Russ Wiles

The Arizona Republic

Social Security remains a confusing topic, and misconceptions could multiply as the presidential campaign swings into high gear. Though the leading candidates haven't yet turned this into a prominent campaign issue, it's bound to gain more visibility. Here's a look at a few myths and misunderstandings, and a couple accurate claims, you might hear on the election trail or elsewhere:

• Social Security is heading toward bankruptcy.

False, though the answer somewhat depends on how you define bankruptcy. Social Security will have money to pay retirement benefits for decades to come, even if needed reforms are not made. It's just that the program won't have the means to meet all its scheduled obligations. Social Security's trustees estimate the program, in the absence of reforms, will be able to pay only about 75 cents on the dollar by 2034.

Reforms still can be made to strengthen Social Security, and the sooner they're made, the better. "The program is getting close to the point of no return," said Marc Goldwein, senior policy director at the Committee for a Responsible Federal Budget.

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• Everyone has Social Security assets held in a personal investment account.

False. Social Security isn't an investment fund but, rather, a pay-as-you-go system that transfers money from workers to retirees. "The taxes paid by today's workers and their employers don't go into dedicated individual accounts," noted Pew Research in a report. "Nor do Social Security checks represent a return on invested capital." Yet nearly one-third of Americans believe they have dedicated Social Security accounts, according to a 2014 Pew survey.

• Social Security will be around for today's young adults.

True. Despite skepticism felt by many young adults that they'll ever see any money from Social Security, and despite the well-known funding problems that could result in benefit cuts, the program will keep going unless Congress dismantles it, which isn't likely. "Saying Social Security won't exist isn't true and won't help the debate," said Goldwein.

• Social Security would have remained solvent if Congress hadn't raided the trust fund.

False. The trust fund refers to a surplus of $2.8 trillion that has been building for the past three decades, from payroll-tax revenue exceeding benefit payments over that period. The surplus is stored in special Treasury bonds, but so what? It's largely an "accounting fiction," not money stashed away for future generations, wrote Paul Solman, co-author of Get What's Yours, a book explaining Social Security benefits. These surpluses will start to shrink in coming years.

The money has been used to fund other government programs, so in a sense it could be argued that Congress and various administrations raided the trust fund, said Goldwein. However, the full $2.8 trillion still is owed by the government to Social Security and most projections assume it will be repaid through some combination of reduced government spending, tax increases or federal borrowings.

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• Taking a big IRA withdrawal can make your Social Security benefits taxable.

True. So can other sources of taxable income.

If Social Security is your only source of income, your benefits probably won't be taxable. But if you have other income, some of your benefits might be taxable. For example, many people who diligently saved using a traditional IRA could get hurt by mandatory withdrawals, which start after investors reach age 70½.

• If you're working while receiving Social Security, you will lose benefits.

Mostly false. Some benefits will be reduced, assuming you're still below full retirement age (between 66 or 67 for most people now employed).

How much gets deducted depends on your age and how much you earn. For 2016, if you remain below FRA throughout the year, the Social Security Administration will deduct $1 in benefits for each $2 earned above $15,720. If you reach FRA during 2016, it will deduct $1 for every $3 earned above $41,880.

However, these benefits aren't lost but delayed. After reaching full retirement age, your benefits will increase to account for amounts withheld earlier. And once you reach full retirement age, you get to keep all your benefits, even if you're still working.

Reach Wiles at russ.wiles@arizonarepublic.com or 602-444-8616.