Debunking Social Security Myths in 2026: How to Make Smarter Claiming Decisions   

There are many misconceptions about Social Security and how it fits into retirees' financial plans. Miscalculating Social Security decisions can meaningfully influence lifetime income, survivor protection, and tax planning. Because claiming decisions are largely irreversible, small choices made at retirement can have long-term consequences. It is important to carefully review Social Security decisions to ensure they are made deliberately and with accurate information, rather than by assumption or default.     

Myth #1: “Social Security Is Going Broke, So I Should Claim as Soon as Possible”  

Reality: Social Security faces funding challenges, but it is not going bankrupt, and fear-based early claiming is often a costly mistake.  

These concerns stem from projections around the Social Security Old-Age and Survivors Insurance (OASI) Trust Fund, which is currently projected to be depleted around 2033. When combined with the Disability Insurance Trust Fund, depletion is projected around 2035. ¹

Although the reserves will be depleted in less than a decade, Social Security operates primarily as a pay-as-you-go system. Current workers fund benefits for current retirees through payroll taxes. Even if trust fund reserves were fully depleted, ongoing payroll tax revenue would still cover approximately 80% of scheduled benefits at that time. Over the long term, projections suggest the system could still pay roughly 74% of benefits in 2097 under current law.²   

In the coming years, Congress will need to act to close the funding gap. Certain proposals that have been explored include gradually increasing the full retirement age past 67, raising payroll taxes on the highest earners (currently, wages over $184,500 are not subject to Social Security tax), ³and slowing the cost-of-living adjustments (COLAs). It is expected that Social Security benefits will continue, but changes are expected for future generations to keep the program running.  

Claiming decisions should not be driven by headlines alone. Instead, they should be evaluated in the context of a broader financial plan that considers current and future tax rates, longevity expectations, and other income sources.   

Myth #2: “I Should Always Wait as Long as Possible to Claim Social Security”  

Reality: Delaying Social Security can be a powerful strategy, but it is not universally optimal. The right claiming age depends on health, income sources, tax planning, and family dynamics.  

While it’s true that delaying benefits can significantly increase monthly payments, higher monthly benefits do not automatically translate into better lifetime outcomes for every household.  

Impact of Claiming Age   

• For each year you delay Social Security after full retirement age (67 for most people today), your benefit increases by approximately 8% per year, up until age 70.  

• Claiming before full retirement age, as early as age 62, permanently reduces benefits by roughly 6% per year for each year claimed early⁴. 

When Claiming Earlier May Make Sense  

• Poor health or shorter life expectancy – The breakeven age for claiming at age 67 versus 62 is 79, meaning if you live past age 79 you will earn higher lifetime benefits. Those with shorter life expectancies may want to claim early.  

• Family benefit coordination -  In married households, the lower-earning spouse may benefit from claiming earlier, while the higher-earning spouse delays to maximize survivor benefits.  

• Cash flow needs - If you’ve stopped working and portfolio withdrawals alone cannot comfortably support spending; earlier claiming may reduce financial strain.  

When Delaying Makes Sense  

• Still Working– If you claim before full retirement age and earn more than the annual earnings limit, benefits may be temporarily reduced. In 2026, if you are under full retirement age and earn more than $24,480, Social Security withholds $1 in benefits for every $2 earned over that limit. (Once you reach full retirement age, this earnings test no longer applies.) ⁵

• Longer life expectancy: If you expect to live past age 82, delaying until 70 may make sense.   

• Higher-earning spouse: Delaying until age 70 can help to maximize family benefits. If the higher-earning spouse predeceases the lower-earning spouse, the surviving spouse will stop receiving their own benefit and will receive the higher benefit.   

• Sufficient assets or alternative income sources: Consider income needs with total portfolio assets and available income streams.  
      

Myth #3: Spousal (and Ex Spousal) Benefits Reduce Total Family Benefits  

Reality: Spousal and ex-spousal benefits generally do not reduce what the other spouse receives—and in many cases, thoughtful coordination can increase total lifetime benefits for the family.  

 A spousal benefit allows a lower-earning spouse to receive up to 50% of the higher-earning spouse’s Primary Insurance Amount (PIA), the benefit available at full retirement age. Importantly:  

• The higher-earning spouse’s benefit is not reduced when a spouse claims a spousal benefit.  

• Spousal benefits are paid in addition to, not instead of, the worker’s benefit.  

• The timing of each spouse’s claim can materially affect the total lifetime benefits received by the household.  

 Ex-Spousal Benefits  

If you were married for at least 10 years, are currently unmarried, and meet age requirements, you may be eligible to claim benefits based on an ex-spouse’s earnings record. Claiming an ex-spousal benefit does not affect your ex-spouse’s benefit in any way.  

Myth #4: “My Social Security Benefits Won’t Be Taxed”  

Reality: Social Security benefits are often taxable up to 85%.  

Social Security benefits are taxed based on provisional income, which includes:  

• Adjusted gross income (AGI)  (excluding Social Security Benefits) 

• Tax-exempt interest  

• 50% of Social Security benefits  

Depending on this total, benefits may be partially taxable as ordinary income:  

• Up to 50% of benefits may be taxable if provisional income exceeds:  

• $25,000 (Single)  

• $32,000 (Married Filing Jointly)  

• Up to 85% of benefits may be taxable if provisional income exceeds:  

• $34,000 (Single)  

• $44,000 (Married Filing Jointly) ⁶

While Social Security taxation cannot always be avoided, it can often be managed with thoughtful planning. Understanding how benefits interact with the rest of your income picture is essential to avoiding unintended tax consequences and preserving flexibility in retirement. One simple but overlooked step: beneficiaries can elect to have federal tax withholding applied to Social Security payments, helping avoid underpayment surprises at tax time.   

OBBBA Changes  

This issue was heavily debated during the One Big Beautiful Bill Act (OBBBA) negotiations, but proposals to meaningfully change the taxation of Social Security benefits did not make it into the final legislation. Instead, the law expanded the senior standard deduction, which may reduce taxable income for some retirees, but it does not directly change how Social Security benefits are taxed.  

Myth #5: “Claiming Strategies Won’t Really Make an Impact”  

Reality: Smart Social Security claiming is not about maximizing a single check—it’s about coordinating benefits with the rest of your financial plan to improve lifetime outcomes.  

Viewing Social Security claiming strategies as insignificant can lead to missed opportunities. When and how benefits are claimed can materially affect taxes, cash flow, and survivor security over decades.  

Effective claiming strategies consider how Social Security fits alongside:  

• Portfolio Withdrawals: The timing of Social Security benefits directly affects how and when portfolio assets are drawn down. Effective coordination can help smooth cash flow, manage taxes, and preserve flexibility. Review withdrawal strategies with your wealth consultant and tax advisor, consider the tax status of various accounts, and how that fits into claiming strategies decisions.  

• Tax Planning: Tax rates are often not static throughout retirement. Claiming strategies should account for changes in income from working in retirement, required minimum distributions, and other fixed payments. Poor coordination can inadvertently push income into higher marginal tax brackets or trigger surtaxes and Medicare premium increases. Some retirees decide to defer claiming Social Security so they can execute Roth conversions during their early years of retirement when income is lower.  

• Longevity Risk Planning: For most retirees, this is the only source of inflation-adjusted, guaranteed income. For households with longer life expectancies, optimizing the role of Social Security can reduce longevity risk and help protect portfolios later in life.  

• Survivor Benefit Optimization: Age differences, health considerations, and earnings disparities between spouses all matter. Delaying benefits for the higher-earning spouse can significantly increase survivor benefits, providing meaningful protection for the remaining spouse.   

Make Social Security a Planning Decision, not a Guess  

Social Security timing is rarely a standalone decision. Evaluating claiming strategies in advance, and in the context of taxes, investment withdrawals, and longevity planning - can reduce uncertainty and improve outcomes over time. If you’d like to review how Social Security fits into your broader plan, reach out to your wealth consultant or take our client compatibility survey to learn more.  

1. https://www.ssa.gov/oact/trsum/ ↩︎
2. https://www.ssa.gov/oact/solvency/provisions/summary.pdf ↩︎
3. https://www.ssa.gov/oact/cola/cbb.html ↩︎
4. https://www.ssa.gov/benefits/retirement/planner/agereduction.html ↩︎
5. https://www.ssa.gov/benefits/retirement/planner/whileworking.html ↩︎
6. https://www.irs.gov/newsroom/irs-reminds-taxpayers-their-social-security-benefits-may-be-taxable ↩︎

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The information provided is general in nature and should not be considered legal or tax advice. Consult an attorney, tax professional, or other advisor regarding your specific legal or tax situation. The items included in this publication are our opinion as of the date of this piece, not all encompassing, and are subject to change without notice. Any tax or legal advice contained in this communication is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.