I'm Alarmed That 64% of Americans Don't Understand This One Fact About Social Security. Here's What Retirees Need to Know

Commemorating the 90th anniversary of Social Security, a program signed into law by President Franklin D. Roosevelt in 1935, the folks at AARP commissioned a survey to assess Americans' understanding of this vital program.

The survey's findings were both surprising and alarming. Here's a look at some of them.

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The survey says...

Let's start with a big problem that the survey exposed: Fully 64% of survey respondents didn't understand the impact of Social Security's surplus running dry. When asked about what will happen once the Social Security Trust Funds are no longer able to pay full benefits, 34% chose the correct answer: Benefits will be paid at a reduced level. But 36% of respondents thought that no benefits would be paid. Another 28% said neither was true, or that they just didn't know. Some 47% thought that benefits would be cut at least in half -- which is wrong. Yikes.

Here's the correct answer: The Trustees of the Social Security and Medicare trust funds, in their latest report, for 2025, have estimated that:

The Old-Age and Survivors Insurance (OASI) Trust Fund will be able to pay 100 percent of total scheduled benefits until 2033, unchanged from last year's report. At that time, the fund's reserves will become depleted and continuing program income will be sufficient to pay 77% of total scheduled benefits.

So benefits won't fall to zero, and they won't be slashed in half. But they will drop significantly -- enough to wreak havoc on millions of retirements.

Don't give up on Social Security, but be prepared

Here's some good news: There are multiple ways to fix Social Security. For example, the current tax rate on workers' earnings, which feeds the fund, could be increased a bit. Currently, most workers pay 6.2%, with their employers kicking in another 6.2%, for a total of 12.4%.

Another possible fix is taxing high earners more. Right now, there's an earnings cap, beyond which income is not taxed for Social Security; it's adjusted annually and the cap is $184,500 for 2026. So if one person's yearly income is $315,000 and another's is $6 million, each will only pay taxes on their first $184,500 of earnings. Taxing more of their income -- or simply taxing it all -- can send a lot more money into Social Security's coffers. Many see this as a sensible fix -- because, after all, most of us are taxed on all our income, so why shouldn't that be the case for everyone?

Still, all these fixes need action by Congress, which may or may not happen. So it's smart to plan for reduced Social Security benefits to avoid getting blindsided. Remember, too, that there are ways to beef up your benefits, such as to delay claiming them until age 70 -- which is the best move for most people.

More startling survey results

The AARP survey revealed additional surprises. For example:

• A significant 37% of respondents thought that the current full retirement age -- the age at which you can start collecting the full benefits to which you're entitled, based on your life's earnings -- is 65. It's actually 67 for most people now.
• Only 40% of respondents correctly identified 62 as the earliest age at which you can claim Social Security retirement benefits.
• Only 24% knew that the age at which you should claim your benefits if you want to maximize them is age 70. Some guessed 62, 65, or even 75. Your benefits will grow for every year that you delay beyond your full retirement age, though only up to age 70. They don't grow any more after that, so there's no point delaying past 70.
• Fully 78% did worry, correctly, that Social Security benefits won't be enough to support them in retirement. That's good, but it means 22% weren't concerned. The average monthly Social Security retirement benefit was $2,081 as of April -- amounting to about $25,000 for the year.

It's a good idea to get very familiar with Social Security, so that you can plan for it well and make sound decisions regarding your potential benefits. Above all, don't expect the program to fully support you in your old age, and be aware that you might be best served by setting up multiple income streams for retirement.

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