Three Common Social Security Myths in 2025: A Retirement Strategist Explains What You Need to Know

Taxes on benefits haven't been eliminated, and based on current projections, the program isn't going bankrupt. Understanding the truth about Social Security and knowing what you can control can help you better prepare for retirement.

By Katherine Tierney, CFA®, CFP®

published 16 August 2025

in Features

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Social Security plays an important role in retirement for most Americans. Separating myth from fact can help you prepare for it.

Here's what you need to know about three common Social Security myths today:

Based on current projections, Social Security isn't going bankrupt. According to the 2025 Social Security Trustees Report, if no changes are made to the program, it will need to reduce benefits in 2033, paying about 77 cents per dollar of the projected benefit.

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The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.

While that might sound concerning, it doesn't tell the whole story. There are several changes Congress can make to strengthen the program and avoid these future cuts, such as removing the earnings ceiling for Social Security payroll taxes, increasing the payroll tax rate or raising the age for eligibility or full retirement.

For example, the Board of Trustees estimates that raising the combined payroll tax from 12.4% to 16.05% would fully fund the program through at least 2099.

Given the program's popularity and its importance to older people, we believe action will be taken to preserve benefits. However, we think it's unlikely to happen until 2033 draws nearer.

What you can do

To navigate the uncertainty, we encourage investors to focus on what you can control — how much you save for retirement and when you claim your benefit.

How much to save. According to a June 2025 analysis from the Social Security Administration (SSA), Social Security replaces about 40% of pre-retirement income for a median earner who claims at full retirement age (FRA) and who makes an average of $69,473 a year.

The more you earn, the more you'll have to replace with your own savings to maintain your lifestyle in retirement.

You can use a financial calculator or work with a financial adviser to help ensure you're saving enough to meet your needs.

If you're concerned about benefit reductions, you could also run projections with a reduced benefit amount to determine if you want to increase savings to help mitigate the risk.

When to claim. While there might be reasons to claim early, we generally recommend against taking benefits before your FRA based on worries about the program's health.

Social Security payments can be sharply and permanently reduced by as much as 30% if taken before FRA. This initial reduction also compounds over time, since cost-of-living adjustments (COLA) are based on this amount and retirement could last 25 years or longer.

Additionally, your selections don't just impact you; they could permanently affect the benefit for your surviving spouse.

Myth No. 2: Layoffs and budget cuts will cause benefits to be delayed or reduced

Budget cuts and staffing reductions won't reduce your benefit amount. Any changes to how Social Security benefits are calculated would require congressional approval.

While service quality could be impacted, we believe widespread delays in benefit checks are unlikely because of the political pressure the government would face.

However, wait times to talk to a representative and the process to file benefits could lengthen.

What you can do

If you need to contact the SSA, set aside plenty of time, and for in-person visits, schedule an appointment.

When you're ready to file, consider the following to help avoid a potential delay in the start of your benefits:

Start the application process up to four months ahead of your desired start date
Use online resources and tools when possible
Make sure you have all documents in order

Contrary to some reports, the One Big Beautiful Bill (OBBB) didn't eliminate taxes on Social Security benefits, though a new deduction could have an impact (more on that below).

If your combined income (also called provisional income) is above a certain threshold, a portion of your benefits will be subject to taxes.

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Your combined income is equal to the sum of your adjusted gross income (AGI), nontaxable interest and half your annual Social Security benefit.

If your combined income is from $25,000 to $34,000 for single filers ($32,000 and $44,000 for joint filers), up to 50% of your benefit is taxed.
If it's greater than $34,000 for single filers ($44,000 for joint filers), up to 85% of your benefit is taxed.

It's important to know that these income thresholds don't adjust annually for inflation. More of your benefit could be subject to taxes over time due to annual COLAs (cost-of-living adjustments) and/or larger retirement account withdrawals. Your state might also tax Social Security benefits.

While the OBBB didn't eliminate taxes on benefits, it did include a new temporary deduction for eligible individuals age 65 or older that can help offset taxes on benefits.

To qualify for the full $6,000 deduction (per taxpayer), your modified adjusted gross income (MAGI) must be $75,000 or less for single filers ($150,000 or less for joint filers). It phases down for income above these thresholds and fully phases out at $175,000 for single filers ($250,000 for joint filers).

The deduction is available through 2028 to both itemizers and non-itemizers, and it's in addition to the current additional standard deduction available to older people.

What you can do

Understand whether you'll qualify for the new deduction and how it could impact your overall tax picture. Tax savings could be put toward current expenses or your financial goals, such as a vacation or a contribution to a grandchild's education.

You might be able to further reduce taxes by using some tax-free assets, such as qualified Roth accounts and health savings account (HSA) withdrawals, to meet your spending needs in retirement, as these assets don't count toward your combined income.

While we generally recommend saving Roth assets as long as possible, it might make sense to selectively use them to stay within a certain tax bracket.

Make sure you're withholding an appropriate amount from your monthly Social Security checks to avoid a surprise at tax time. You can file IRS Form W-4V with the SSA to update your withholdings.

This content is provided for educational purposes only and should not be interpreted as specific investment, tax, or legal advice. Edward Jones, its employees, and financial advisors cannot provide tax or legal advice. You should consult your attorney or qualified tax advisor regarding your situation. Opinions stated are not intended to predict or guarantee the future of Social Security.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Katherine Tierney is a Senior Strategist at Edward Jones, a leading financial services firm dedicated to helping its 9 million clients turn their life plans into financial strategies. Katherine is responsible for developing and communicating the firm's retirement and tax advice and guidance. She also serves as a member of the firm's oversight committee for all financial planning advice and guidance.