Weston: What Millennials get wrong about Social Security

Still, millennials who believe Social Security won’t be there for them could make bad choices about their retirement savings. The worst outcome would be if they didn’t save at all, convinced retirement was hopeless. But any of the following myths could cause problems.

‘I CAN SAVE ENOUGH TO RETIRE EVEN WITHOUT SOCIAL SECURITY’

Good luck with that.

Currently, the average Social Security benefit is just under $1,500 a month. You would need to save $400,000 to generate a similar amount. (That’s assuming you use the financial planners’ “4 percent rule,” which recommends taking no more than 4 percent of the portfolio in the first year of retirement and adjusting it for inflation after that.)

And that may be underestimating the value of Social Security. The Urban Institute estimates that many average-income single adults retiring between 2015 and 2020 will receive about $500,000 in benefits from the system while couples will receive roughly $1 million. Millennials, meanwhile, are projected to receive twice as much: about $1 million for an average-income single adult and $2 million for a couple.

Trying to save enough to replace 100 percent of your expected Social Security benefit might well be impossible, and could cause you to stint on other important goals such as saving for a child’s education or even having a little fun once in a while.

‘I CAN IGNORE MY SOCIAL SECURITY ACCOUNT’

Your future Social Security check will be based on your 35 highest-earning years. To get what you’re owed, however, your earnings need to be reported accurately and that doesn’t always happen. Employers may not report the correct information to Social Security, or may not report your earnings at all. You can correct those errors if you catch them in time. Fixes could be difficult decades from now, when the employer may have gone out of business and needed documents may be unavailable.

‘IF IT’S STILL AROUND, I SHOULD GRAB IT AS SOON AS POSSIBLE’

Millions of Americans make this mistake every year, locking in permanently reduced payments and potentially costing themselves up to $250,000 in lost benefits by claiming too early. But Congress is highly unlikely to cut benefits for those in retirement or close to retirement age, Meyer notes.

Instead, there likely will continue to be incentives for delaying your Social Security claim. Currently, benefits increase by about 7 percent to 8 percent for each year you wait to apply after age 62 until benefits max out at 70.

Working an additional few years also can compensate for low- or no-earning years earlier in millennials’ careers, when incomes may have been depressed by recession or gig-to-gig work.