Many American seniors rely heavily on their Social Security income for retirement. But one surprising retirement mistake people make is glossing over their Social Security statement without a second glance. The details in this document can make a big difference in your monthly Social Security income, so any mistakes could significantly impact your budget.
This guide explores what you should look for on your Social Security statement.
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1. Your earnings history
Your earnings history sets the stage for your future benefits because the Social Security Administration calculates your monthly payments based on your highest 35 years of earnings.
A single missing year or underreported income for a given year could drag down your average, leading to a lower Social Security check. In fact, one missing year of earnings could reduce your monthly benefit by around $100. Even if the difference in your monthly check seems small, missing funds could add up to a substantial amount over the course of your retirement.
When reviewing your Social Security statement, it’s helpful to take a close look at your earnings history. If you spot any errors, bring them to the attention of the Social Security Administration (SSA) to make the necessary changes.
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2. Your benefit estimates for different claiming ages
As a part of your statement, you’ll see a graph highlighting the monthly check amount you can expect based on the age you choose to retire. This graph starts with how much you could receive if you claim benefits at 62, all the way up until age 70.
A quick glance will show you that waiting to claim your benefits can make a significant difference. Depending on your situation, waiting until age 70 to claim your benefits could lead to a monthly check almost $1,200 higher than if you had claimed at age 62. Without looking at this chart, it’s easy to underestimate how much you could save by waiting.
3. Survivor and disability benefits estimates
If you’re eligible for survivor and disability benefits, these details are laid out on your Social Security statement. You can find out exactly how much you’d be eligible for if you became disabled and how much of a monthly benefit you will leave behind for your survivors after passing away.
Understanding these numbers can help you when planning for your family’s future.
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4. Your total working years
You’ll be able to find your total working years on your Social Security statement, which notes how many years of zero earnings are being factored into the 35-year average.
If you are still a few years away from retirement, opting to work long enough to fill in all of the 35 years with an income can help you maximize your benefits.
5. Your full retirement age
Although many Americans assume that the retirement age is 65, that’s not always true for your Social Security calculations. Instead, many retirees will notice a full retirement age of 67 on their Social Security statement. If you claim benefits before your full retirement age, you’ll receive a smaller monthly check.
You can use the document to confirm your full retirement age when mapping out your retirement plans.
6. Total taxes paid
If you’re curious about how much you’ve paid in Social Security and Medicare taxes, you can find out on your Social Security statement. It tallies up the total you’ve paid in Social Security and Medicare taxes. Plus, it shows what your employer, or employers, have kicked in.
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7. Retirement planning tip
The most recent Social Security statement includes this important detail about this income: Social Security benefits are not intended to be your only source of retirement income. You may need other savings, investments, pensions, or retirement accounts to make sure you have enough money when you retire.
Although it’s tempting to lean exclusively on Social Security, it’s often not enough to cover all of your retirement needs. In the years and decades leading up to your retirement, make an effort to save and invest for your retirement years.
8. Medicare eligibility
Your Social Security statement also mentions whether or not you have enough credits to qualify for Medicare at age 65. Since Medicare is a key part of most retirement plans, it’s helpful to know whether or not you’re on track to qualify.
Bottom line
As you navigate your golden years, keeping a careful watch on your Social Security statement can help you avoid missing out on potential income due to mistakes on this important document. Make sure to double-check your Social Security statement to help pave the way for a stress-free retirement.
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