{"id":4103,"date":"2014-10-07T06:42:43","date_gmt":"2014-10-07T10:42:43","guid":{"rendered":"https:\/\/kerryhannon.com\/?p=4103"},"modified":"2014-10-07T06:43:53","modified_gmt":"2014-10-07T10:43:53","slug":"why-you-need-to-read-the-new-social-security-statements","status":"publish","type":"post","link":"https:\/\/kerryhannon.com\/?p=4103","title":{"rendered":"Why You Need To Read The New Social Security Statements"},"content":{"rendered":"
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\"download\"<\/a>Beginning this month, many workers will get\u00a0Social Security benefit estimate statements<\/a>\u00a0in their mailboxes for the first time since 2011. But to get the most out of them, you need to know how to read them, fix mistakes in them and plot your retirement plans around them.I\u2019ve spoken to two experts for their advice on all counts, which I\u2019ll offer below.<\/p>\n

If you do receive one of these statements from the Social Security Administration, don\u2019t toss it or file it away unread. \u201cIt\u2019s probably the most crucial financial planning document for every American,\u201d said InvestmentNews contributing editor\u00a0Mary Beth Franklin<\/a>, author of the new e-book,\u00a0Maximizing Your Social Security Retirement Benefits<\/em><\/a>.<\/p>\n

(MORE<\/strong>:\u00a0The Real Social Security Crisis: Service<\/a>)<\/p>\n

READ Story HERE on Forbes<\/a><\/strong><\/p>\n

Why Paper Statements Are Here Again<\/strong><\/a><\/p>\n

Back in 2011, the Social Security Administration began phasing out mailed annual benefit statements to most workers to save an estimated $70 million a year. The agency said people could get the same information by setting up\u00a0my Social Security<\/em>\u00a0accounts at its website,Socialsecurity.gov<\/a>.<\/p>\n

But its decision raised a ruckus, especially since only 14 million wage earners have logged on to create the accounts. (I\u2019m one who has, and check\u00a0my Social Security\u00a0<\/em>statement online at least once a year even though I won\u2019t start claiming for another 16 years or so.)<\/p>\n

Mailings for people 60 and older resumed in February 2012 and Congress required the agency to revive the paper version starting this month \u2014 for millions of others (though not for everyone).Now, the paper mailings go out every five years to American workers age 25 and older who are not receiving Social Security benefits and who haven\u2019t registered for\u00a0my Social Security<\/em>\u00a0accounts. That means boomers can expect to get theirs at age 50, 55 and 60. After age 60, people will get the printed statements annually.<\/p>\n

(MORE<\/strong>:\u00a0How to Track Down Your Social Security Benefits<\/a>)<\/p>\n

The Reason to Open Yours<\/strong><\/p>\n

Why bother opening the letter when it arrives?<\/p>\n

The primary reason is that your statement will give you an idea how much you can expect to receive from Social Security depending on what age you apply for benefits. And this information will help you decide when to start claiming them. You can begin taking Social Security retirement benefits at age 62, but they\u2019ll be smaller than if you wait until you\u2019re what Social Security calls\u00a0Full Retirement Age<\/a>\u00a0\u2014 that\u2019s now age 66 and gradually rises to 67 for people born in 1960 or later. But you can get even larger benefits if you don\u2019t start receiving them until you turn 70. (In my case, the difference between applying for benefits at 62 and 70 is more than $14,000 a year.)<\/p>\n

(MORE<\/strong>:\u00a0Preparing for Social Security: A Checklist<\/a>)<\/p>\n

Now, for the advice about getting the most out of the paper statements:<\/p>\n

How to Read The Statements<\/strong><\/p>\n

When you get your statement, first check your earnings record and see if all the employment figures are correct. If your earnings record is wrong, you may not receive all the Social Security benefits you\u2019re entitled to; Social Security figures your monthly checks based on your average earnings over your lifetime.<\/p>\n

\u201cIt\u2019s very common that the income is incorrectly reported,\u201d said William Meyer, CEO and co-founder ofSocial Security Solutions<\/a>, a company that sells a Social Security claiming-decision software tool (cost: $20 to $250, depending on the level of analysis you receive).<\/p>\n

Next, look at the amount listed as your monthly estimated benefit at Full Retirement Age, at age 70 and 62 (early retirement age).<\/p>\n

You can also check the monthly\u00a0survivor benefits<\/a>\u00a0if you were to die this year \u2014 for your child, a spouse caring for your child and your spouse starting at Full Retirement Age.<\/p>\n

Keep in mind that the statement\u2019s benefit estimates are just that \u2014 estimates. The projections are smaller than the dollar amounts you will likely receive when you claim benefits because they\u2019re calculated in today\u2019s dollars \u2014 before being adjusted for inflation, Franklin told me.<\/p>\n

Plus, your eventual benefit could be affected by any modifications to benefits Congress enacts and by cost-of-living increases after you start claiming. The estimates also assume (probably wrongly) that you\u2019ll keep making the same amount of money until you start receiving benefits.<\/p>\n

In short, your Social Security estimated benefits report is \u201ca snapshot in time,\u201d said Meyer.<\/p>\n

Now here\u2019s what you\u00a0won\u2019t<\/em>\u00a0find on the statements: Your spouse\u2019s (or ex-spouse\u2019s) estimated Social Security benefits. \u201cIf a person is married, divorced or widowed, the information is only about that individual and doesn\u2019t include the whole picture,\u201d said Meyer.<\/p>\n

How to Fix Errors<\/strong>\u00a0in the Statements<\/strong><\/p>\n

If you discover that any earnings before last year are incorrect, get your W-2 or tax return for the years in error and then either call Social Security (800-772-1213) or write to the agency immediately (Social Security Administration, Office of Earnings Operations, P.O. Box 33026, Baltimore, Md. 21290-3026).<\/p>\n

How to Use Your Statement<\/strong><\/p>\n

Reading your Social Security statement can be a good reminder of\u00a0how much you need to be saving<\/a>\u00a0on your own for retirement. Odds are, you won\u2019t be happy living on just the estimated benefit Social Security says will be winging your way.<\/p>\n

It can also launch your essential retirement-planning research to determine what age you (and your spouse or partner if you have one) should begin claiming Social Security benefits.<\/p>\n

\u201cWhen to start receiving Social Security is the largest financial decision that 99% of Americans make,\u201d said Meyer.<\/p>\n

Anyone who is married should view his or her Social Security claiming date as a\u00a0household<\/em>\u00a0decision. \u201cYou should make this decision together as to what is appropriate for both of you and how to maximize your benefits,\u201d said Franklin. That means looking at both of your personalized Social Security statements \u2014 ones in the mail or online.<\/p>\n

The decision about when to take Social Security is a head-spinner and no two people have the same scenario. To get a handle on it, first sign up for\u00a0my Social Security<\/em>\u00a0(so you won\u2019t have to wait to get a paper statement). Then run various claiming situations with a free online Social Security benefits calculator such as ones from\u00a0AARP<\/a>,\u00a0T. Rowe Price<\/a>,\u00a0Financial Engines<\/a>\u00a0or\u00a0SSAnalyze!<\/a><\/p>\n

Two calculators that charge a fee but are worth considering:\u00a0Maximize My Social Security<\/a>\u00a0($40) from Boston University economics professor and PBS NewsHour contributor Larry Kotlikoff and Meyer\u2019s\u00a0Social Security Solutions<\/a>. Their fees are pocket change when you consider the thousands of dollars in Social Security benefits you might forego by making the wrong choice of when to start claiming.<\/p>\n

By Kerry Hannon<\/p>\n

Kerry Hannon has spent more than 25 years covering personal finance for Forbes, Money, U.S. News & World Report and USA Today. She is the author of <\/b>What’s Next? Follow Your Passion<\/i> and Find Your Dream Job in Your Forties, Fifties and Beyond<\/i><\/b><\/span><\/a>;<\/i> <\/b>Great Jobs for Everyone 50+<\/b><\/span><\/a> and <\/b>Suddenly Single: Money Skills for Divorcees and Widows<\/i><\/b><\/span><\/a>. Her website is <\/b>kerryhannon.com<\/b><\/span><\/a>. Follow her on Twitter <\/b>@kerryhannon<\/b><\/span><\/a>.<\/b><\/span><\/p>\n

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