10 Myths and Misconceptions About Social Security
 (2024)

Myth #4: Members of Congress don't pay into Social Security

The facts: A common complaint about Social Security is that members of Congress don't bother fixing the program because it doesn't cover them. Actually, it does. Members of Congress came under the Social Security umbrella in 1984, along with the rest of the federal workforce, as part of the sweeping changes to the program enacted the previous year.

Before that, senators and representatives did not pay into Social Security and were instead fully covered by a pension plan called the Civil Service Retirement System (CSRS). Those in office on Jan. 1, 1984, were allowed to remain in CSRS, but only in conjunction with Social Security. (If you're curious, one senator and four House members remain from those days.)

Those elected since are covered by Social Security as well as a pension program that replaced CSRS. Either way, members of Congress pay into Social Security just like most American workers.

Myth #5: The government raids Social Security to pay for other programs

The facts:The twotrust funds that pay out Social Security benefits— one for retirees and their survivors, the other for people with disabilities — have never been part of the federal government's general fund. Social Security is a separate, self-funded program. The federal government does, however, borrow from Social Security.

Here's how: Social Security's tax revenue is, by law, invested in special U.S. Treasury securities. As with all Treasury bonds, the federal government can spend the proceeds on a variety of programs. But as with all bondholders, Treasury has to pay the money back, with interest. Social Security redeems the securities to pay benefits.

This borrowing fuels the notion that the government is raiding or even stealing from Social Security and leaving it with nothing but IOUs. But the government has always made full repayment, and the interest increases Social Security's assets, to the tune of $66.4 billion in 2022.

Myth #6: Undocumented immigrants drain Social Security

The facts:Some have blamed problems with Social Security's financial health on undocumented immigrants draining the system's resources. It's a popular complaint, but a false one. Noncitizens who live and work in the U.S. legally canqualify for Social Securityunder the same terms as native-born and naturalized Americans, but undocumented people are not allowed to claim benefits.

There is evidence that undocumented workers actually improve Social Security's bottom line. Some do obtain Social Security numbers under false pretenses, and payroll taxes are withheld from their wages even though they are not eligible to later collect benefits. A report by Social Security actuaries said that undocumented immigrants made a net contribution of around $12 billion to the program in 2010 and that their earnings would likely continue to “benefit the financial status” of Social Security.

Myth #7: Social Security is like a retirement savings account

The facts:The government does not stow your payroll tax contributions in a personal account for you, to be paid out with interest when you retire. Your benefit is based on how much money you earned over your working life, not on how much you paid into the system. As noted above, those contributions fund benefits for current retirees (and their survivors, and people with disabilities). When you retire, those still working will cover your benefits, and so on.

Over their lifetimes, most people get more from Social Security and Medicare(which is also partially funded by payroll tax contributions) than they pay in, according to analyses by the Urban Institute, a nonpartisan think tank. Still, you might think of Social Security less like saving for retirement — there areother vehicles for that— and more like an earned benefit the government promises to pay so you have at least some income in your later years.

Emphasis on “some": Contrary to another common misperception, Social Security is not meant to replace your entire work income. On average, it provides about 40 percent of a beneficiary's preretirement earnings. The formula for calculating benefits is weighted so that they replace a larger percentage of income for lower-wage workers and a lower percentage for upper-income earners.