The Myths Are Expensive — and They’re Everywhere
Every week, I hear from retirees who made financial decisions based on something a neighbor said, a headline implied, or a social media post claimed about Social Security. In my 15 years working in consumer finance — including my time as a senior analyst at the Consumer Financial Protection Bureau — what I see most often is not fraud or bad luck destroying retirement plans. It’s misinformation.
And heading into 2026, the stakes are higher than they’ve been in years. The Social Security Administration just released its 2025 Trustees Report showing the Old-Age and Survivors Insurance (OASI) trust fund is now projected to be depleted by 2032 — one year earlier than last year’s estimate. Medicare Part B premiums continue to climb. And the 2026 cost-of-living adjustment (COLA) is shaping up to be modest at best, with early projections suggesting roughly a 2.2% to 2.5% increase.
This is exactly when Social Security myths do the most damage. Let me walk you through the five most persistent — and most costly — misconceptions I’m seeing right now, and what the actual data says.
Myth #1: “Social Security Is Going Bankrupt — I Won’t Get Anything”
What People Believe
This is the granddaddy of all Social Security myths, and it’s been circulating for decades. A 2024 Gallup poll found that 33% of retirees and 73% of non-retirees doubt they’ll receive their expected benefits. The recent Trustees Report headline — “fund runs out by 2032” — poured gasoline on the fire.
The Reality
Trust fund depletion does not mean zero benefits. Even if Congress does absolutely nothing (which would be historically unprecedented), the system doesn’t vanish. After 2032, incoming payroll taxes would still cover approximately 79% of scheduled OASI benefits, according to the Trustees’ own projections.
That’s a meaningful cut, yes — roughly 21 cents on every dollar. But it is a far cry from “bankrupt.” I often tell readers: the word “bankrupt” implies assets going to zero, and that simply cannot happen as long as 180 million Americans are paying into the system through FICA taxes every paycheck.
The more productive concern is whether Congress will act — and how. Options on the table include raising the payroll tax cap (currently $176,100 in 2025), adjusting the full retirement age, modifying the benefit formula for higher earners, or some combination. The Congressional Budget Office has scored over a dozen proposals. The political will is the variable, not the math.
If you’ve been making decisions — like claiming early at 62 out of panic — based on the “going bankrupt” narrative, you may have locked in permanently reduced benefits for no reason. For more on how COLA misunderstandings compound this problem, see our breakdown of 6 Social Security COLA Myths Retirees Must Stop Believing.
Myth #2: “The COLA Increase Means I’ll Have More Spending Power Next Year”
What People Believe
When the Social Security Administration announces a COLA — the 2025 adjustment was 2.5%, and 2026 is projected around 2.2% — many retirees expect a genuine raise. After all, if the average retiree benefit is roughly $1,976 per month (as of January 2025), a 2.2% bump would add about $43 monthly. That sounds like progress.
The Reality
Here’s what virtually every headline leaves out: Medicare Part B premiums are deducted directly from your Social Security check, and they almost always go up. The standard Part B premium rose to $185.00/month in 2025, and CMS actuaries project further increases for 2026 due to rising costs of physician-administered drugs and outpatient services.
When you subtract a projected Part B premium increase of $10–$15/month from that $43 COLA bump, you’re left with a net gain of $28–$33. Now factor in Medigap or Medicare Advantage premium increases, dental plan costs, and the reality that the CPI-W (the index used to calculate COLA) doesn’t perfectly track senior spending patterns — particularly housing, healthcare, and prescription drugs — and many retirees actually lose purchasing power year over year.
This is what researchers call the “COLA illusion.” A 2023 Senior Citizens League analysis found that Social Security benefits have lost approximately 36% of their buying power since 2000, even after annual COLA adjustments.
| Year | COLA Increase | Medicare Part B Premium | Avg. Monthly Benefit (Jan.) | Estimated Net Gain After Part B |
|---|---|---|---|---|
| 2022 | 5.9% | $170.10 | $1,657 | ~$76/mo |
| 2023 | 8.7% | $164.90 | $1,827 | ~$164/mo |
| 2024 | 3.2% | $174.70 | $1,907 | ~$51/mo |
| 2025 | 2.5% | $185.00 | $1,976 | ~$39/mo |
| 2026 (est.) | ~2.2% | ~$195–$200 (projected) | ~$2,019 | ~$28–$33/mo |
The takeaway: don’t treat COLA as a raise. Treat it as a partial — and often inadequate — inflation offset. If your budget depends on that increase, you’re already behind.
Myth #3: “I Should Claim Social Security as Early as Possible to ‘Get My Money'”
What People Believe
This myth has a seductive logic: “What if the program gets cut? What if I don’t live long enough? Better to grab what I can at 62.” Combined with Myth #1, it creates a powerful emotional pull to claim early. Approximately 30% of eligible Americans still file for benefits at 62, the earliest possible age.
The Reality
Claiming at 62 permanently reduces your monthly benefit by up to 30% compared to your full retirement age (67 for anyone born in 1960 or later). Conversely, delaying until 70 earns you an 8% annual increase through delayed retirement credits — guaranteed, with no market risk.
Let me put numbers to this. If your full retirement age benefit would be $2,200/month at 67:
- Claiming at 62: ~$1,540/month (a 30% permanent reduction)
- Claiming at 67: $2,200/month
- Delaying to 70: ~$2,728/month (a 24% permanent increase)
Over a 20-year retirement, that difference between claiming at 62 versus 70 totals approximately $285,000 in cumulative benefits. For a married couple coordinating strategies, the gap can exceed $400,000.
Now, is early claiming always wrong? No. If you have a serious health condition that limits life expectancy, if you’re out of work with no savings bridge, or if you’re the lower-earning spouse in a coordinated strategy, claiming early can make sense. But making that decision out of fear rather than strategy is where I see the most regret.
What I always recommend: run your numbers through the SSA’s own retirement estimator tool before deciding. And if you’re married, model both spouses’ claiming ages together — the survivor benefit implications are enormous and almost always overlooked.
Myth #4: “Medicare Covers Everything I Need, So Healthcare Won’t Be a Major Expense”
What People Believe
Many Americans approaching 65 assume that once they enroll in Medicare, their healthcare costs essentially disappear. This belief is reinforced by Medicare Advantage plan advertisements promising $0 premiums and extra benefits like dental and vision.
The Reality
According to Fidelity’s 2024 Retiree Health Care Cost Estimate, the average 65-year-old couple retiring today will need approximately $315,000 (after tax) to cover healthcare expenses through retirement. That figure doesn’t include long-term care.
Here’s what Original Medicare (Parts A and B) does not cover or covers only partially:
- Dental care: No routine dental coverage
- Vision: No coverage for routine eye exams or glasses
- Hearing aids: Not covered under Original Medicare
- Long-term care: Medicare does not pay for custodial nursing home care
- Part B coinsurance: You pay 20% of approved services with no annual out-of-pocket cap under Original Medicare
- Prescription drugs: Requires separate Part D enrollment, with its own premiums, deductibles, and coverage gaps
Medicare Advantage plans may cover some of these extras, but as Medicare.gov notes, they come with network restrictions, prior authorization requirements, and benefit structures that can change annually. The 2026 Medicare Advantage enrollment trends show plans continuing to tighten networks and reduce supplemental benefits in response to federal payment changes.
And here’s the connection many retirees miss: your healthcare costs directly impact your Social Security income. Higher-income retirees pay Income-Related Monthly Adjustment Amounts (IRMAA) on both Part B and Part D premiums. A Roth conversion or large IRA withdrawal in a single year can push you into a higher IRMAA bracket two years later, costing you hundreds of dollars monthly in premium surcharges. The IRS uses your modified adjusted gross income from two years prior, so a 2024 income spike hits your 2026 Medicare premiums.
This is why healthcare planning and Social Security claiming strategy must be coordinated — not treated as separate decisions. If you’re also planning to stay in your home long-term, be sure to review Aging in Place Costs More Than Expected: How to Budget Smart to get a complete picture of your future expenses.
Myth #5: “I Can’t Outlive My Savings If I’m Careful With Spending”
What People Believe
Frugality is a virtue, and many retirees believe that careful budgeting alone will prevent them from running out of money. They cut coupons, downsize, and avoid splurges — and assume the math will work out.
The Reality
Frugality is necessary but not sufficient. The three forces that destroy even careful retirement budgets are longevity risk, inflation, and sequence-of-returns risk — and willpower alone can’t overcome them.
Longevity risk is the most underestimated. A healthy 65-year-old woman today has a 50% chance of living past 87 and a roughly 25% chance of reaching 94, according to Society of Actuaries data. If you retire at 65 with a 20-year spending plan, there’s a meaningful probability you’ll need 25 to 30 years of income.
Inflation is already showing its damage. Recent survey data shows that older adults are depleting retirement savings faster than expected, largely because the 2022–2024 inflationary period eroded purchasing power at exactly the wrong time. We’ve covered this trend extensively — Seniors Depleting Retirement Savings Faster Due to Inflation provides the full picture.
Sequence-of-returns risk means that when market downturns happen matters more than overall average returns. A 25% portfolio drop in year two of retirement is catastrophically different from the same drop in year 15, because early withdrawals from a depleted portfolio lock in losses permanently.
What Actually Protects You
The evidence-based strategies I recommend go beyond simply spending less:
- Guaranteed income floor: Maximize Social Security by delaying benefits, and consider a single premium immediate annuity (SPIA) for essential expenses your portfolio doesn’t need to cover.
- Dynamic withdrawal strategy: Instead of a rigid 4% rule, use a flexible approach like the “guardrails” method — reducing withdrawals 10% when your portfolio drops below a threshold, and allowing modest increases when it rises above another.
- TIPS and I-Bonds: Treasury Inflation-Protected Securities provide a direct hedge against CPI increases. I-Bonds purchased through TreasuryDirect (currently yielding a composite rate adjusted semiannually) remain one of the most accessible tools for retirees.
- Tax-bracket management: Strategic Roth conversions in lower-income years can reduce future Required Minimum Distributions and IRMAA surcharges — saving thousands over a retirement span.
The point isn’t to be pessimistic. It’s to match your strategy to the actual risks rather than relying on optimism and discipline alone.
What You Should Actually Do Before 2026
If these myths have shaped any of your retirement decisions, the good news is that most are correctable — or at least manageable — with timely action. Here’s where I’d focus energy between now and January:
- Request your updated Social Security statement through your my Social Security account at ssa.gov. Verify your earnings record — errors are more common than you’d think, and they directly reduce your benefit.
- Model your Medicare costs for 2026. Open enrollment runs October 15 through December 7, 2025. Don’t auto-renew your current plan without comparing — formularies, networks, and premiums shift every year.
- Revisit your withdrawal strategy with a fee-only fiduciary advisor (not a product salesperson). One planning session focused on tax-efficient withdrawals and claiming strategy typically pays for itself many times over.
- Stress-test your plan for longevity. Model your finances to age 95, not 85. If the numbers don’t work at 95, you need to adjust now — not at 88 when options are limited.
The Bottom Line: Myths Are the Real Threat
After years of analyzing consumer financial behavior at the CFPB and now advising readers directly, I can tell you this with certainty: the biggest threat to retirees’ financial security in 2026 isn’t a trust fund depletion date or a modest COLA. It’s acting on myths instead of data.
Social Security isn’t going to zero. Your COLA isn’t a real raise. Claiming early out of fear usually backfires. Medicare leaves major gaps. And frugality alone won’t outrun inflation and longevity.
The retirees I see doing best aren’t the ones with the biggest portfolios. They’re the ones who questioned assumptions, ran the numbers, and made decisions based on what the system actually does — not what the headlines said it might.
That’s a choice available to every reader of this article, starting today.
About Sarah Mitchell, Former CFPB Senior Analyst
Sarah Mitchell is a consumer finance expert with 15 years of experience protecting American consumers. She spent eight years as a senior analyst at the Consumer Financial Protection Bureau (CFPB), where she investigated financial fraud targeting older adults and developed consumer education programs. At Daily Trends Now, Sarah covers scam awareness, smart shopping strategies, discount programs, and consumer rights — helping seniors protect their wallets and avoid costly traps.
