6 Common Social Security Misconceptions Debunked

Established via the passage of the Social Security Act in 1935, the United States’ Old-Age, Survivors, and Disability Insurance (OASDI) program — more commonly known as the Social Security program — is set to turn 90 years old in 2025. The federal program is designed to protect Americans from losing all their earnings, and thereby suffering a substantial loss in quality of life, as a result of retirement, disability or (for participants’ family members) the death of a household income provider.

To spotlight this valuable resource and its importance to tens of millions of Americans, each April serves as National Social Security Month, a monthlong observance geared toward educating people about the Social Security program and the services it offers. So here at Arthur State Bank, we’re taking the opportunity this April to set the record straight about a few widely held misconceptions regarding the U.S. Social Security program.

6 myths about Social Security — debunked

According to a 2023 AARP study, more than 95% of American adults consider Social Security an important government program, and more than 70% rank it among the most critical government programs. But despite the program’s widespread popularity, a number of long-believed Social Security myths persist.

To elevate your understanding of Social Security, read on to get the truth about six of these common misbeliefs:

  • Myth No. 1: The retirement age for receiving full Social Security benefits is 65.
    The facts: The age at which a worker can retire and receive 100% of his or her Social Security benefits — also known as full retirement age (or FRA) — varies by birth year. For those born in 1958, who will start to hit full retirement age in 2024, it is currently set at 66 years and eight months. From there, the FRA grows by two months per year until it reaches age 67 for those born in 1960 or later.
  • Myth No. 2: The program is going broke.
    The facts: The Social Security program will continue to have funding for as long as payroll taxes are collected from American workers and employers. With its revenue generated via FICA (Federal Insurance Contributions Act) and SECA (Self-Employed Contributions Act) taxes, the program is funded using a pay-as-you-go system, and the taxes currently being collected largely cover the benefits currently being distributed.
    Funding challenges do exist, though. In past decades, the system took in more money than it paid out, helping it build a surplus of funds to pull from when needed. But it’s beginning to pay out more than it takes in, as the number of retirees has started to grow faster than the number of American workers paying into the system, and as the retirees are on average living (and collecting benefits) for longer durations.
    Unless legislative changes are made, the Social Security program’s current surplus funds are projected to run out in 2034. If that happens and no changes are made, the program would still collect funds via the above-mentioned taxes, thereby giving it most of the money needed to pay out benefits. (Current projections put this at 80% of the funds needed to pay full scheduled benefits when the surplus runs out.) Top options for making changes to address the shortfall include raising the payroll tax rate, increasing the full retirement age or raising the income tax rate on distributed program benefits.
  • Myth No. 3: Social Security program funding is being drained by undocumented immigrants.
    The facts:
    While non-U.S. citizens who legally live and work in the United States can qualify for Social Security, undocumented workers are not allowed to claim Social Security benefits. In some cases, reports by Social Security actuaries show, undocumented workers have managed to get Social Security numbers under false pretenses — and payroll taxes have been withheld from their paychecks. But because they are never able to claim Social Security benefits, this actually serves to benefit the program’s financial standing.
  • Myth No. 4: Social Security benefits are untaxed.
    The facts: For previous generations of Social Security beneficiaries, the benefits paid out by the program actually did go untaxed. But in 1984, a provision of a Social Security overhaul passed during the Ronald Reagan administration made a portion of many recipients’ benefits taxable, with the size of the taxable portion varying based on income level. Under today’s guidelines, individual beneficiaries who make $25,000 to $34,00 per year, along with couples filing jointly who make $32,000 to $44,000 per year, can see up to half of their Social Security benefits subject to federal income taxes. Above these income levels, up to 85% of Social Security benefits are subject to federal income taxes, while below them, no federal taxes are taken out on Social Security benefits. Some states also collect income taxes on Social Security benefits.
  • Myth No. 5: The government taps into Social Security funds to pay for other programs.
    The facts: Two trust funds hold the money used to pay out Social Security benefits — one for retirees and their surviving family members, and the other for people with disabilities. Neither is part of the U.S. government’s general fund, as Social Security is administered via a separate program that is self-funded.
    However, the federal government does occasionally borrow money from Social Security funds, as the tax revenues that fund the program are invested in U.S. Treasury securities. Treasury bonds enable the government to spend the money invested in them on other programs, but the government must (and has never failed to) pay the money back with interest — and the interest results in a net gain of funding for the Social Security program.
  • Myth No. 6: If you keep working, you’ll permanently lose your Social Security benefits.
    The facts: There is a Social Security rule known as the “earnings limit” (or “earnings test”) that reduces the amount of benefits available to recipients who choose to continue working while claiming Social Security benefits. But the reduction is not permanent, and the rule doesn’t apply to all working beneficiaries. Rather, it applies only to people claiming Social Security benefits and still working before their full retirement age, and it only withholds a portion of benefits when their work earnings exceed a set cap (that changes annually). Further, the benefits are later adjusted upward, so recipients can eventually recoup this temporarily withheld money over time.

Proudly serving South Carolina since 1933, Arthur State Bank offers accounts and services to meet a variety of financial needs. To help you achieve all your financial goals, the bank offers in-person service as well as a range of convenient digital solutions. To learn how Arthur State Bank can help you with banking needs ranging from checking and savings to retirement accounts, mortgages, other personal loans and more, visit arthurstatebank.com.

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AnnualCreditReport.com is the only source for free credit reports authorized by the federal government. Every 12 months, you can get a free copy of your credit report from each agency.

Your credit report has your credit history for all of your credit accounts as well as any credit inquiries and public record court information such as collections. In addition, the report provides personally identifiable information such as your name, address, and employment.

Be sure to carefully review all three reports to identify any problem areas that you may need to clean up prior to applying for a mortgage. If there is any incorrect information, follow the reporting agency’s rules to correct it or add a notation to the report to explain the situation.

Your FICO Score is a score combines data from several areas include payment history, the amount owed, length of credit history, new accounts. Many lenders use this score as a guide. This score is not provided as part of the free annual credit report.

Learn more about how your credit score impacts your ability to secure a loan.


Couple looking over finances

Primary considerations for setting your housing budget require an assessment of your income, debt and current savings for the down payment on the home. The following are generally recommended guidelines; however, you should meet with an Arthur State Bank lender to get personalized mortgage information.


Couple meeting with lender

The pre-qualification/pre-approval letter is included with any offer you make on a house to inform the seller that you have met with a mortgage lender and you are prepared to make an offer. The letter states that based on certain assumptions, the bank is prepared to lend you up to a specified amount of money for a home mortgage.

When choosing a loan officer, we recommend going local to work with someone who understands your community’s real estate market. This blog on first-time home purchases includes questions to ask your lender that may be helpful when preparing for your meeting.

Helpful Resources:


Realtor shaking hands with a client

When a house is sold, the seller typically pays real estate commission to both the listing agent and the selling agent. It is extremely beneficial for the buyer to use their own real estate agent. Loan officers can often recommend selling agents in the area; ask your officer about realtor referrals when discussing your loan.

A good realtor will know the local market and can help you find an ideal home based on your budget, location and desired features. During your search, understand that you will most likely need to compromise on some items, so it’s important to identify your critical needs versus your wants.


Couple searching online for a home

Additionally, when you start with the house search and work backwards, homes can often go off the market while you’re completing steps 1-4. While browsing homes immediately can be tempting, we recommend following these steps in order so that, once you find your dream home, you’ll be well-positioned to take action immediately.

When you find the home you want and you think you are ready to put an offer on it, you will want to make sure you have all the information you need to make a solid offer.

  • Evaluate the neighborhood.
  • Drive by the house at different times of the day.
  • Examine how other houses in the neighborhood are maintained.
  • Consider any potential traffic or other disruptive noise.
  • Is there ample parking for you and visitors?
  • Read the details in any Homeowner Association agreements (HOA fees and rules).

Make sure to do a preliminary check of house details:

  • Check the water:
  • Does it have good pressure?
  • How long does it take to get the water hot?
  • Is it well water or city water?
  • Turn light switches on and off.
  • Open and close doors and windows to make sure they work properly.
  • Review previous utility bill expenses.
  • Consider the property tax bill.


Family meeting with realtor at new house

When writing an offer contract, be sure to pay attention to all of the details.

Offer Price:

Your agent should do a market analysis that pulls data on recently sold comparable houses. The best comparisons will come from the same neighborhood.

If you are asking for the seller to pay some of the closing costs, remember that this cost plus the sales commission determines the net amount you are offering the seller for the house.

Work with your agent on your negotiation strategy. There are many things to consider, such as how badly you want this particular house, whether it is a buyer’s or seller’s market and an assessment of the seller’s motivation to get the property sold.

There isn’t one best strategy.

Be sure to document in writing everything you want included with the house, such as appliances, etc. Your agent should guide you through the contract step-by-step.


  • Home inspection.
  • Mortgage.
  • Final walk through (24 hours prior to closing).

Proposed closing date. Typically, this is 30-45 days from an accepted offer.

A good-faith deposit is required for the offer. This is typically between 1-10% of the purchase price of the house. The deposit is kept in escrow until closing and the money is applied to the purchase price of the house at closing. If the house does not close due to one of the contingency clauses, the buyer receives their money back. However, if the buyer decides not to close on the property, the seller may get the deposit money.

Attach your pre-approval letter to the offer.


Two people in professional meeting

The clock starts ticking for everything documented in the contract, including mortgage application, inspections and closing date.


Woman advising other woman on mortgage application

You will need to decide which mortgage to select prior to the application.

Plan for the following potential fees:

  • Application fee (many banks and mortgage companies charge an application fee; however, there is not an application fee at Arthur State Bank).
  • Credit check.
  • Appraisal (may be paid at closing).
  • Loan origination fee (paid at closing).

Once you have approval for your loan, make sure you don’t change anything that will impact the status of your mortgage. Banks do a final check on credit and jobs just prior to closing, so now is not the time to change jobs or make another purchase on credit such as a car or furniture.


Home inspector going over findings with home owner

Depending on the size of the house, an inspection can cost on average between $300 to $1000.

Many real estate contracts specify how problems uncovered in the inspection will be resolved, up to a certain dollar amount. Should necessary repairs exceed that amount, the buyer has the option to cancel the contract without penalty and receive their deposit money back. Another option is for the buyer and seller to renegotiate who will pay for additional repairs.


Woman happily holding keys to her new home
  • Homeowner’s insurance is required by the lender prior to closing on the loan.
  • Turn on utilities in your name, effective the closing date.
  • Change your address with the U.S. Postal Service.
  • Make moving arrangements.

Three days prior to closing:

  • You should receive your final Closing Disclosure from the closing agency. The final Closing Disclosure shows a column for the seller and a column for the buyer. All closing charges and credits for both the seller and the buyer are documented in the closing statement.
  • Review the closing statement for accuracy prior to coming to closing.
  • The final amount in the buyer’s column shows you the amount of money you need to pay at closing.

The closing office will provide specific payment instructions. Closing funds have become recent targets for cybercriminals. If you are asked to use a wire transfer, call the office and ask to speak to someone you have been working with to double-check the instructions.

Closing day:

In South Carolina, the closing will usually take place at the attorney’s office. Everyone signing for the mortgage must be present to sign the closing paperwork. Make sure you bring the following:

  • Cashier’s check or proof of payment for wire transfer.
  • Driver’s license.
  • Checkbook, just in case there are any additional items that were not on the closing statement.

Be sure to understand this information:

  • How and when you will pay:
  • Your mortgage.
  • Your property taxes.
  • Your homeowner’s insurance.
  • Any HOA dues.
  • Who to call with any questions.

The best practice is to go through the homebuyer’s roadmap in this sequence. However, if you jumped ahead early in your journey, just circle back to address the steps you missed.

Arthur State Bank’s loan officers are closely tapped into local real estate markets and experts at helping clients get what they need on terms that work for them. We also offer mortgage specials for first-time homebuyers.

To start planning your journey to your dream home, try out our mortgage calculator. If you’re ready to talk to a loan officer, contact Arthur State Bank to request personalized mortgage information today. Don’t forget to ask about our first-time homebuyer offer.