When you receive Social Security statements from the government, take the time to look them over. It is vital to keep track of the items on your statements over time. If you want to do it now, you can view your latest statement by creating and logging into your account on the Social Security Administration's website at ssa.gov.
If you choose not to create an online account, you will receive paper statements in the mail starting at age 25 and every five years after that. Beginning at age 60, you will start receiving paper statements annually. Regardless of how you receive your statements, you need to know how to read them properly.
If you would like to follow along, click here to view a sample Social Security statement.
Reading Social Security Statements
Social Security statements offer insight into both your past and your future. Once you get past the "What Social Security Means To You" section, you will see the first customized section, “Your Estimated Benefits", tailored specifically to you.
Your Estimated Benefits
This section helps you plan your future retirement, but it comes with a few caveats you will need to make sure you understand.
Unfortunately, no one has a crystal ball and these numbers are just estimates. They can change if Congress amends the laws governing the Social Security program. If current funding levels do not change, your estimated benefits may drop in 2033, by which time it is estimated that there will only be enough Social Security money to pay out 77% of scheduled benefits.
Your future benefits will change based on future cost of living adjustments, since estimates are displayed in current-year dollars and are not inflation-adjusted.
Finally, your estimated benefits will change based on your future earnings, which for the purposes of your Social Security statement are estimated to be equal to your last year's earnings until the day you retire. This is unrealistic because your earnings will vary, as they have throughout your career. If you get big raises and promotions, your benefits may be higher. However, if you get laid off and have to take a pay cut with your next job, your benefits may be lower.
Now that you understand these caveats, you can look at the various projected benefits displayed. Your statement shows how much you will receive per month if you retire at full retirement age, -- age 67 for most people -- at early retirement when you turn 62 or at a delayed retirement of age 70.
You will also see information relating to how much you would receive per month if you were disabled starting today and qualify for disability. Additionally, your statement displays family and survivor benefits that you may be eligible for and shows whether you have currently earned enough credits to qualify for Medicare.
Finally, you will see the facts that the Social Security Administration used to calculate your benefits, including your birth date, what they estimate your taxable earnings will be in the future, and the last four digits of your Social Security number. Make sure this information is correct.
The next section is called "How Your Benefits Are Estimated". You can read a brief explanation here before continuing to the next important section called "Your Earnings Record".
Your Earnings Record
Your Social Security taxable earnings, shown by year for your entire earnings history, directly determine your monthly Social Security benefits. The earnings record only includes earnings that had Social Security tax paid on them, so if your earnings in a year exceeded the Social Security wage base, only the earnings up to that base will be shown. Additionally, earnings for the most recent year may not be fully updated yet, but they will be by the time you receive your next statement.
You should be able to match these amounts up to your W-2s or self-employment tax records. Verify this important information carefully to ensure that you receive all of the benefits to which you are entitled.
How to Correct Your Social Security Records
The last two sections are informational in nature and do not contain any individualized data. They do cover what to do if you find any errors within your statement. Should you find an error, make sure to have your tax returns available and call 1-800-772-1213 between 7:00 AM and 7:00 PM your local time. You can also visit your local Social Security Administration office or write to "Social Security Administration, Office of Earnings Operations, P.O. Box 33026, Baltimore, MD 21290-3026".
Next time one of these statements shows up in the mail, don’t toss it away. If there is anything wrong with the information, the quicker you start disputing it, the better.