Most Americans are unaware of the many complicated laws that govern Social Security. In fact, a recent survey by Nationwide found that more than half of all respondents tested were inaccurate on 10 crucial true or false questions about the retirement benefits program.
In 1935, they established the Social Security program to offer retirement income to qualified American employees. Later, it was expanded to include the majority of the workforce. It is still America’s pension plan and the financial lifeline that many individuals rely on to stay afloat in retirement.
According to Investopedia, Social Security pays at least half of the income to 37 percent of senior men and 42 percent of senior women. It accounts for at least 90% of the elderly men income for 12% old men and 15% old women.
10 Social Security questions most Americans got wrong
So, what are the ten facts about which most Americans are mistaken? Here they are so you can see if you can outperform most of your peers according to MSN.
Social Security provides a lifetime income guarantee
The truth is that once you start getting retirement benefits, you will continue to receive them for the rest of your life. However, for most people, this means that Social Security will be their only source of income for the rest of their lives, as savings may run out. One of the main reasons to aim to maximize these advantages is because they provide guaranteed income.
Divorced people may still be eligible for spousal payments from Social Security
The good news for people whose marriages have ended is that these benefits are still available as long as the marriage lasted at least ten years and you haven’t remarried.
Benefits from Social Security are tax-free
In reality, single filers with a provisional income of $25,000 or more and married joint filers with an initial payment of $32,000 or more will have a portion of their benefits taxed. In addition, half of Social Security benefits, all taxable income, and some non-taxable income are included in provisional income.
Income has no bearing on your Medicare premiums
Higher earners end up paying more than the usual premium, with some paying as much as $578 per month in 2022. Wealthier retirees should be aware of the possibility of higher healthcare costs.
Your partner’s spousal benefits will be affected if you file for Social Security early
Married couples should be aware that their claim decisions might impact both spousal and survivor benefits, and they should collaborate to develop a strategy that maximizes their combined lifetime income.
If you work for less than 35 years, your Social Security payout will be reduced
It may come as a surprise, given that you only need ten years of work experience to be eligible for retirement benefits. However, benefits are computed based on the average income in your 35 most excellent earning years, regardless of how many years you work.
You can’t sign up for Medicare unless you’re also a Social Security beneficiary
Although this statement is untrue, only 35% of individuals know it. Even if you aren’t receiving Social Security, after you turn 65, you are eligible for Medicare. In addition, signing up late may result in higher future premiums.
A person earning $150,000 pays the same amount of Social Security tax as a millionaire
There is a “wage basis,” and Social Security taxes are only assessed up to that amount. The pay base ceiling is set at $147,000 in 2022.
Social Security is not inflation-protected
The good news is that the benefits program includes inflation protection since seniors receive cost-of-living adjustments regularly when the consumer price index shows a year-over-year increase in the cost of goods and services.
Workers need to pay Social Security taxes on all earnings
This isn’t due to the $147,000 wage limit.