Given the importance of Social Security in the lives of retirees, it would stand to reason that most Americans are aware of the amount of benefits they would be entitled to should they retire, but that does not seem to be the reality of the situation.
According to new research from the National Institute on Retirement Security (NRIS), just 11% of Americans who aren’t retired say they know exactly how much benefits they stand to receive. Additionally, 24% are “not very sure” of their benefit amounts and 22% say they have no idea of how much they would be entitled to receive.
This lack of information is not good for future beneficiaries, who should be more concerned about financial planning for retirement. Being proactive could help improve quality of life once on fixed income.
How to get your Social Security benefit estimate
Tyler Bond, research director at NIRS, during a Tuesday presentation of the firm’s research explains the easy process “Workers can go to the Social Security Administration website and log into their own account and receive an estimate of their future benefit amounts. Most workers seem not to have done that and don’t seem to have a good sense of what they will get personally from Social Security.”
Any worker who is 18 years old can create a “My Social Security” account to check the records, and for those aged 60 and over who do not have an online account, a paper statement can be requested, which will be mailed.
What your Social Security statements will be show
According to Joe Elsasser, certified financial planner and president of Covisum, a Social Security claiming software company, the statements will particularly help individuals between the ages of 62, the earliest you can retire and claim benefits and 70, the latest you can delay, see how the annual cost-of-living adjustments would affect monthly benefit checks.
Of course everyone would benefit from knowing this information, as Elasser also argues, but this segment of the population would be especially well served by checking “The best way to think about it is, what kind of living standard would Social Security provide if you continue to work, continue to basically get wages that are in line with inflation. That’s what the Social Security statement tells you.”
But these statements can only work with the information available now, they cannot predict wages or cost of living adjustments that would change substantially the situation. As Jim Blair, vice president of Premier Social Security Consulting and a former Social Security administrator explains, “The closer someone is to age 62, the more accurate it is.”
How to make statements more accurate
The easiest way to do this is to ensure that your earnings history is correct and accurately reflects your wage history. It is always easier to fix mistakes as they happen that when enough time has passed for records to get lost.
If there is a mistake, correcting it is as easy as taking the correct W-2 form to a local Social Security Administration office. Tax returns, wage stubs, pay slips, personal wage records or other documents can also be used to verify the information. But even if all records are correct, you amy end up getting less in benefits than expected, due to the potential shortfall in the Social Security Trusts. Payrolll taxes should still sustain a portion of the theoretical allocated benefits, but it may not be the full amount depending on whether or not Congress shores up the program.
As Elasser cautions, “It’s totally reasonable to expect a benefit cut for younger people. But to plan for it not to be there at all is a poor assumption.”
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