Social Security Benefits Tips

Social Security Benefits Tips

Whether you’re currently receiving social security benefits or not there yet, you should be reviewing your Social Security Statement annually. This document projects what your monthly benefit will be at various ages and, equally important, includes your earnings history – as far back as high school. Some people discover that their wages as listed on the statement appear to be missing or incorrect. Such problems, if not fixed, could reduce your payouts in retirement.

To review and download your statement, you can create a “My Social Security” account on the Social Security Administration’s website – go to: ssa.gov/myaccount.

The first step is to review your records and work history. Your Social Security Statement has two columns with details about your earnings: your taxed Social Security earnings and your taxed Medicare earnings. You might have held a job at some point in which your earnings weren’t taxable for Social Security (some government jobs, for instance, don’t pay Social Security taxes) but were taxable for Medicare. In that event, your earnings record would show all your wages for a particular year in the Medicare column, but zero wages under the Social Security column. So it’s possible that some of your work was for an entity that wasn’t taxed by Social Security, but was by Medicare.

Another possibility is that your earnings in one or more years exceeded the Social Security taxable ceiling. Then the Social Security column would show the maximum taxable amount ($128,400 in 2018), but the Medicare column, with no ceiling, would show all of your earnings.

If neither of these explanations help, the next step would be to contact the Social Security Administration (and not the IRS) with an “earnings discrepancy” issue. Normally that means the person is missing a year of earnings or has extra earnings that aren’t theirs (called “scrambled earnings” inside the agency). You can find instructions about this and what records you might need (W-2s, tax returns, etc.) on your Social Security Statement. The number to call is 1-800-772-1213, or you can make an appointment to visit your local Social Security office.

There are also online calculators that can help people plan for and make the most of retirement. One of them highlighted in the news lately is “Open Social Security,” which you can find at opensocialsecurity.com. This free calculator helps individuals and couples decide when to claim Social Security benefits to generate “the most total spendable dollars over your lifetime.” Users enter their marital status, gender, date of birth, and “primary insurance amount,” which is the amount of your monthly benefit at “full retirement age,” as defined by the Social Security Administration (that figure can be found on your Social Security Statement).

With that information, the calculator recommends a specific filing strategy, including the date and age when you should first claim benefits, and provides a chart with year-by-year benefit amounts. The website also includes a good description about how the calculator is working. The calculator can’t account for every circumstance that an actual person or couple might face, but it can help with simplifying one of your toughest and most important financial tasks in later life.