The internet makes it easy to access news, but that can be both a blessing and a curse. Just as there's a lot of misinformation circulating about COVID-19 itself, there's also a fair amount of false data to be heard about Social Security. Buying into the following myths is apt to make an already stressful period of life even more harrowing, so don't fall into these traps.
1. COVID-19 will wipe out Social Security completely
Social Security's primary source of revenue is payroll taxes. This year, employees pay a 12.4% tax on up to $137,700 in earnings. Salaried workers pay half of that 12.4%, and the companies they work for pay the other half. Self-employed workers, meanwhile, pay the entire 12.4%.
Because so many Americans are currently out of a job, and therefore aren't subject to payroll taxes on their wages, it's clear that Social Security is not only losing revenue at present, but it's likely to do so for much of the year. While that may constitute a financial setback for Social Security, there's no reason to believe it will doom the program forever. Once the economy recovers, we're apt to see the unemployment rate decline, at which point Social Security will get to enjoy a healthier revenue stream. Even if current unemployment levels hold steady for another year, it won't be enough to wipe the program out -- not even close.
2. You can't apply for Social Security during the COVID-19 crisis
Back in March, Social Security closed its field offices in an effort to support social distancing and protect our most vulnerable population. As such, you may be led to believe that you can't file for benefits.
Thankfully, that's not true. You can easily create a Social Security account online and register for benefits when you're ready -- provided you're at least 62 years of age.
3. Social Security recipients who lose their jobs during COVID-19 can't claim unemployment benefits
Some people work and receive Social Security benefits simultaneously. If that's your situation and you lose your job, you might assume that collecting Social Security will render you ineligible for unemployment benefits. But again, that's not true.
It used to be the case that some states would reduce your unemployment benefits if you were collecting Social Security at the time of your filing, but that practice has been eliminated. As such, you can tap both income sources if you're out of work during the pandemic.
Furthermore, if you collect both Social Security and a paycheck from work prior to reaching full retirement age, you may have some benefits withheld if your work income exceeds what's known as the earnings test limit. But unemployment benefits don't count as wages toward that limit, so they shouldn't impact your Social Security income at all.
At a time when there are so many reasons to be anxious, the last thing you need is to fall victim to misinformation. Avoid buying into the above myths, and you'll spare yourself some unnecessary stress.