Seven Common Myths About Social Security Retirement Benefits, Explained

Learn the facts about how Social Security works for retirees

Social Security benefits can play an important role in a retirement income plan, but the federal program is not always easy to understand.

Misconceptions about Social Security are widespread, and there are many different views on the best way to use its benefits.

An Ameriprise financial advisor can help explain how Social Security may fit into your broader retirement income strategy.

Here are seven Social Security myths, debunked:

Myth #1: Social Security benefits won’t be there when I retire

Although the program’s long-term solvency is often debated, people who are already retired and collecting benefits are unlikely to see a major impact. Those who are still years away from retirement may naturally worry about the program’s future. It is very unlikely that Social Security will disappear altogether, though changes such as reduced payments or a higher full retirement age could be made if lawmakers act.

Myth #2: Social Security will cover all my retirement expenses

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Use this calculator to estimate what your retirement benefit amount could be.

For most people, Social Security alone will not replace enough income to fund retirement. It can be a valuable source of supplemental income, but the program was never intended to pay for every retirement expense. Retirees often need additional income sources to support the lifestyle they want.

Myth #3: Social Security benefits don’t increase with inflation

Unlike many other retirement income sources, Social Security payments are designed to rise with inflation. Each year, the Social Security Administration reviews inflation data and decides whether to apply a cost-of-living adjustment, or COLA. Since 1975, COLAs have ranged from 14.3% in 1980 to 0.0% in 2009, 2010 and 2015.

Even so, annual inflation adjustments may not fully keep up with retirement costs. Health care expenses, for example, can rise faster than inflation. Depending on where you live, your local cost of living may also increase more quickly than the yearly benefit adjustment.

Advice spotlight

Social Security should be one of several retirement income sources. Consider how other resources, such as 401(k) plans, pensions, annuities, IRAs, real estate income and other savings, can work alongside your Social Security benefits to help provide the income you need for the retirement you want.

Myth #4: I can outlive Social Security

You cannot outlive your Social Security benefits. Once you begin collecting, payments continue every month for the rest of your life. Because the program is backed by the federal government, it offers a level of stability that many other income sources cannot match.

Myth #5: I should wait as long as possible to claim my Social Security benefits

Delaying benefits generally increases your monthly payment, but waiting is not the best move for everyone.

The right decision depends on whether it is better to start receiving smaller benefits earlier or wait for a larger monthly amount later. Important factors include:

• Health, family history and life expectancy
• Other retirement income sources
• Employment status
• Taxes
• Marital status

Myth #6: Social Security income isn’t subject to taxes

Even though Social Security is a federal benefit, you may owe taxes on it if your modified adjusted gross income, or MAGI, exceeds certain limits. Depending on your other income, as much as 85% of your Social Security benefits may be taxable.

According to the Social Security Administration, about 40% of Social Security recipients pay income taxes on their benefits.¹

Learn more: Social Security and taxes, explained

If working is part of your ideal retirement lifestyle, you can earn wages and receive Social Security at the same time. Still, it is important to understand the wider financial effects of that added income:

• Tax impacts: Receiving Social Security while working can raise your overall taxable income and possibly move you into a higher tax bracket.
• Medicare impacts: If the added income pushes you above certain thresholds, your Medicare premiums may rise.
• Payment impacts: If you are younger than full retirement age and earn more than certain dollar amounts while collecting retirement benefits, your Social Security payments may be reduced.

Let’s discuss your Social Security options

If you have questions about when to start collecting Social Security or how it fits into your broader retirement plan, speak with an Ameriprise financial advisor.

Questions to ask an Ameriprise financial advisor during your initial complimentary consultation

• How should I factor Social Security payments into my future retirement income strategy?
• At what age should I begin collecting my Social Security payments?
• If retirement is still far away, should I count on Social Security as a future income source? If so, how can I estimate my potential benefit amount?

When you are ready to contact an Ameriprise financial advisor for a complimentary initial consultation, consider bringing these questions to the meeting.

Third-party companies mentioned are not affiliated with Ameriprise Financial, Inc.

¹Retirement Benefits, Social Security Administration, 2025: https://www.ssa.gov/pubs/EN-05-10035.pdf

This information is provided only as a general source of information and is not a solicitation to buy or sell any securities, accounts or strategies mentioned. It is not intended to serve as the primary basis for investment decisions, nor should it be interpreted as a recommendation or advice tailored to the needs of any individual investor. Please seek the advice of a financial advisor regarding your personal financial situation.

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