Explanations on retirement myths

⚠️ This book is generated by AI, the content may not be 100% accurate.

1 Social Security Myths

1.1 Myth: Social Security will disappear by the time I retire

📖 Fact: While Social Security’s financial outlook is uncertain, the program can make adjustments to ensure its long-term viability.

1.1.1 item Social Security will disappear by the time I retire.

• better_alternative_belief:
  • Social Security is not likely to disappear, but it will need to make adjustments to ensure its long-term viability.
• explanation:
  • The Social Security Trust Fund is projected to be exhausted by 2035, but the program can make changes to ensure its solvency.

1.1.2 item I can collect Social Security benefits as soon as I turn 62.

• better_alternative_belief:
  • You can start collecting Social Security benefits as early as age 62, but your benefit amount will be reduced if you do.
• explanation:
  • Full retirement age is 67 for those born in 1960 or later. If you start collecting benefits before full retirement age, your benefit amount will be reduced.

1.1.3 item I will need to save $1 million for retirement.

• better_alternative_belief:
  • The amount of money you need to save for retirement depends on a number of factors, including your desired retirement lifestyle and your life expectancy.
• explanation:
  • There is no one-size-fits-all answer to the question of how much money you need to save for retirement.

1.1.4 item I can’t afford to retire early.

• better_alternative_belief:
  • Retiring early is possible if you plan ahead and make some sacrifices.
• explanation:
  • There are a number of ways to retire early, such as downsizing your lifestyle, working part-time, or starting a business.

1.1.5 item I will be bored in retirement.

• better_alternative_belief:
  • Retirement can be a time to pursue your interests and passions.
• explanation:
  • There are many things you can do in retirement, such as traveling, volunteering, or taking classes.

1.2 Myth: I will receive the same monthly benefit as my spouse

📖 Fact: The size of your Social Security benefit is based on your own earnings history, not your spouse’s.

1.2.1 item The government will take care of me in retirement.

• better_alternative_belief:
  • The government provides a safety net, but you need to take responsibility for your own retirement planning.
• explanation:
  • Social Security and other government programs provide a basic level of support in retirement, but they are not enough to cover most people’s expenses. You need to save and invest on your own to ensure a comfortable retirement.

1.2.2 item I’ll have enough money saved up by the time I retire.

• better_alternative_belief:
  • Most people underestimate how much money they will need in retirement.
• explanation:
  • Retirement can last for 20 years or more, and you will need a substantial amount of money to cover your expenses. The average American needs to save at least $1 million for retirement.

1.2.3 item I can afford to retire early.

• better_alternative_belief:
  • Retiring early can be expensive.
• explanation:
  • You will need to have enough money saved up to cover your expenses for the rest of your life. You may also need to pay for health insurance and other costs that are not covered by Social Security. Retiring early can also reduce your Social Security benefits.

1.2.4 item I’ll be able to find a part-time job after I retire.

• better_alternative_belief:
  • It can be difficult to find a part-time job after you retire.
• explanation:
  • Many employers are not interested in hiring older workers, and part-time jobs are often low-paying. You may also find it difficult to compete with younger workers who have more recent experience.

1.2.5 item I’ll be able to travel the world in retirement.

• better_alternative_belief:
  • Traveling in retirement can be expensive.
• explanation:
  • You will need to have enough money saved up to cover your travel expenses, which can be significant. You may also need to pay for health insurance and other costs that are not covered by Social Security.

1.3 Myth: If I retire early, I’ll get penalized for my entire life

📖 Fact: Early retirement benefits are reduced, but the penalty only applies until your full retirement age.

1.3.1 item Social Security benefits are taxed the same regardless of your income.

• better_alternative_belief:
  • Social Security benefits may be taxed if you have other sources of income, such as wages, self-employment income, or interest.
• explanation:
  • The amount of Social Security benefits that are taxed depends on your combined income from all sources. If your combined income is above a certain threshold, up to 85% of your Social Security benefits may be subject to income tax.

1.3.2 item I can collect Social Security benefits as early as age 62.

• better_alternative_belief:
  • You can start collecting Social Security benefits as early as age 62, but your benefits will be permanently reduced.
• explanation:
  • If you start collecting Social Security benefits before your full retirement age, which is 67 for people born in 1960 or later, your monthly benefit amount will be reduced by up to 30%.

1.3.3 item I have to wait until I’m 70 to collect my full Social Security benefit.

• better_alternative_belief:
  • Your full retirement age is 67 if you were born in 1960 or later.
• explanation:
  • The full retirement age for Social Security benefits has been gradually increasing since 1983. For people born in 1960 or later, the full retirement age is 67.

1.3.4 item Social Security benefits are enough to live on.

• better_alternative_belief:
  • Social Security benefits are only designed to replace about 40% of your pre-retirement income.
• explanation:
  • Social Security benefits are intended to supplement other sources of retirement income, such as savings, investments, and pensions. Most people will need to have other sources of income in order to maintain their standard of living in retirement.

1.3.5 item I can work and collect Social Security benefits at the same time.

• better_alternative_belief:
  • You can work and collect Social Security benefits at the same time, but your benefits may be reduced if you earn too much.
• explanation:
  • If you earn more than a certain amount, your Social Security benefits will be reduced by $1 for every$2 you earn over the limit. The earnings limit for 2023 is $21,240 for people under full retirement age and$56,520 for people at full retirement age.

1.4 Myth: Social Security is funded by the government

📖 Fact: Social Security is a self-funded program, primarily financed by payroll taxes from current workers.

1.4.1 item Social Security is going to run out of money

• better_alternative_belief:
  • Social Security is projected to be able to pay reduced benefits until 2035, which is when the trust fund is projected to be exhausted.
• explanation:
  • The Social Security Trust Fund is a real trust fund that holds U.S. Treasury bonds. The bonds in the Trust Fund represent the IOUs that the government owes to Social Security. The bonds are backed by the full faith and credit of the United States government, meaning that they are as safe as any other U.S. government bond.

1.4.2 item I need to start taking Social Security as early as possible to get the most money

• better_alternative_belief:
  • You will receive a lower monthly benefit if you start taking benefits early. Every year that you delay taking benefits, the amount you receive each month increases.
• explanation:
  • The Social Security retirement age is gradually increasing. For people born in 1960 or later, the full retirement age is 67. However, you can start taking benefits as early as 62 or as late as 70.

1.4.3 item Social Security should be privatized

• better_alternative_belief:
  • Privatizing Social Security would increase costs, reduce benefits, and increase risk for retirees.
• explanation:
  • Social Security is a defined benefit program, which means that you are guaranteed a certain level of benefits when you retire, regardless of how much you contribute or how well the stock market performs. Private retirement accounts are defined contribution plans, which means that the amount you receive in retirement depends on how much you contribute and how well the investments perform

1.4.4 item You can’t collect Social Security until you reach retirement age

• better_alternative_belief:
  • You can start collecting Social Security benefits as early as age 62, but your benefits will be reduced if you start collecting before your full retirement age
• explanation:
  • You can start collecting Social Security benefits as early as 62. However, if you do so, your benefits will be permanently reduced. For people born in 1960 or later, the retirement age is 67. You can receive full benefits if you start collecting at your full retirement age.

1.4.5 item Social Security is a welfare program

• better_alternative_belief:
  • Social Security is not a welfare program, It is an earned benefit program that you have paid into through payroll taxes throughout your working life.
• explanation:
  • Social Security is funded through payroll taxes that you pay throughout your working life. When you retire, you begin collecting benefits from the trust fund that is funded by these taxes.

1.5 Myth: I can collect Social Security benefits if I’m not a U.S. citizen

📖 Fact: Generally, only U.S. citizens and permanent residents who have worked and paid Social Security taxes are eligible for benefits.

1.5.1 item I can collect Social Security benefits if I’m not a U.S. citizen.

• better_alternative_belief:
  • Generally, only U.S. citizens and permanent residents who have worked and paid Social Security taxes are eligible for benefits.
• explanation:
  • Social Security is a U.S. government program that provides retirement, disability, and survivor benefits to eligible individuals. To be eligible for Social Security benefits, you must generally be a U.S. citizen or a permanent resident who has worked and paid Social Security taxes.

1.5.2 item I can collect Social Security benefits even if I’ve never worked.

• better_alternative_belief:
  • You must have worked and paid Social Security taxes for a certain number of years to be eligible for benefits.
• explanation:
  • The amount of Social Security benefits you receive is based on your earnings and the number of years you have worked. You must have worked and paid Social Security taxes for at least 10 years to be eligible for retirement benefits.

1.5.3 item I can collect Social Security benefits if I’m still working.

• better_alternative_belief:
  • You can collect Social Security benefits if you’re still working, but your benefits will be reduced.
• explanation:
  • If you’re still working and receiving Social Security benefits, your benefits will be reduced by $1 for every$2 you earn above a certain amount. The amount you can earn without affecting your benefits changes each year.

1.5.4 item I can collect Social Security benefits if I’m married to someone who is receiving benefits.

• better_alternative_belief:
  • You can collect Social Security benefits if you’re married to someone who is receiving benefits, but the amount you receive will be reduced.
• explanation:
  • If you’re married to someone who is receiving Social Security benefits, you may be eligible for spousal benefits. The amount of spousal benefits you receive will be based on your spouse’s earnings record and the number of years you have been married.

1.5.5 item I can collect Social Security benefits if I’m disabled.

• better_alternative_belief:
  • You can collect Social Security disability benefits if you’re disabled and meet certain other requirements.
• explanation:
  • If you’re disabled and unable to work, you may be eligible for Social Security disability benefits. To be eligible, you must have worked and paid Social Security taxes for a certain number of years, and you must meet certain medical requirements.