It took an act of Congress, but Social Security statements are back in the mail.
The annual personal earnings record and benefit statements were largely canned in 2011 in a cost-cutting move, but complaints soared and legislation ensued.
More Top Picks Best Threshold Ramps For Wheelchairs
Beginning this month, the Social Security Administration said, it will mail statements to most workers every five years, beginning at age 25, until they reach age 60, when annual paper statements will resume. They come about three months before your birthday.
The statements give you a monthly benefits estimate, calculated as if you’ll continue to earn last year’s salary about until retirement. It estimates this figure for three starting dates: your full retirement age, age 62 and age 70. Waiting until age 70 qualifies recipients to receive delayed retirement credits, or a greater monthly check.
But if you’re one of the nearly 14 million Americans signed up for an online account at socialsecurity.gov/myaccount, you won’t get one. Don’t want such a personal document arriving in the mail? Sign up for an online account and save Uncle Sam the 50 cents to mail it to you.
Officials said one of the biggest reasons for resurrecting the statements was to provide people with the ability to verify the accuracy of their earnings record, from which future benefits are calculated.
So, what to look for? Make sure the earnings in each year match the income reported in Box 3 of your W-2 tax form.
If you’re self employed, the earnings should match the net earnings you reported after business deductions and depreciation. Don’t count dividends and other investment income, including most real estate rental income.
Unfortunately, odds are slim that a decent percentage of people will ever perform this task, said Steven Sass, program director at the Center for Retirement Research at Boston College and a former Federal Reserve Bank economist.
Sass is a self-professed paper-statement geek and was happy to see the documents return to mailboxes, but he thinks the administration missed a great opportunity.
The statements could have been dressed up with more data about saving for retirement, he said, but even without a budget to do that, the government could have rolled them out all at once to create a buzz and get people looking at their information when the announcement was making headlines.
Even in their current form, though, Sass thinks the statements can be a great motivator. For many people, it’s the only time they look at their career earnings, year by year, all on one page. It can be a humbling experience, to be sure.
What the statements — paper or online — won’t tell you is what your actual benefits might be if you are or were married, if you spent part of your career in government service that was not part of the Social Security system or if you are a surviving family member of a deceased worker who earned benefits.
These situations are much more complex, but they are vital to understanding and planning your retirement income.
If you’ll qualify for spousal or survivor benefits, for example, it may pay to claim those while delaying a claim on your own work record until age 70, when you can collect delayed retirement credits. In many cases, financial advisers recommend maximizing the higher earner’s benefit, knowing it will last until the second spouse dies.
To understand and forecast an optimal strategy that takes all these situations into account, you’ll still need to start with a baseline, accurate estimate of your own benefits.
So get your geek on and use the paper statement as an early birthday present — and a chance to look into your financial future. Better yet, don’t wait for a milestone birthday and just sign up for an online account.
Share your journey to or through retirement at [email protected].