The 1 Social Security Myth That Could Utterly Wreck Your Retirement

"Social Security is going bankrupt." "Congress is stealing money from Social Security." "Social Security is nothing but a giant Ponzi scheme."

These are some of the things you might hear about Social Security if you spend enough time digging around. But just because you read something doesn't mean that it's true.

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Social Security is not at risk of going bankrupt. The worst-case scenario the program is looking at as of now is benefit cuts.

Congress, meanwhile, is not stealing money from Social Security, nor is the program a giant Ponzi scheme. A Ponzi scheme is a scam where investors are duped into buying into an opportunity that's fake. When you pay into Social Security, you're paying into a legitimate program that's designed to provide you with a monthly benefit once your retirement rolls around.

But while these Social Security myths may be mistruths, there's one misconception about the program that tends to hurt a lot of people. And you don't want it to wreck the retirement you've worked hard for.

You can't retire on Social Security alone

Another big myth in the context of Social Security is that it's feasible to retire on those monthly benefits alone. The truth is that it's technically possible to live on only Social Security -- but it's not pleasant.

If you earn an average paycheck, Social Security will replace about 40% of it -- assuming lawmakers find a way around benefit cuts, which is pretty likely given that they've never let Social Security slash benefits before. But most retirees need 70% to 80% of their former income to enjoy a comfortable lifestyle.

To put it another way, imagine having to take a 60% pay cut. Would you enjoy the lifestyle that leads to?

Now you may bet thinking, "But I'll have fewer expenses in retirement." And that may be true. Your home may be paid off by the time you retire, and your transportation costs may be lower due to not having a commute to work.

On the flipside, you might spend more money on leisure since you'll have more free time on your hands. And you may find that your healthcare costs are higher than ever between added medical issues and costly Medicare premiums.

That's why it's not a good idea to plan to retire on Social Security alone. It's OK to have those benefits constitute a decent chunk of your retirement income. But you should have a means of supplementing them.

That could mean saving money in an IRA or 401(k) plan. It could mean loading up on investments like bonds and dividend stocks that come with reasonably predictable payment schedules. Or it could mean pledging to work part-time in retirement for as long as you can.

Social Security won't be enough

It's natural to assume that you can retire on just Social Security, since you might read that that's what a lot of people do. But realize that many people retire on just Social Security not because they want to, but because they face too many barriers to building retirement savings.

Given that Social Security cuts can't be ruled out, it's especially dangerous these days to assume that you'll be able to live on those benefits alone. So if you're still working and therefore have time to accumulate a retirement nest egg, try to make that a priority.

You don't have to save 20% of your paycheck if that's not doable. Contribute $100 or $200 a month to an IRA or 401(k) and take things from there. Bringing savings into retirement could spell the difference between getting to enjoy your senior years to the fullest versus being under constant financial stress.

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