62 is the earliest age you may start to receive Social Security benefits, but it isn't the only age to start doing so. Your benefit is calculated based on your "full retirement age," or FRA. Your FRA is determined based on the year you were born. If you claim benefits before this age, your benefit is permanently reduced depending on how early you initiated your claim. If you claim later than full retirement age, you will earn delayed retirement credits and receive a bigger Social Security check. For specific information about the benefits you and your family members may receive, visit the Social Security Administration's website at or call 800-772-1213.


Jan. 28's column inadvertently left out the implications the Tax Cuts and Jobs Act might have on your withholding. Areas affected include the income tax rates, income tax deductions and credits, and repeal of personal exemptions. A new 2018 Form W-4 is in process, but might not be released until after Feb. 15. Until its release, employees may use the 2017 Form W-4. The IRS is also working on revising the withholding calculator located at When released, the modified calculator and 2018 Form W-4 can be used by employees who wish to update their withholding in response to the Act.

Marc A. Hebert, M.S., CFP, is a senior member and president of the wealth management and financial planning firm The Harbor Group of Bedford. Email questions to Marc at Your question and his response might appear in a future column.

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