Social Security Myths for Central Minnesotans
There are many myths about social security. James Schmitz from Laraway Financial Advisors highlighted the myths associated with social security. They include the myth that it's going broke. James Schmitz says as long as workers pay payroll taxes social security will not run out of money. He says the social security system was at a surplus of $2.9 Trillion dollars at the end of 2020. Schmitz says now the system is paying out more than it is bringing in due to an increase of the non working population compared to the working population. He says without changes the surplus is expected to run out in 2034. Schmitz says congress could keep this from happening by making changes.
Other myths include the thought retirement age is 65. Schmitz says the retirement age is 66 and 2 months for those born between 1955, 66 and 4 months for those born in 1956 and 67 for those born in 1960 or later. Another myth Schmitz talks about is that the annual cost of live adjustment is guaranteed. He says there is no rule stating that their is a cost of live increase for social security benefits. Schmitz says benefits this year are set to increase by 5.9%.
Schmitz says the government doesn't raid the social security system to pay for other programs but it does borrow from it and pay it back in full with interest. Another myth is that you don't have to pay taxes on benefits. He says people will pay taxes on your benefits.
Schmitz says social security is not a retirement savings account. Schmitz says to view social security as an earned benefit not a fully funded retirement plan. He says on average social security provides approximately 40% of a retired person's income.
Other myths include ex spouses benefits come out of your own benefits. He says another myth is that you lose your benefit if you keep working. That is not true. If you have any questions or concerns about retirement contact James Schmitz at LFA.
If you'd like to listen to today's conversation it is available below.