Four Outrageous Myths about Social Security - dummies

Four Outrageous Myths about Social Security

Copyright © 2012 AARP. All rights reserved.

Something about Social Security stirs the popular imagination. Rumors and phony stories have attached themselves to the SSA from the start. Sometimes you can identify the grain of truth that sprouts into a tall tale. Other times you can’t.

Here are four of the more outrageous myths about Social Security.

Your Social Security number has a racial code in it

The nine-digit Social Security number has long fascinated people because it is a unique, personal identifier in a nation that cherishes individuality. One myth is that the number contains a code that identifies the race of the cardholder. According to the myth, the code can be found in the group number, the fourth and fifth digits, in the middle. In one version of the rumor, a person’s race could be determined by whether the fifth digit in the Social Security number is even or odd.

These are all simply false.

One explanation for this myth is that people have misinterpreted the meaning of the term group number, wrongly assuming that it referred to race. According to the SSA, group number refers simply to an old system of numerical grouping that traces back to Social Security’s early days, when everyone’s records were stored in paper files. Employees used the two-digit group number to help organize the files.

Members of Congress don’t pay into the system

This myth gets its strength by combining two rich symbols, Social Security and Congress. Variations of the myth include the idea that lawmakers get a special break on Social Security payroll taxes or that they’re allowed to collect benefits at an earlier age than the rest of us.

In the past, Congress and the rest of the federal government were covered under the Civil Service Retirement System, which was created years before Social Security. Under a 1983 law, however, all three branches of the federal government were steered into Social Security. As a result, since 1984, members of Congress, the president, the vice president, federal judges, and most political appointees have been required to pay taxes into the Social Security system like everyone else. And the same rules apply to them as apply to you.

Undocumented immigrants barrage social security with illegal claims

Tales that undocumented immigrants are soaking up Social Security benefits pick up steam periodically. As one popular version has it, Congress is about to consider a bill making benefits legal for workers who are in this country without authorization. This notion makes a lot of people angry. It’s also possible that the myth is spread when people stand in line at a Social Security office and make assumptions about others around them.

Whatever the cause, the myth is not true. Plus, the myth obscures an irony: Undocumented workers actually add revenue to the system through the Social Security taxes that are taken out of their pay.

Under the law, undocumented immigrants are prohibited from claiming Social Security, as well as most other federal benefits. (Certain exceptions to this ban are allowed, such as for emergency medical treatment and emergency disaster relief.)

Older Americans are greedy geezers who don’t need all their Social Security

As some tell it, most older Americans spend their days being pampered in posh retirement villas. According to the stereotype, these misers have no concern for young people — they prefer to take advantage of Social Security benefits they don’t need.

Talk about myths! The truth is that Social Security benefits keep more than one-third of older Americans out of poverty, often by a thin margin.

Are benefits too generous? The average monthly payment for a retiree is about $1,229 (as of 2012). That comes to only $14,748 per year. Not only do many millions of people struggle with poverty and near poverty, but recent estimates paint a bleaker picture than had previously been thought.

A U.S. Census Bureau alternative poverty measure in 2011 found a 15.9 percent poverty rate among Americans age 65 and up. That measure was much higher than the 9 percent rate for older Americans in the standard poverty index. A key reason: The newer measure takes healthcare spending into account.

Such figures make clear what common sense may tell you: A great many older people rely on Social Security to survive.