Dispelling the Biggest Social Security Myths

Myth 1: Social Security Is Running Out of Money

Despite concerns, Social Security is not on the verge of collapse. Projections show that without reforms, the trust fund could be depleted by 2035. However, ongoing payroll taxes would still cover approximately 80% of promised benefits[i]. And Social Security has overwhelming support from citizens and bipartisan legislators. According to the National Academy of Social Insurance’s Social Security at 90 report, over 80% of Americans favor raising taxes to maintain full benefits rather than accepting benefit cuts[ii].

The 1983 Social Security amendments were designed to secure solvency through 2058, but events like the 2008 Great Recession reduced reserves faster than anticipated, moving depletion estimates earlier.

Myth 2: Social Security Is a Ponzi Scheme

Social Security is a transparent, government-managed, pay-as-you-go system, where today’s workers fund retirees’ benefits. Experts like Nobel laureate Paul Krugman and researchers at the Center on Budget and Policy Priorities (CBPP) have called Social Security a highly successful and efficient government program, significantly reducing elderly poverty[iii].

Myth 3: The Program Can’t Be Fixed

Social Security has faced and overcome financial hurdles before, notably with the 1983 amendments that bolstered its solvency. Annually, the Social Security Board of Trustees releases an official report and testifies before Congress about Social Security’s financial outlook, including shortfalls and recommended policy fixes[iv]. Timely adjustments, such as modest tax changes or benefit reforms, can keep the program strong for generations.

Key Social Security Facts for Retirees in 2025

• Cost of Living Adjustment (COLA): Annually, social security benefits are increased for inflation based on the consumer price index. For 2025, Social Security beneficiaries realized a 2.5% COLA; over the past 50 years, COLAs have ranged from 0% to as high as 14.3%!
• Full Retirement Age (FRA): Depending on your birth year, FRA ranges from 65 to 67. Waiting to claim until your FRA results in a monthly benefit approximately 30% higher than claiming at 62.
• Delayed Benefits: For every full year past your FRA that you wait to claim your benefit, it increases 8%. Thus, age 70 claiming results in a 24% higher benefit than age 67.  There is no benefit to waiting past age 70.
• Taxes on Benefits: Up to 85% of benefits may be taxable at the federal level, based on combined income levels.  State taxation varies with some states not taxing social security at all.
• Proof of Life Requirements: The SSA automatically verifies U.S. residents, but requires retirees abroad especially over age 90 to submit annual “Foreign Enforcement Questionnaires (Form SSA-7162). Missed submissions can pause payments, but U.S. embassies and consulates can assist.

Major 2025 Updates to the Social Security System

• Staff Reductions: Approximately 7,000 job cuts across the SSA.
• Office Consolidations: Local SSA offices were merged or closed to streamline operations.
• Digital-First Approach: Increased reliance on my Social Security accounts and digital communication.
• Direct Deposit Push: SSA accelerated the phaseout of paper checks, requiring beneficiaries to enroll in direct deposit. Ensure banking details are updated to avoid payment delays; missed payments will be retroactively corrected.
• Support for International Beneficiaries: U.S. citizens living abroad can access Social Security services through designated embassies or consulates.

Final Takeaway: Stay Informed, Stay Secure

Social Security is a bedrock of retirement security in the United States. While challenges exist, proactive reforms and informed beneficiary action should ensure its continued success. That doesn’t mean that no change to benefits is possible; especially higher earners could see modest reductions in benefits down the road depending on the ongoing costs of the program in relation to the benefit base. Retirees should regularly monitor updates via the Office of the Chief Actuary and use SSA’s official website, ssa.gov, for managing benefits and accounts.

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[i] The 2024 OASDI Trustees Report
[ii] National Academy of Social Insurance; Social Security at 90, January 2025
[iii] Paul Krugman, “The Clean Little Secret of Social Security,” Paul Krugman’s Substack, April 4, 2025, https://paulkrugman.substack.com/p/the-clean-little-secret-of-social. And Center on Budget and Policy Priorities, “Key Principles for Strengthening Social Security,” CBPP, June 6, 2023, https://www.cbpp.org/research/social-security/key-principles-for-strengthening-social-security.
[iv] The 2024 OASDI Trustees Report