Social Security myths often stem from outdated information or a misunderstanding of how the system’s funding is structured. For the 2026 tax year, several of these misconceptions have gained traction due to recent legislative debates and demographic shifts.

Myth 1: “Social Security is going bankrupt.”

This is perhaps the most persistent myth. While the Social Security Trust Funds are projected to be depleted around 2032–2034, this does not mean the program will disappear.

  • The Reality: Social Security is primarily a “pay-as-you-go” system. Even if the trust funds are emptied, the program will still collect payroll taxes from current workers.
  • The Impact: Projections for 2026 suggest that if Congress takes no action by the time the reserves are gone, the SSA would still be able to pay roughly 75% to 80% of scheduled benefits. While a 20% cut would be significant, it is not a total collapse of the system.

Myth 2: ” Undocumented immigrants are draining the fund.”

There is a common belief that people who have not paid into the system are receiving benefits from it.

  • The Reality: To receive Social Security retirement benefits, you must have a valid Social Security number and have earned 40 work credits (roughly 10 years of work).
  • The Impact: Undocumented workers are legally barred from claiming benefits. In fact, many undocumented workers pay Social Security taxes using ITINs or false numbers but never receive the benefits, which actually results in a net gain for the trust fund.

Myth 3: “The government stole the money for other programs.”

Critics often claim that the government has “spent” the Social Security money on unrelated projects, leaving behind “worthless IOUs.”

  • The Reality: By law, Social Security surpluses must be invested in special-issue U.S. Treasury bonds.
  • The Impact: These bonds are backed by the “full faith and credit” of the United States. The government “uses” the money for general spending, but it must pay the trust fund back with interest. To date, the government has never defaulted on these obligations, and the interest earned provides billions in additional revenue for the program each year.

Myth 4: “Working after 62 permanently loses you money.”

Many people believe that if their benefits are withheld because they earned too much while working, that money is gone forever.

  • The Reality: This is part of the “Earnings Test,” but it is a temporary withholding, not a penalty.
  • The Impact: Once you reach your Full Retirement Age (67), the SSA recalculates your monthly benefit to “give back” those withheld months. Over time, your monthly check will be higher than it would have been otherwise, effectively reimbursing you for the withheld funds.

Myth 5: “Social Security will cover all my retirement expenses.”

Many younger workers and even some retirees believe Social Security was intended to be a standalone pension.

  • The Reality: Social Security was designed as a “safety net” to replace only a portion of pre-retirement income.
  • The Impact: On average, Social Security replaces about 40% of a worker’s career-average earnings. Financial planners in 2026 generally recommend that Social Security be just one “leg” of a three-legged stool, alongside personal savings (like a 401(k) or IRA) and traditional pensions.

Source: Social Security Administration (SSA), “Social Security Myths vs. Facts” (2026 Digital Fact Sheet); and AARP, “Social Security: Fact vs. Fiction.”