Your annual Social Security statement contains everything you need to know about the benefits that you may receive. If you are not sure of what all the entries mean our team is happy to explain some of the key points. Obtain a copy of your statement and we will walk you through some of the more important sections of the form.
Earnings record: This is the record of your taxed Social Security earnings, in other words this is the amount of your total income that is subject to payroll tax. The reason there are separate columns for Social Security and Medicare earnings is because they have different caps. You will note there is no cap on Medicare earnings. Make sure that your records and the records of the Social Security Administration are equivalent to one another – if not get in touch with the agency.
Estimated benefits: These are projections of your benefits:
- Retirement: The estimated benefit given is based on what you would get if you elect to retire at different ages; the amount is based on earnings history as of now. You can claim retirement benefits as young as 62, most people defer filing because the benefits go up between 7 and 8 percent annually but you will max out at 70 years of age.
- Disability: There is an estimated amount of disability benefits that would be available if you claimed for benefits prior to full retirement age. Once you reach full retirement age, disability benefits convert to retirement benefits.
- Family: Upon your retirement or disability your family may also be entitled to benefits. The fact that there is no forecast of potential benefits is a flaw in the system because many people make poor claiming decisions as they are not aware of these possible benefits. School aged children as well as your spouse can get benefits that are about half of what you would get.
- Survivors: Upon your death, school age children and your surviving spouse, even if you are divorced, might get benefits based on your earnings. Once again, only the limits are listed, not the primary benefit amounts.
As you can see from this brief introduction to your statement, the system is rather complex. We hope that this will help you to get an idea of what to expect when you retire or should you need to apply for Social Security disability benefits.