Great depression

Four Social Security Myths

By Larry Ferstenou

Based on You CAN Retire Young

The younger you are upon reading this article, the more concerned you need to be about your future Social Security benefits. Here are four myths you should know about: 

(1) It’s in the Constitution: Contrary to what many believe, Social Security is not included in the U.S. Constitution. It was part of the Great Depression New Deal package of programs passed in 1935.

(2) There is a Social Security Account With Your Name on It: Social Security is an inter-generational program, meaning that today’s workers are supporting today’s retirees. There is no account with your name on it collecting real interest, and no guarantee that when you reach retirement age the generation under you will be contributing enough to support your retirement benefits. 

(3) The Trust Funds: The Social Security taxes we pay today are funding the benefits of today’s retirees. Although more money is currently being taken in than what benefits are being paid to our senior citizens, that surplus is being borrowed by the federal government and spent as fast as it’s coming in. The surplus money is being replaced with IOUs. When the time comes to pay back those IOUs (which is projected to begin in about 14 years), where do you think the federal government is going to come up with the money? 

(4) You Will be Able to Retire at 65: Most people do not realize that the age to retire with full benefits was changed in 1983. Under the new schedule, only those born in 1937 or earlier can retire at 65 with maximum benefits. Those born 1943 to 1954 will have to wait until they are 66, and everyone born 1960 or later will have to wait until they turn 67. 

Social Security is not guaranteed, you will probably retire a year or two later than anticipated, and the benefits you do receive may be less than you expect. You are going to need other income sources to secure your retirement. For more information on the myths exposed herein (as well as for a wealth of other information on Social Security), visit the Social Security Administration’s Web site at www.ssa.gov, or try the Web site of the National Center for Policy Analysis at www.teamncpa.org.

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Larry Ferstenou retired over ten years ago at age 42 and is the author of You CAN Retire Young: How to Retire in Your 40s or 50s Without Being Rich (American Book Business Press, 2002). More information can be found at www.youcanretireyoung.com. Copyright © Larry A. Ferstenou, 2002–2003.