Bedford, New Hampshire – Collecting Social Security benefits plays a crucial role in retirement income strategies, but navigating the federal program can be complex.
Misconceptions and differing viewpoints about Social Security abound. To help demystify the process, we will discuss how Social Security fits into your broader retirement income strategy.
Here are six myths about Social Security that need to be debunked:
Myth 1: Social Security benefits won’t be there when I retire. While the program’s solvency is a topic of concern, if you’re already receiving benefits, any changes are unlikely to affect you. For those not yet in retirement, it’s important to track any potential impact and work with a financial advisor to adjust your strategy accordingly.
Myth 2: Social Security will be a major source of retirement income. While it can supplement other sources, it’s unlikely to provide enough income on its own. Retirement planning should consider various income streams and a flexible tax-diversified approach.
Myth 3: Social Security benefits don’t keep up with inflation. In fact, monthly payments are designed to keep pace with the cost of living, with cost-of-living adjustments (COLAs) made annually by the Social Security Administration.
Myth 4: You can outlive Social Security. Social Security payments are guaranteed for life, backed by the federal government and designed to keep pace with inflation.
Myth 5: I should wait as long as possible to claim my Social Security benefits. While delaying can increase monthly payments, it’s not the best option for everyone. Factors such as health, life expectancy, and tax rates on Social Security income should be considered in making this decision.
Myth 6: Social Security income isn’t subject to taxes. Depending on your total income, up to 85% of your Social Security benefits may be taxable. It’s important to consider the tax implications of your Social Security income in your broader retirement plan.
As you navigate the complexities of Social Security and its role in your retirement, it’s crucial to seek guidance from a financial advisor, as they can help tailor a personalized retirement income strategy to best meet your needs.