Social Security: 3 Key Misconceptions Most Americans Have

1. Wrong: Workers must pay Social Security taxes on all of their income

According to the Nationwide Retirement Institute 2023 Social Security Survey, 74% of respondents believed that workers must pay Social Security taxes on all of their income. However, there is a taxable maximum of $160,200 for 2023, and Social Security payroll taxes aren’t applied to any income above this level.

2. Wrong: You can’t change your mind after claiming Social Security benefits

Around 71% of respondents in the Nationwide survey answered “false” to the statement, “You can undo a claiming decision within the first 12 months.” However, the Social Security Administration allows individuals to cancel or withdraw their benefits applications up to 12 months after benefit approval, although any benefits received up to that point must be paid back.

3. Wrong: Social Security isn’t protected against inflation

Roughly 70% of survey respondents didn’t think that Social Security benefits are protected against inflation. In reality, Social Security recipients receive an annual cost-of-living adjustment (COLA) specifically intended to provide inflation protection. However, some argue that the inflation metric used to calculate COLAs doesn’t accurately reflect cost increases that impact seniors.

One other big misconception

24% of respondents agreed with the statement, “I will not get a dime of the Social Security benefits I have earned.” This misconception likely stems from the fact that Social Security’s trust funds are projected to run out of money in the next decade. However, ongoing payroll taxes can still fund most of the scheduled Social Security benefits, and benefit cuts aren’t inevitable. Congress and the president have options to bolster Social Security and avoid cuts.