Understanding Social Security Myths

Most people value the truth, but there’s something oddly entertaining about rumors and superstitions. Issues really arise when someone struggles to tell myth from reality. This conversation has been ongoing since 1935, when Social Security made its debut.

Now, with projections indicating that the Old Age and Survivors Insurance Trust Fund may run out by 2033, a few myths are starting to gain some popularity. Let’s take a look at five common misconceptions and see what the reality is behind them.

Myth 1: Participation in Social Security was promised to be completely voluntary by President Franklin D. Roosevelt.

Actually, if you’re working in a job that’s covered by Social Security, you’re subject to FICA payroll taxes. These taxes aren’t voluntary; they start from day one of your job. It’s just part of the deal.

Myth 2: Roosevelt promised that workers could deduct Social Security contributions from their income taxes.

The truth is, there was never any provision allowing employees to do that. The law from 1935 explicitly prohibited such deductions.

Myth 3: All Social Security payments were promised to remain untaxed as ordinary income.

When Social Security began, benefits weren’t taxed. However, there was no promise from the president that they wouldn’t be taxed later—and no law preventing it. It wasn’t until 1983, when funds were nearly depleted, that Congress allowed taxing those benefits.

Myth 4: Politicians have looted Social Security to fund other expenses.

In reality, Social Security funds can only be invested in special U.S. Treasury securities. While the government can borrow from this fund, it pays back with interest, much like a bank does with your savings. So, it’s more of a loan situation, not a heist.

Myth 5: Illegal immigrants drain Social Security resources.

This one’s a bit backward. Many undocumented workers use fake Social Security numbers to get jobs and actually contribute to the system via payroll taxes, but they don’t receive benefits. According to the American Immigration Council, in 2023, undocumented workers contributed an impressive $26.2 billion to the Social Security Trust Fund, while paying an estimated $89.8 billion in total taxes across various levels.

The truth remains, regardless of whether one prefers to believe in fun myths or not. Simply believing in something doesn’t change the reality of the situation.