Transcript:

How well do you understand Social Security? Surveys show that most Americans fail basic questions about how the system works, including high-income earners and even millionaires.

In today’s video, I’ll break down the seven most common myths and misunderstood facts about Social Security and show you how knowing the truth could put thousands of extra dollars in your pocket.

I’m Hunter Brockway with Boca Retirement Strategies, where we help retirees and pre-retirees simplify Social Security, taxes, and income planning so they can retire with clarity and confidence.

Even affluent investors underestimate Social Security’s importance. A recent study found that 29% of investors with over $5 million expect to get a quarter or more of their retirement income from Social Security. So, no matter your income, understanding how the system really works matters.

Myth number seven: True. You may be eligible for benefits based on your ex-spouse’s record.

If you were married for at least 10 years, are currently unmarried, and your ex is eligible for Social Security, you can claim benefits on their record, even if they’re remarried.

Here’s the key: You don’t reduce their benefit by claiming it. You’re simply tapping into the same system. For some retirees, especially those who didn’t work full-time or earned much less than their spouse, this can double their lifetime benefit.

Myth number six: True. Social Security offers income for life.

Unlike a 401(k) or IRA, you can’t outlive Social Security. It’s effectively an annuity backed by the U.S. government. Whether you live to 75 or 105, your benefits keep coming. And that guaranteed income can make it easier to invest or spend confidently in retirement.

That’s why many advisors call Social Security the foundation of your retirement paycheck.

Myth number five: True. Fewer than 35 working years equals a smaller benefit.

Your Social Security benefit is calculated using your highest 35 years of earnings, adjusted for inflation. If you worked fewer than 35 years, the missing years are counted as zeros, which drags down your average.

So, even part-time or later-in-life work can help replace some of those zeros and boost your benefit.

Myth number four: True. Someone earning $200,000 pays the same Social Security tax as a millionaire.

Here’s one most people don’t realize. Social Security taxes only apply up to a wage cap: $168,600 in 2024. It adjusts annually.

That means someone making $200,000 and someone making $2 million both pay the same maximum Social Security tax. After that, income above the cap isn’t taxed for Social Security at all.

It’s a regressive system by design. Higher earners hit the cap faster.

Myth number three: False. Social Security is not protected against inflation.

That’s wrong. Social Security is protected against inflation through Cost-of-Living Adjustments, or COLAs.

In 2026, for example, benefits will increase 2.8% based on inflation. Some years are higher, like the 8.7% jump in 2022. Others are lower.

These COLAs help protect your purchasing power, though they don’t always keep up with rising costs like housing and healthcare.

So yes, Social Security does adjust—just sometimes maybe not enough.

Myth number two: False. Workers pay Social Security taxes on all of their income.

Another big misconception: You don’t pay Social Security tax on every dollar you earn.

You pay 6.2% on income up to that same wage base we just discussed. Above that, the Social Security portion stops, though the Medicare tax continues.

For self-employed people, it’s doubled because you pay both the employee and employer side—12.4% up to that limit.

Myth number one: True. You can undo a claiming decision within 12 months.

Few people know this. You get a one-time do-over if you claimed Social Security too early.

Within the first 12 months of starting your benefits, you can withdraw your application, repay the benefits you’ve received, and reset your claim as if it never happened.

That gives you a second chance to delay benefits and earn up to 8% per year in growth up until age 70.

Let’s recap the seven facts.

Number seven: You can claim on an ex-spouse’s record.

Number six: Social Security is lifetime income.

Number five: Fewer than 35 working years reduces your benefit.

Number four: High earners pay the same maximum Social Security tax.

Number three: It is inflation-adjusted through COLAs.

Number two: You don’t pay Social Security tax on all of your income.

And number one: You can undo your claim within the first year.

If you got even one of these wrong, you’re in good company. Studies show only 14% of Americans feel very confident about their Social Security knowledge.

So, what does this mean for you?

Social Security isn’t simple, but understanding the rules can literally be worth hundreds of thousands of dollars over your lifetime. Knowing when and how to claim, how your work history affects benefits, and how to coordinate your spousal or divorce benefits are some of the most valuable planning decisions you’ll ever make.

I put together a free tax retirement workbook that covers top retirement planning topics and how to fit them into your plan. You can download it using the link in the description below.

I’m Hunter Brockway with Boca Retirement Strategies. Enjoy your successful retirement with more money, less stress, and fewer taxes.