Seniors depend heavily on Social Security for their income. Excluding a spouse’s income, 43% of seniors rely on Social Security for 90% or more of their income. With so many seniors relying so much on Social Security, let’s dispel of 4 common myths.

Myth 1: The Cost Of Living Adjustment (COLA) is set by the President or Congress.

The COLA is determined solely by the Consumer Price Index. The third quarter of the current year is compared against the third quarter in the year of the last COLA adjustment. If the inflation rate is high enough, then the COLA is automatically calculated and awarded. This automatic adjustment was signed into law in 1972 by Nixon.

Myth 2: Members of Congress do not pay into Social Security

This was true prior to 1984 when federal employees were covered by the Civil Service Retirement System. However, in 1984, federal employees, including the President and Congress, became a part of the Social Security system. Anyone hired after this has paid into Social Security. Those hired before 1984 had the option to stay with the CSRS or move over to Social Security.

Myth 3: Social Security is going broke

The system currently has over $2.75 trillion in reserves. At this point, they aren’t even tapping into the reserves. The reserve fund will start being used sometime in the next few years and will not run out of reserves until around 2035. So Congress has close to 20 years to enact legislation that will extend the reserve fund. In the improbable event that no changes are made, there will be enough income in 2035 to pay approximately 79% of the benefits owed. So while changes will need to be made, there is no immediate danger.

Myth 4: Early collectors can lose benefits forever if they continue to work

While it is true that your benefits can be reduced if you collect benefits before your full retirement age (FRA) and make over a certain threshold, that money isn’t lost forever. This year your Social Security will be reduced by $1 for every $2 that you make over the $15,720 limit. This only applies to those who collect early. However, once you reach your FRA, your benefits will be recalculated with credits applied for the benefits withheld. Many early retirees will limit their income to the earnings limit out of fear of losing money. However, this not only lowers your immediate income, but will keep you from getting the adjusted “bump” upon hitting full retirement age too.