5 Common Myths About Social Security That Cost People Real Money

I've had so many conversations with people who feel confused or frustrated by Social Security. And honestly, I get it. The rules are complicated, the terminology isn't intuitive, and the rumors spread faster than the facts.

But a few myths show up again and again, and believing them can shrink your retirement income by thousands of dollars over your lifetime.

Myth 1: "Social Security is going bankrupt."

This one is everywhere, but it's not accurate.

Social Security isn't running out of money. The program faces a funding gap in the 2030s, which could reduce future benefits if Congress doesn't act. But workers will still be paying into the system, and benefits will still be paid out.

The conversation is about reductions, not disappearance.

Understanding this helps you plan based on reality instead of fear.

Myth 2: "You should always file at 62."

Filing early is an option, but it's rarely the best one.

If you file at 62, your monthly check is permanently reduced. Waiting until your full retirement age gets you the full amount you earned. Waiting until 70 gives you roughly an 8% increase for every year you delay past full retirement age.

There are situations where filing early makes sense, but "always file at 62" isn't one of them.

If you want to run your own numbers, your mySocialSecurity account shows what you'd earn at different ages.

If you're planning ahead for retirement, moving your emergency fund to a high-yield savings account can help you earn more than 10x the national average. See some of the best online rates today.

Myth 3: "Your benefit won't change if you keep working."

Your benefit absolutely can change.

Social Security uses your 35 highest-earning years to calculate your check. If you're still working and earning more than you did earlier in your career, you could replace a lower-earning year with a higher one.

That can raise your monthly benefit for the rest of your life.

Even part-time income can help if it bumps out a low-earning year.

Myth 4: "Spousal benefits are automatic."

They're not.

Spousal benefits don't kick in unless you apply, and they depend on your partner's work history, your age, and whether your spouse has filed for their own benefits. The same goes for survivor benefits.

Missing these rules can cost couples a lot of money. Coordinating the timing of each person's claim often leads to a higher combined household benefit.

If you're unsure how spousal benefits work for you, a short questionnaire from our partner, SmartAsset, helps match you with up to three fiduciary financial advisors, each legally bound to work in your best interest.

Myth 5: "COLA increases guarantee more buying power."

The annual cost-of-living adjustment is designed to help your check keep up with inflation. But in many years, prices rise faster than the COLA does.

That means your COLA increase doesn't always translate to more real spending power.

This is why building your own savings and income streams matters. Social Security alone can't outpace rising living costs.

The real takeaway

Social Security is one of the most important pieces of your retirement plan, but it's also one of the most misunderstood. The more you understand the rules, the more money you get to keep.

If you want a bigger check, start by checking your earnings record, running your claiming-age estimates, and coordinating benefits with your spouse. Small steps can add up to real money over your lifetime.