Social security has a lot of complex rules, and most Americans do not know them. In fact, according to a recent study by Nation-widemore than half of all adults surveyed received 10 important true or false questions about the retirement benefit program incorrectly.
Their misconceptions included how long you can charge Social Security, whether these benefits are taxed as well as Medicare premiums, and whether your income affects how much you pay.
So what are the 10 statements that the majority of Americans were wrong about? Here they are so you can see if you are capable of doing better than most of your peers.
1. Social security offers guaranteed income for life
Only 49% of the persons correctly stated that this statement was true.
The reality is that once you start receiving retirement checks, they will continue for as long as you live. For most people doing this Social Security the only source of income they can count on for their entire retirement, as savings can run out. The fact that these services provide a guaranteed income is an important reason why it pays to try to maximize them.
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2. Divorced persons may still be entitled to spousal benefits from Social Security
Only 47% of people knew that this statement was also correct.
The good news for those whose marriage has ended is that it is possible to get these benefits as long as the marriage lasted for at least 10 years, and as long as you have not remarried another.
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3. Social benefits are tax-free
The correct answer, false, was given by only 45% of the population. While Social Security is tax free for some recipients, this is not the case for everyone.
In fact, single tax registrars with a provisional income of $ 25,000 or higher and married joint registrars with a provisional income of $ 32,000 or higher will be taxed on part of their benefits. Provisional income is half of social benefits, all taxable income and part non-taxable income.
Thirteen states also tax benefits, for at least some retirees.
4. Medicare premiums are not affected by your income
Only 38% of people responded correctly to this statement as false. The reality is that higher wage earners end up paying more than the standard premium – with some people paying as much as $ 578 per month in 2022. Wealthy retirees need to be aware of the potential for more expensive health care costs.
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5. If you require social security early, your partner’s spouse benefits will be affected
Only 37% of people knew that this statement was true. Spouses should recognize that their claims decisions can affect both spouse and survivors’ benefits and should work together to create a strategy to maximize overall living income.
6. If you work for less than 35 years, you will receive a smaller social security benefit
Only 35% of the people said exactly that this was a true fact.
This may come as a surprise as you only need 10 years of work history to qualify for retirement. But no matter how many years you actually work, the unemployment benefit is calculated on the basis of the average salary in your 35 highest earning years. Working less time means that your Social Security income will be reduced by including $ 0 payroll in the average paycheck used to determine your benefit.
7. You can not sign up for Medicare without being signed up for Social Security
This statement is false, but only 35% of people knew it. When you turn 65, you will be eligible for Medicare even if you do not receive Social Security. And late registration can lead to higher future prizes.
8. A person earning $ 150,000 pays the same social security tax as millionaires
This surprising fact was known only by 33% of the respondents in the survey.
The reason why this is the case is that there is a “wage base” and social security taxes are levied only up to this limit. In 2022, the salary base is $ 147,000. So whether you earn $ 150,000 or $ 10 million a year, you will only pay $ 147,000 in social security taxes. Of course, you also do not get credit for income above this level when the benefits are calculated.
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9. Social security is not protected against inflation
Surprisingly, only 32% of the people correctly stated that this statement was false. The good news is that there is inflation protection built into the benefit program, as seniors receive periodic cost-of-living adjustments when the consumer price index shows a year-on-year increase in the price of goods and services.
10. Workers pay social security tax on their entire income
Finally, only 30% of the population knew that it was false for workers to pay taxes on their entire income. The reason why this is false is because of the above mentioned salary base limit.
How many of these statements did you correctly guess were true or false? Hopefully you did better than the majority of Americans. And if you did not, at least now you know the truth and can make more informed choices about your benefit claim.
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