There are numerous things to understand about Social Security. For instance, American workers have to learn how the SSA computes their benefit amounts. It looks at the 35 best years you ever worked, brought up to inflation. You need to be familiar with spousal benefits when marriage is present.
But one of the most helpful things you can do in advance of claiming Social Security is to read your latest Social Security statement. It contains some key information that will be invaluable in deciding about your future benefits.
You can easily access your Social Security statement online. The SSA provides a new statement each year for every American worker. If you haven’t recently, check out the SSA’s website at www.ssa.gov.https://www.ssa.gov/
If you do not have an account, one can be set up through a few easy steps.
What information is in your Social Security statement?
Many people check their Social Security statement only to see an estimate of their future benefits. However, this document provides much more information that can be helpful. Here is what you will find:
- Earnings history: A year-by-year record of your income from Social Security-covered jobs. This includes past wages, up to the taxable maximum for each year. Even if you worked as a teenager, your earnings should be listed.
- Taxes paid: The amount of Social Security and Medicare taxes you and your employers have paid over your career.
- Work credits: Whether you have earned enough credits to qualify for benefits. In most cases, working at least 10 years (earning 40 credits) makes you eligible.
- Disability benefits: Information on whether you qualify for disability benefits if you were to become disabled.
- Survivor benefits: The amount your family members could receive if you were to pass away unexpectedly.
- Medicare eligibility: Whether you qualify for Medicare benefits at age 65.
- Retirement benefit estimates: How much you would receive at different retirement ages, from 62 to 70.
- Full retirement age: The age at which you qualify for full Social Security benefits.
- Additional resources: A list of important details about Social Security benefits and links to more information.
How to use your social security statement
If you are thinking about retiring soon, reviewing your Social Security statement can help you plan. Here are some key areas to focus on:
- Check your earnings record
Look over your earnings history to make sure everything is correct. It is possible for some earnings to be missing. Even one missing year can affect your future benefits. If you find an error, your statement includes a phone number you can call to correct it. - Understand how your retirement age affects your benefit
Your Social Security benefit changes depending on when you start claiming it. If you begin collecting before your full retirement age, your benefits will be permanently reduced. On the other hand, waiting beyond your full retirement age will increase your monthly benefit.
For example, if your full retirement age is 67 and you wait until 69, your benefit increases by 16%. If your estimated benefit at 67 is $2,000 per month, waiting until 69 would increase it by $320 per month, adding up to an extra $3,840 per year.
If you’re still considering when to retire, this information can help you decide the best time to start collecting your benefits. Even if you’ve already made your decision, knowing the details will be helpful in planning your financial future.
