To get an estimate of how much you'll be receiving when you retire, you should be getting your Social Security statements now. Keeping up to date with your statements is crucial if you plan on collecting Social Security benefits in the future — you don't want to be surprised by realizing that your benefits aren't as high as you had anticipated.
Don't sit and wait for your statement — the Social Security Administration sends your statement by mail only if you're over 60, not collecting benefits and don't have an online account. But you can get your benefits statement online at any time to verify your earnings and see how much you'll get at what age. Here are five reasons to get your Social Security statement and use it to plan your retirement the right way.
1. Check Your Benefits
Your Social Security statement shows the amount you'll receive each month when you retire, which is based on your lifetime earnings and projected earnings going forward. Your Social Security benefits statement also shows you how much you would receive if you became disabled.
More than one in four 20-year-olds will become disabled prior to retirement age, according to the SSA. Knowing how much you would receive in disability benefits can also help you plan for a major life change and enable you to make sure you have enough disability insurance.
The closer you are to retirement, the more accurate your estimated benefits will be. The actual amount of your benefit is determined when you apply for benefits and might be different from the estimate in your statement if your earnings increase or decrease in the future. To predict how much your benefits will be, use the Social Security estimator.
2. Verify Your Family’s Benefits
If you're married or have children, your spouse or kids might be affected by the amount of your Social Security benefits. For example, your spouse can receive payments based on your work record for up to 50 percent of your monthly benefits. Your dependent children might also qualify to receive benefits based on your record if they are:
- Unmarried and under 18 years old
- 18 or 19 years old and a full-time student in grade 12 or lower
- 18 or older and disabled from a condition that began before age 22
Your Social Security statement also shows how much your other family members can expect to receive based on your work record. This information can help you plan your financial future as a family so you can maximize your benefits.
3. Confirm Your Work Record
Your statement includes a Social Security statement of earnings. Your Social Security earnings statement shows how much of your earnings were subject to Social Security and Medicare taxes for each year you've worked. Review this information carefully — if the amounts are incorrect, you won't receive the correct benefit amount at retirement.
If you need to make a request for Social Security earnings information that is erroneous, call the Social Security Administration at 800-772-1213 immediately. You'll need your W-2s and tax returns to support your claim, so resolve the error before you get rid of important records.
4. Plan Your Retirement
Knowing how much you'll receive in benefits can help you plan for retirement. Social Security benefits are designed to replace only about 40 percent of your annual pre-retirement earnings, according to the SSA. It's important to use financial products — like an employer-sponsored 401k plan or an individual IRA — that will maximize your savings so you can live comfortably in retirement.
Your statement also shows what you can expect to receive if you start collecting benefits at the minimum retirement age of 62, your full retirement age, or if you wait until 70 to collect benefits. You'll find your full retirement age on your statement — it ranges from 65 for people born in 1937 or earlier to 67 years old for people born in 1960 or later. Knowing these benefit amounts can help you decide how long you need to work to receive benefits you want.
Related: How Much Money Do I Need to Retire
5. Figure Out If Your Pension Will Be Affected
If you worked only for employers who withheld Social Security taxes from your paycheck and you're getting a pension, your Social Security benefits won't be affected. If you earned a pension from an employer who didn't withhold Social Security taxes from your paycheck, however, and you also worked at least 10 years in other jobs that qualified you for Social Security benefits, your pension might lower your Social Security benefit amount.
The reduction is limited to half the amount of the pension from your employment that was not covered by Social Security. For example, if you receive a public-sector pension of $600 a month, your Social Security benefits reduction can't exceed $300.
How to Sign Up for Your Social Security Statement Online
Another way to view your Social Security statement online is to visit the "my Social Security" section of SSA.gov. To create an account so you can access your statement, you must be at least 18 years old and have a valid email address, Social Security number and mailing address.
The SSA prioritizes security, so you can create an account only for yourself. The SSA uses your personal information to verify your identity against its records, as well as an external identity services provider to verify your data against its records.
When you make a verification request to establish your account, SSA's external identity service might use your credit report to verify your identity and you could see a soft inquiry on your report. Don't worry — these inquiries don't affect your credit score and they'll come off your report after one year.
Creating an online account is quick and secure, and it enables you to check on your benefits any time. Get your statement now — the earlier you start your retirement planning, the more likely you'll reach your goals.
Keep Reading: Answers to Your Top 6 Social Security Questions