10 Social Security Myths That Refuse to Die

The system is going broke, the retirement age is 65, and other common misconceptions

Andy Markowitz,

Updated June 16, 2026

AARP

Comments

En español

Updated June 16, 2026

Ryan Johnson

Social Security is enormous and complex, paying out some $137 billion in benefits a month to more than 71 million retirees, people with disabilities and their family members. It's wildly popular: Ninety-six percent of Americans consider Social Security important, according to a June 2025 AARP survey, with support nearly equal across party lines. And it is key to older Americans’ financial health, providing at least half of family income for 2 in 5 people ages 65 and older.

Given its significance in American life, concerns about Social Security’s current and future state are understandable and widespread. Some of those concerns, along with the many changes to Social Security over its 90-plus-year history, have given rise to misconceptions about how it is funded and how it works. Here are the facts behind 10 of the most stubborn Social Security myths.

Myth #1: Social Security is going broke

The facts: As long as workers and employers pay payroll taxes, Social Security will not run out of money. It's a pay-as-you-go system: Revenue coming in from FICA (Federal Insurance Contributions Act) and SECA (Self-Employed Contributions Act) taxes largely cover the benefits going out.

Key takeaways

Concerns about Social Security’s funding and future have given rise to numerous misconceptions.
Some persistent myths stem from changes to Social Security’s retirement age and taxation of payments.
Rules on benefit options for divorced people and how continuing to work affects your payments are often misunderstood.

Social Security does face funding challenges. For decades, it collected more than it paid out, building a surplus that stood at $2.56 trillion at the end of 2025. But the system is now paying out more than it takes in, largely because the retiree population is growing faster than the working population and living longer. Without changes in how Social Security is financed, the surplus is projected to run out in 2034, according to the latest annual report from the program’s trustees.

Even then, Social Security won’t be broke. It will still collect tax revenue and pay benefits. But that revenue will only cover 83 percent of scheduled benefits, according to the latest estimate. To avoid that outcome, Congress would need to take steps to shore up Social Security’s finances, as it did in 1983, the last time the system's reserves were nearly depleted. The steps then included raising the full retirement age (see Myth #2), accelerating an increase in the payroll tax rate and introducing an income tax on benefits (see Myth #8).

Myth #2: The Social Security retirement age is 65

The facts: Full retirement age, or FRA — the age when a worker qualifies to file for 100 percent of the benefit calculated from lifetime earnings history — is 66 and 10 months for people born in 1959 and 67 for those born in 1960 and after. (Anyone born before 1959 has already reached it.)

The 65 threshold is a former Social Security truth that has become a myth. When Social Security was created in 1935, 65 was set as the age of eligibility. In later decades, the minimum eligibility age was lowered to 62, at which people could claim a reduced benefit, but 65 remained the standard for full retirement.

That changed with the 1983 overhaul, which raised the retirement age to reduce Social Security's costs. The increase is being phased in over time; 2002 was the last year in which people turning 65 could claim their full benefit.

But the myth dies hard: A 2025 survey by insurance company Allianz Life found that a majority of Americans (55 percent) still believe the Social Security full retirement age is 65.

Myth #3: The annual COLA is guaranteed

The facts: Since 1975, Social Security law has mandated that payment amounts be adjusted annually to keep pace with inflation. However, there is no requirement that this cost-of-living adjustment (COLA) result in a yearly increase.

The COLA is tied to a federal index of prices for select consumer goods and services called the CPI-W. Benefits are adjusted annually based on changes in the CPI-W from the third quarter of one year to the third quarter of the next. In the third quarter of 2025, the index showed a 2.8 percent increase in prices, so benefits increased by 2.8 percent in 2026.

But if the index doesn’t show a statistically measurable rise in prices — if there’s effectively no inflation — then there's no adjustment to benefits. This has happened three times since the current formula was adopted, in 2010, 2011 and 2016. Whether or not it produces a benefit increase, this process is automatic; it does not involve the president or Congress. They would have to take separate action to change the COLA.

Myth #4: Members of Congress don't pay into Social Security

The facts: A common complaint about Social Security is that members of Congress don’t bother fixing the system because it doesn’t cover them. Actually, it does. Members of Congress came under the Social Security umbrella in 1984, along with the rest of the federal workforce, as part of the sweeping changes enacted the previous year.

Before that, senators and representatives did not pay into Social Security and were instead fully covered by the Civil Service Retirement System (CSRS), a federal pension plan. Those in office on Jan. 1, 1984, were allowed to remain in CSRS, but only in conjunction with Social Security. (If you’re keeping score, five senators and four House members remain from those days.)

Those elected since are covered by Social Security as well as a pension plan that replaced CSRS. Either way, members of Congress pay into Social Security just like most American workers.

Myth #5: The government raids Social Security to pay for other programs

The facts: The two trust funds that pay out Social Security benefits — one for retirees and their survivors, the other for people with disabilities — have never been part of the federal government's general fund. Social Security is a separate, self-funded system. The federal government does, however, borrow from Social Security.

Here's how: Social Security's tax revenue is, by law, invested in special U.S. Treasury securities. As with all Treasury bonds, the federal government can spend the proceeds on a variety of programs. But as with all bondholders, Treasury has to pay the money back, with interest. Social Security redeems the securities to pay benefits.

This borrowing fuels the notion that the government is raiding Social Security or even stealing from it, leaving it with nothing but IOUs. But the government has always made full repayment, and the interest increases Social Security’s assets, to the tune of $68.9 billion in 2025.

Myth #6: Undocumented immigrants drain Social Security

The facts: Some have blamed problems with Social Security's financial health on undocumented immigrants draining the system's resources. It’s a popular complaint, but it's false. Noncitizens who live and work in the U.S. legally can qualify for Social Security under the same terms as native-born and naturalized Americans, but undocumented people are not eligible to claim benefits.

There is evidence that undocumented workers improve Social Security’s bottom line. Some do obtain Social Security numbers under false pretenses, and payroll taxes are withheld from their wages even though they are not eligible to later collect benefits. Undocumented immigrants paid $25.7 billion into Social Security in 2022, according to a July 2024 report from the nonpartisan Institute on Taxation and Economic Policy.

Myth #7: Social Security is like a retirement savings account

The facts: The government does not stow your payroll tax contributions in a personal account for you, to be paid out with interest when you retire. Your benefit is based on how much money you earned over your working life, not on how much you paid into the system. As noted above, those contributions fund benefits for current retirees (and their survivors, and people with disabilities). When you retire, those still working will cover your benefits, and so on.

Over their lifetimes, most people get more from Social Security and Medicare (which is also partially funded by payroll tax contributions) than they pay in, according to analyses by the Urban Institute, a nonpartisan think tank. Still, you might think of Social Security less like saving for retirement — there are other vehicles for that — and more like an earned benefit the government promises to pay so you have at least some income in your later years.

Emphasis on “some": Contrary to another common misperception, Social Security is not meant to replace your entire work income. On average, it provides about 40 percent of a beneficiary's preretirement earnings. The formula for calculating benefits is weighted so that they replace a larger percentage of income for lower-wage workers and a lower percentage for upper-income earners.

Myth #8: You don't pay taxes on Social Security benefits

The facts: This was true until 1984. The Social Security overhaul passed by Congress and signed by President Ronald Reagan the year before included a provision that made a portion of Social Security benefits taxable, depending on your income level.

You will pay federal income tax on up to 50 percent of your benefits if your income for the year is $25,000 to $34,000 for an individual filer and $32,000 to $44,000 for a couple filing jointly. Above those thresholds, up to 85 percent of benefits are taxable. Below them, you don't owe the IRS anything on your benefits. (Roughly speaking, Social Security counts as income the money you get from work, pensions and investments; nontaxable interest; and half of your Social Security benefits.)

You might also owe state taxes on your 2026 Social Security income if you live in Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah or Vermont. Their rules on taxing benefits vary widely; contact your state tax agency to learn more.

Myth #9: An ex-spouse's benefits come out of your own

The facts: If you are divorced, your former spouse may be eligible to collect Social Security benefits on your earnings record (and vice versa). As with benefits for a current spouse, these can be up to 50 percent of the benefit amount you are entitled to at full retirement age.

But those ex-spouse (or spouse) benefits don’t reduce your Social Security. They are distinct payments and have no effect on what you receive each month, even if both a current and a former spouse (or multiple former spouses) are collecting them. You get the full benefit you’re eligible to receive, based on your earnings history and the age when you filed for Social Security.

Myth #10: You lose benefits permanently if you keep working

The facts: Social Security does have a rule, called "earnings test," that can temporarily reduce the payments for people who still work. But it doesn’t apply to all working beneficiaries and is not permanent.

The rule only covers people who claim benefits before full retirement age and continue working. In this circumstance, Social Security withholds a portion of benefits if earnings from work exceed a set cap, which changes annually and differs depending on how close you are to full retirement age.

In 2026, if you are working, collecting benefits and will not reach full retirement age until a later year, your Social Security payments will be reduced by $1 for every $2 in earnings above $24,480. If you will reach FRA in 2026, the formula is $1 less in benefits for every $3 in earnings above $65,160.

In the month when you hit FRA, the earnings test goes away — there's no benefit reduction, regardless of your income. Social Security also adjusts your benefit upward so that over time, you recoup the money that was withheld.

%{postComment}%

Andy Markowitz is an AARP senior writer and editor covering Social Security and retirement. He is a former editor of the Prague Post and Baltimore City Paper.