Social Security is a massive retirement plan, as most American senior citizens are receiving, or will eventually receive, Social Security benefits. However, there is much about the Social Security program that's often misunderstood. Here are five particularly troubling misconceptions about Social Security that could end up costing you money.

1. Social Security retirement age is 65

This is a common, but understandable misconception. Many employers use 65 for their full retirement age, 65 is also the age of eligibility for Medicare, and 65 used to be the Social Security full retirement age, so it makes sense that people may get this confused.

Social Security card tucked between bills of U.S. currency.

Image source: Getty Images.

However, the last people who had a full Social Security retirement age of 65 were born in 1937. Everyone who hasn't yet reached the maximum age to claim Social Security has a full retirement age of 66, 67, or somewhere in between. This is important to know, as claiming benefits at age 65 will result in a permanent reduction.

Specifically, here's a chart that can help you find your own full Social Security retirement age.

If You Were Born In...

Your Social Security Full Retirement Age Is...

1954 or earlier

66 years


66 years, 2 months


66 years, 4 months


66 years, 6 months


66 years, 8 months


66 years, 10 months

1960 or later

67 years

Data source: Social Security Administration.

2. Social Security is going broke, so I'd better claim early

You may have heard that Social Security will be broke soon and therefore won't be able to pay any more benefits. And many people think they need to claim Social Security as soon as possible, just in case this happens.

Here's the short version of the true story. Social Security is currently sitting on reserves of nearly $3 trillion and is expected to run a surplus for the next several years. Beginning in the 2020s, deficits are expected to begin, and the program's reserves are expected to run out in 2034. That much is true.

Still, there are two key points you need to know:

  1. Even if that happens, the incoming payroll taxes will still be enough to cover more than three-fourths of benefits. So Social Security benefits wouldn't simply stop.
  2. It assumes that nothing will be done to fix the situation. There are several ways Social Security can be fixed, and this isn't the first time Social Security's financial state was in jeopardy. History tells us something will be done.

To be clear, there are plenty of good reasons to claim Social Security before you reach your full retirement age. However, fears that Social Security will go broke are not one of them.

3. Social Security will be enough to live on in retirement

Experts generally suggest that you'll need 70%-80% of your pre-retirement income to maintain the same standard of living after you retire. Meanwhile, Social Security is designed to replace 40% of the average worker's income. Keep in mind that Social Security benefits are weighted in favor of lower-income workers. If you have an above-average salary, your benefits could be considerably less than 40% of your pay.

Simply put, don't use the knowledge that you're going to get Social Security benefits as an excuse to not save as much as you should for retirement. It's important to have a realistic idea of how much you need to save for a comfortable retirement, and not just rely on Social Security.

4. I'll never get back as much as I put in to Social Security

Many people think of Social Security as some type of scheme where you'll never get as much in benefits as you put in. This simply isn't true.

According to a 2013 study by the Urban Institute, the average two-earner couple with each spouse earning $44,800 (in 2013 dollars) would pay $816,000 in payroll taxes over their lifetimes but would end up getting more than $1 million in Social Security and Medicare benefits.

This situation holds true in all cases, even for people several years away from eligibility who have a full retirement age of 67.

5. Stay-at-home parents and other non-working spouses aren't eligible

Don't think that just because you're a one-income household, or you or your spouse have been the primary earner, that you'll only get one Social Security benefit check after you retire.

Thanks to Social Security spousal benefits, even if one spouse in a married couple didn't work at all, he or she is still entitled to a retirement benefit. Check out our Spousal Benefits guide for details, but in a nutshell, the program gives a retirement benefit at full retirement age equal to half of the higher-earning spouse's.

For example, let's say you worked for 40 years and are entitled to a $1,800 monthly Social Security benefit at full retirement age. On the other hand, your spouse stayed home and raised your children, and didn't work at all. Thanks to spousal benefits, he or she could get as much as $900 per month at full retirement age based on your work record. This can be a major income boost for retired couples.

The bottom line

The more you know about Social Security, the better equipped you'll be to make smart decisions for you and your family. This is just a sampling of common misconceptions that could be costly to ill-informed seniors, so take the time to learn the ins and outs of the Social Security program before you reach the age of eligibility.