Your Social Security Statements Are Not Junk Mail

You can now get your Social Security statements online, but you’re probably used to getting them in the mail—and promptly shredding them. Many people tend to ignore their statements, especially if retirement seems far off. But you should, and here’s why. Even though the money won’t be the bulk of your retirement income, being aware of what’s in there will help you accurately plan your future lifestyle. You can’t make up the shortfall between Social Security and your lifestyle if you don’t know what Social Security is paying you. Most importantly the statement can also act as an early warning sign that you have been a victim of identity theft.

So what is in my Social Security statement?

There are two main sections to a Social Security statement, earnings, and benefits. Earnings are pretty self-explanatory. This is the column that lists how much you’ve made each year of your working life. The section also estimates how much you’ve paid into Social Security and Medicare since you started working.

The benefits column is also relatively self-explanatory. It shows how much you will be taking out of the programs when you are ready to retire. It also tells you how much you can expect to collect if you have to claim disability benefits, or how much family members will collect upon your death.

Why is it important?

Your Social Security statement is important for a few reasons. First, is the obvious reason: So you know how much you will collect when it comes time to retire. If you retire after the age of 62, but before 67, you will only be eligible for 70% of the amount you would otherwise be entitled to. If you hold off to retire until you are 70 years old, you will collect an additional 32%. After this age, you don’t receive any additional retirement benefits.

But, most people don’t plan to collect a whole lot from their Social Security. These days, other investments—such as IRAs, 401(k) plans—and mutual funds are generally how people finance their retirement. There’s a more important reason to review the statement carefully: to check for identity theft.

If you get your statement and the earnings don’t match what you’re actually earned that year, start doing some digging. One of the most common types of identity theft is stealing a Social Security Number (SSN). If the earnings are less than what they should be, you’ll definitely want to correct the mistake, as it means you will receive fewer benefits upon retirement.

What do I do if I spot a discrepancy?

Fixing any discrepancies can be a hassle, but not if you keep your tax records (and, of course, you are keeping your tax records, aren’t you?). To do so, you’ll need to contact the Social Security Administration (SSA) with tax returns or W-2s. Payslips and wage records are also adequate as evidence. Failing any of this, you need to furnish employer names, the dates you worked for them and how much you earned. Always send copies, never send originals. The more information you can send the SSA, the better. If you send them a minimal amount of information it can take months for them to adjust your statement.

In the meantime, check to make sure that your employer has the right SSN on file. Even if you fix your earning statement this year, if your employer has the wrong number on file it can mean problems down the road. Correcting any incorrect information an employer has is the best way to ensure that your statements are accurate in the future.