How to Make the Most of Your Social Security Statement

Over the years, I’ve noticed a surprising trend: many people don’t review their Social Security benefit statements on a regular basis. That’s a missed opportunity, because these statements are among the most important financial documents you’ll ever receive. They not only help you track your earnings history but also project the benefits you may rely on in retirement. Considering that Social Security replaces, on average, about 40% of a retiree’s pre-retirement income, it’s essential to understand what the statement is telling you and make sure the information reported is accurate.

Where to Find Your Most Recent Statement

Social Security used to mail benefit statements every year, but today the system is different. If you haven’t received one recently, don’t worry — you can always access the most up-to-date version online by visiting the Social Security Administration’s website.

To register online, click on either Create an Account or Sign In. You’ll be asked for some personal details and then prompted to answer a series of security questions based on your credit file history. These can sometimes be tricky, so don’t be surprised if the questions seem unrelated to you. Selecting “This does not apply to me” is often the correct choice. Once you’ve made it through, you’ll be able to view your most recent Social Security benefit statement.

📺 Want a deeper walkthrough? Check out our video Making the Most of Social Security to see how to review your statement and plan effectively for retirement.

How Are the Benefit Estimates Calculated?

The statement is a four-page document, but the most important information is on pages 2 and 3. The top of page 2 provides monthly benefit estimates at three different ages for individuals who qualify for Social Security retirement benefits.

• Full Retirement Age (FRA): Your benefit is calculated based on your top 35 years of earnings. If you haven’t paid into Social Security for 35 years, zeros are factored in, which can lower your benefit. The good news is that your benefit is recalculated each year based on your most recent earnings, so higher-earning years can replace lower ones or fill in gaps.

• Age 70: Benefits increase each month you delay filing beyond full retirement age, up to age 70. This increase amounts to about 8% per year.

• Age 62: Benefits are reduced for each month you file before full retirement age by roughly 0.5% per month.

📺 Curious about retroactive benefits and how timing can impact your payout? Watch Unlock the Secrets of Social Security Retroactive Benefits! for a concise explanation.

What Assumptions Are Being Made?

Your benefit estimates are based on the assumption that you’ll continue to earn at your most recently reported annual income level until you reach retirement age. If that assumption doesn’t match your actual plans — for example, if you intend to retire earlier or reduce work hours — your benefit statement may overstate what you’ll actually receive.

How Do I Adjust the Assumptions?

If the assumptions don’t reflect your plans, the easiest way to update the numbers is by using the calculators available on ssa.gov. The online calculator allows you to enter your own projected earnings and retirement age to generate a personalized estimate.

Do I Need to Review My Reported Earnings?

Yes. Reviewing your reported earnings each year is one of the most important steps you can take. The earnings listed on your statement are used to calculate your retirement benefits, so errors can affect what you ultimately receive.

You don’t need to worry about small differences between your statement and your tax return, but pay attention to larger issues, such as a missing year of earnings when you know you were working. If that happens, contact Social Security as soon as possible to find out what documentation is needed to correct the record. Often, a past tax return is sufficient. Catching these errors early is best, while you still have easy access to your records..

Where to Go for More Information

The Social Security Administration’s website has a wealth of resources if you’d like to explore these topics further. And if you’re interested in learning more about strategies for when and how to file for benefits, including options for individuals, couples, and survivors, we regularly host educational seminars. You can find upcoming events and register on our events page; we’d love to see you there!