Your Social Security statement
My Social Security statement comes automatically in the mail once a year, and I usually glance at it and then stick the paper in my current year’s tax folder in case I ever get the urge to look at it again. But really, if you’re in the U.S., it’s important to do more than just glance at it. (If you’re under 25 or not receiving your statement automatically for some other reason, you can always sign up to receive it by going to the Social Security web site.)
When you get your statement, you should verify that your earnings record is correct for the previous years. (Sadly, mine is, including the couple of years recently when I made less than $4,000 per year.) This is important because your earnings record is what the government will base your benefits on (for retirement, disability, Medicare, etc.) Verifying your earnings record is also important because if the numbers are off (especially if they are off dramatically) it could be an indicator of identity theft or fraud. Obviously you’d want to nip that in the bud if it occurred.
Your estimated future benefits are listed on the statement as well. Regardless of whether or not you believe Social Security will be around, reading your numbers can be a good wakeup call. It can kick-start you into making sure that you’re saving enough on your own for retirement now. For example, my estimated retirement benefit if I stop working at age 62 is about $957 per month in today’s dollars. I don’t think $957 is enough though, so I need to be saving and investing heavily now to improve my future lifestyle.
You can also have some fun with the numbers. Ever wanted to know how much money you’ve earned in your entire life? It’s right there. (All you have to do is add it up.) I wonder how many of us have made their first million already? (Not me.) You can find out how much you made in your first year of work and compare that with what you’re making now. You can calculate your average wages over your working lifetime. You can reminisce about the year you took off to travel the world, or what have you.
Finally, the statement offers a brief over view of the Social Security system, and a link to a site called Mymoney.gov, which is “a federal government website dedicated to teaching all Americans the basics of financial management”.
March 27th, 2008 at 12:12 pm
Actually, that estimate is the amount in today’s dollars. From what I recall it’s based on the assumptions that you’ll keep working every year until retirement and that each year your salary will be the same as the latest year they have on record. So, since even if you’re doing the same type of work, like they are assuming, you will likely get raises, which will increase their estimate over time.
Second, they use a multiplier for all your earlier salaries to turn your real salaries into inflation-adjusted numbers. Those multipliers get updated each year. So that’s going to increase your estimate also.
What I’m wondering is what exactly they mean by salary. All my numbers are basically right, but they don’t exactly match any numbers I can find. I’m pretty sure I have checked my gross income, my net income, and my social security income. Their website says they get their numbers from your W-2 forms from your employer and your Schedule C tax return forms for self-employment income.
March 27th, 2008 at 12:24 pm
Social security, guh! As a topic, it turns my mind to a pile of fly-infested compost. And those stupid statements scream out to me:
Yeah Right!
Whatever.
Ya think?…
And other mean stuff that all points to the fact that by the time I retire (at age 96), there won’t be any social security. There is already no social security, and the poop hasn’t even hit the swirly cooling thing yet.
March 27th, 2008 at 3:50 pm
Thanks for pointing that out about the estimate being in today’s dollars, Debbie. I missed that, and will update my post. But still, I’d like to have more than $957 a month to live on.
March 28th, 2008 at 6:35 am
If you use that cash as it was supposed to be used, not as the stool but a leg, you could offset taxes, help with housing upkeep, pay for some insurances, and have some left over for groceries.
Will it fund a trip to Aruba? Probably not. Will it be enough to live on without any other income? Probably not. Will it help deter a future life of homelessness and begging for a few coins from a stranger? Only if you built the rest of the stool.