Social Security & Medicare
Understanding how Social Security fits into your retirement picture is crucial — but myths and misinformation often get in the way.
Social Security is the major source of income for many seniors. In 2026, an average of nearly 71 million Americans per month will receive a Social Security benefit, totaling approximately $1.65 trillion in benefits paid during the year.¹
Social Security is part of the three-legged stool that the Office of Personnel Management (OPM) has created for your retirement. The stool consists of your pension, your Social Security income, and the Thrift Savings Plan (TSP).
Social Security may seem straightforward, but there's more to it than many federal employees realize. The rules around eligibility, claiming age, earnings, spousal benefits, and taxes can all affect what you receive — and common myths can make an already complex program even harder to navigate. What you don't know could influence both the timing of your decision and the amount of income you receive in retirement.
6 Common Myths About Social Security
Myth #1: Social Security benefits won't be available when I retire.
While discussions about Social Security's solvency persist, if you're already in retirement and receiving benefits, it's unlikely to significantly impact you. For those not retired yet, ongoing monitoring and adjustments with a financial professional can address potential changes.
Myth #2: Social Security will be a major source of retirement income.
Although Social Security serves as supplemental income, relying solely on it is usually insufficient. It's just one part of your three-legged stool of retirement planning, and a comprehensive strategy, incorporating various income sources, is essential for maintaining your desired lifestyle.
Myth #3: Social Security benefits don't keep up with inflation.
Social Security payments are designed to adjust for the cost of living. Annual evaluations lead to cost-of-living adjustments (COLAs). For 2026, benefits are set to increase by 2.8%, demonstrating the program's adaptability to inflation.
Myth #4: You can outlive Social Security.
Social Security continues until your death, with government backing and inflation adjustments. Unlike other income streams, it provides a reliable monthly payment, offering financial security throughout your lifetime.
Myth #5: I should wait as long as possible to claim Social Security benefits.
While delaying benefits increases monthly payments, it's not universally beneficial. Factors like health, family life expectancy, and tax considerations should be weighed for your personal situation. Consulting with a financial professional before retirement can help you plan the optimal age for claiming benefits.
Myth #6: Social Security income isn't subject to taxes.
Despite being a federal program, Social Security income might be taxable if your modified adjusted gross income exceeds specific limits. Up to 85% of benefits can be taxed, affecting approximately 40% of recipients, according to the Social Security Administration.
Bottom Line
As you approach retirement, understanding how Social Security fits into the bigger picture is crucial. By clearing up these six common misunderstandings, you're in a better position to make informed decisions that can protect and maximize your retirement income.
Remember, Social Security is just one part of your federal retirement benefits. Coordinating it wisely with your FERS or CSRS pension and TSP can help ensure a more stable financial future. Don't leave it to guesswork — take the time to understand your options, ask questions, and seek guidance when needed. Your retirement is too important to be built on myths.
¹ Social Security Administration
Social Security: What, Why, How & When
Understanding the intent, decision, calculation, timing, taxes, and earnings test behind Social Security is essential before you claim. Here are the most frequently asked questions we receive.
The Intent
The Social Security program was designed to provide a retirement benefit funded throughout your entire working life — 6.2% of all your wages. It is intended to be payable at your full retirement age (also called your normal retirement age). The year in which you were born determines your full retirement age. For example, if you were born in 1950, your full retirement age is 66.
The Decision
You get to decide when to start drawing Social Security benefits, any time between age 62 and 70. There is no benefit to waiting beyond age 70. Within the first 12 months of starting benefits, you can change your mind — but you must repay all benefits received. This is your only do-over.
The Calculation
The benefit calculated for you at full retirement age is called your Primary Insurance Amount (PIA). The Social Security Administration takes your highest 35 years of inflation-adjusted earnings to determine your Average Indexed Monthly Earnings (AIME). If you have fewer than 35 years of earnings, those missing years count as zero and reduce your benefit.
The Timing
Taking benefits at 62 results in a permanent 30% reduction penalty. Waiting until 70 increases your benefit significantly. For example: $1,200/mo at 62, $1,714/mo at 67 (FRA), and $2,125/mo at 70. Once you begin receiving benefits, cost-of-living adjustments apply each year.
The Taxes
At the federal level, up to 85% of your Social Security benefits may be taxable depending on your Modified Adjusted Gross Income (MAGI). At the state level, as of 2024, only nine states tax Social Security benefits: Colorado, Connecticut, Kansas, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont.
The Earnings Test
If you are drawing Social Security, are under your full retirement age, and have wages exceeding $24,480/year (2026), your benefit will be reduced by $1 for every $2 earned over that limit. Pension income, TSP withdrawals, and investment income do not count. Once you reach full retirement age, the earnings test no longer applies.
Benefit Reduction Chart by Claiming Age
| Age at Claim | Months Early | Total Reduction | % of Benefit Received |
|---|---|---|---|
| 62 | 60 | 30.0% | 70.0% |
| 63 | 48 | 25.0% | 75.0% |
| 64 | 36 | 20.0% | 80.0% |
| 65 | 24 | 13.3% | 86.7% |
| 66 | 12 | 6.7% | 93.3% |
| 67 (FRA) | 0 | 0.0% | 100.0% |
Frequently Asked Questions
FAQ #1: How much does working longer really affect my Social Security benefit amount?
If you already have 35 years of earnings, working longer won't increase your benefit significantly. However, if you have fewer than 35 years, each additional year of work replaces a zero in the calculation — meaningfully increasing your benefit.
FAQ #2: If I choose to live overseas, do I still get my Social Security benefit?
Likely yes, as long as you are not living in Cuba or North Korea, where US payment bans apply. Be sure to update your physical address with the Social Security Administration before leaving the country.
FAQ #3: My spouse and I will both be eligible to draw Social Security. Is there a strategy to maximize what we get?
Yes, but it depends on the age difference between you, the difference in your earned benefits, and your respective health conditions. Consulting a financial professional with Social Security planning tools is strongly recommended.
FAQ #4: I'm married. Can my current spouse collect off of my benefits? Does it affect how much I get?
Once you file, your spouse becomes eligible for up to half of your full retirement age benefit — whichever is higher between their own benefit and half of yours. It does not reduce what you receive. Together you would receive 150% of your benefit.
FAQ #5: I'm widowed. Can I collect off of my deceased spouse's benefit?
Yes, but you receive one or the other — your own earned benefit or your deceased spouse's benefit, not both. The survivor benefit percentage is based on your age at the time you claim, not your spouse's age at death. Visit SSA.gov for detailed information.
FAQ #6: If I'm very ill, does it always make sense to take benefits at age 62?
If it's only you to consider and your life expectancy is short, taking benefits at 62 makes sense. However, if you have a surviving spouse, your early claiming decision permanently affects their survivor benefit. Taking benefits at 62 with a 30% penalty means your spouse's survivor benefit will also reflect that reduction.
FAQ #7: I'm divorced. Can my former spouse collect off of my benefits? Does it change how much I get?
If your marriage lasted 10 or more years and your ex-spouse is still unmarried, they can draw benefits off your work record. It does not reduce your benefit in any way.
FAQ #8: I am a CSRS employee. Will I get all of the Social Security benefit listed on my statement?
It depends on how many years of substantial Social Security earnings you have. With 30 or more qualifying years, you avoid the Windfall Elimination Provision (WEP) and receive your full benefit. With fewer than 30 years, WEP may reduce your benefit by up to $558/month or half your benefit, whichever is less.
FAQ #9: Am I better off taking Social Security at 62 and preserving my investments, or the reverse?
Unlike investments, your Social Security benefit cannot be left to heirs — only your spouse can benefit from your record. Investments left untouched can be passed on. Whether it makes sense to take the 30% early penalty while leaving investments to grow depends on your investment performance, health, and overall financial picture.
FAQ #10: I'm torn between taking Social Security at 62 versus waiting until 70. Is there a breakeven point?
Yes — approximately age 80. If you live past 80, waiting until 70 yields more total lifetime income. If you live to exactly 80, both strategies produce roughly the same total. The longer you live beyond 80, the more valuable the delayed strategy becomes. Spousal benefits and other factors should also be weighed.
Have Questions About Social Security & Medicare?
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