Useful Information From Your Social Security Statement

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I recently received a nice greenish pamphlet from the government, my Social Security Statement! I thought it would tell me how much to expect from them in retirement… instead it just says is that I haven’t accumulated enough work credits to get Social Security benefits. Gee, thanks… *toss*. But wait, a few recent events have shown me other ways that it can be useful.

How Do I Get A Copy? If you are 25 or older, you should automatically receive it annually about 3 months before your birthdate. Otherwise, people of any age can request a copy to be sent to them. Here’s a sample statement.

Use #1: Find Out How Much Money Have You Earned In Your Lifetime
One of the books I am currently reading is the much-praised Your Money or Your Life. In it, one of the first exercises is find out how much money you’ve earned in your lifetime. Under the Your Earning Record section of your SS statement, it will break down all the (taxed) income you’ve ever made by year. Add it all up, and you should have your lifetime income. Besides breaking out your old Quicken files or tax returns, this is probably the only place all this information is easily available.

Why do this? For one, you may be surprised by how much money you have been able to earn, and this should boost your confidence. Second, if you compare this number to your current net worth, you may also be surprised by how little you’ve actually kept so far. Hopefully this will motivate you to waste less money.

…Or it could be cool just to know how much money you’ve ever made. 😉

Use #2: Life Insurance Planning
I’m also (slowly) doing some research on life insurance. In calculating how much life insurance you’ll need, you may want to consider what sources you already have. Many people don’t know that Social Security offers survivorship benefits if you have kids, or spouses of retirement age. In fact, about 20% of all Social Security benefits are paid out to those younger than age 62.

Under the Your Estimated Benefits Section, there is information for your estimated survivor benefits if you die. Currently, it says that my child would get over $1,100 per month if I died, and my spouse caring for the child would get over $1,100 per month as well. Over $26,000 a year? Really? This is much more than I would have imagined. As far as I can tell, this until the child turns 18.

There are also disability benefits listed, but usually privately-bought disability insurance only covers up to 60% of your original income, so I would still try to buy all I could get.

Use #3: Realize The Whole Thing Might Be Wishful Thinking
Finally, there’s a happy message snuck in at the bottom:

Your estimated benefits are based on current law. Congress has made changes to the law in the past and can do so at any time. The law governing benefit amounts may change because, by 2041, the payroll taxes collected will be enough to pay only about 75 percent of scheduled benefits.

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  1. You mistyped that last quote. The date at which taxes cover 75% of benefits is 2041. The correct quote is “The law governing benefit amounts may change because, by 2041, the payroll taxes collected will be enough to pay only about 75 percent of scheduled benefits.”

  2. If you look at page 4 of the sample, I think you’ll find that while the survivor benefits for your child continue to age 18, the spouse caring for the child benefit is only until age 16.

  3. I Need More Tape! says

    One thing to note about calculating your lifetime income with the SS statement:

    The statement only shows income up to the Social Security tax cap, which I believe was $97,500 in 2007. So if you earned $150K in 2007, the statement will show only $97,500.


  4. I was divorced from the father of my child when he passed away, but I was still able to collect survivor benefits for myself and my daughter, because I had never remarried. I also could not earn over a certain amount of money per month in order to keep the benefits coming, and it was to my advantage to keep my income down, since the benefits were more than I could earn at the time. My survivor benefits stopped when my daughter was 16, but her’s continued until she was 18, provided she was in school.

  5. So I’m guessing that you have a birthday coming up in about 3 months. I’ll mark that on my calculator. I didn’t know you could get them before you were 25. Maybe I will get one. Probably won’t be that interesting though since I only have a few years of work history.

  6. dan isaacs says

    Is that a misprint? Shouldn’t it be 2041, not 2014?

  7. Redgtxdi says

    I think you’ve got another misprint?……..

    Many people don’t know that Social Security offers survivorship benefits if you have kids or spouses of retirement age

    Kids of retirement age?? (confuzzled

  8. Dave Tuck says

    My SSS says that by 2041 payroll taxes collected will be enough to only pay about 78%.
    Either way, this unfunded liability along with the others is going to cause major problems in the future. This will probably have to be resolved within my lifetime. These liabilities already exist, they cannot be wished away, either taxes must go up, benefits must go down, or some combination of the two. By the way, politicians have no incentive to fix this.
    Maybe national health care, if implemented will lower life spans and this will help social security. Maybe the US will open its borders and this will help social security.
    It will be amazing to see what happens when the government eventually has to start paying for these liabilities with general funds. Treasury security investors will see this and the default risk premium will shoot up, and this might be the end of the welfare state.

  9. Just removing the income cap on SS taxes is enough to fund social security indefinitely. So I don’t really think we are going to have some sort of “major crisis”.

  10. I tried requesting a form, but apparently I am not in their system. Is that bad?

  11. Anonymous says

    I don’t have one of my reports handy, but doesn’t it only report social security wages? I think I remember my form only being useful as a reference for the increases in the cap over the past ten years… (i.e., income in excess of the ss cap isn’t reported)

  12. Dave Tuck says

    I understand that I may be incorrect. From what I have read, removing the income cap will only postpone the funds return to a true pay as you go system. Most importantly it would have huge economic costs because of raising the marginal tax rate. Could you please post sources of information leading to your conclusion. Here are two sources which have good information as to why I think it will not work.

  13. I too was surprised how much I might get from social security. I’ve been taught not to rely on it so long that I’d forgotten that it might actually make a difference.

    This amount on top of my current retirement savings would be fantastic.

  14. Allen @ Good Money Blog says

    Same here. If I ever get anything from social security 30 some years later, I’ll treat that as bonus.

  15. dan isaacs says

    As Andy indicated, raising the cap on contributions to 120K from it’s current ~95k would make them solvent through 2100. It’s easy to fix this “problem”.

    Medicare, OTH, is not so simple to fix.

  16. Thanks for pointing out the 2041 typo. Things aren’t that bad.

  17. None of us are going to draw SS unless they RAISE taxes. I have never considered it beneficial to the welfare of the present or future generation that my children should be brought into bondage by my acts. However, our ancestors desired money so much that they burdened us with a debt we cannot possibly repay. Thanks.

  18. I noticed in the last statement I got that one year was blank for income. I called and since I had my W2 from that year still I was able to send a copy of it to the local social security office and they updated my statement. Weird, huh? Anyway, that’s another good reason to look at the statements before shredding them!

  19. “Why do this? For one, you may be surprised by how much money you have been able to earn,”

    Yes, I am always surprised at the amount of looting this program entails from hardworking Americans and how much more I could have to do with as I please.

    SS was a fraud right from the very start. And never Constitutional despite what the Supreme Court may rule.

    Think about it. Someone making $40k is looted of almost 7% between this and medicare plus your employer’s contribution. Between the two, that is about $5600/year the average person could be doing better things with over the year.

    $5600/year compounded at 7% over 30 years is ….anyone care to answer?

  20. Raising the cap doesn’t necessarily solve the problem, because the advocates of that plan forget that based on the current formula the amount a person’s receives from social security in retirement is based on how much they paid in.

    IE, to get the maximum social security payment, a person needs to to meet or exceed the social security cap for at least 30 working years. A person who earns half the SS base over 30 working years or so will only receive a check for half the maximum benefit.

    This is why the SSA sends this statement every year, because they want us to confirm that your earned income is properly reported so that when retirement comes you will receive the benefit you deserve. It much better to get the records fixed now when you have access to your W-2s and such.

    If you simply raise the SS cap, and make no changes to the calculations on how benefits are paid out, the benefits of the workers at the higher end of the retirement scale will increase and nothing will change for those on the bottom end. The net effect is a larger share of SS benefits will be paid out to the more wealthy retirees.

    IE, in order for their plan to work, those who advocate raising the SS cap must also advocate telling the the workers that will be affected to the raised cap that the amount of taxes in excess of the old cap will not be credited to them when they ultimately retire.

  21. This statement isn’t really an accurate reflection of income made over your lifetime. I have S-Corp distributions, which represent the vast majority of my income, and they aren’t reflected on this statement.

    Also, what about dividends and interest?

    Almost all of it is taxable, just not taxable for SS and Medicare.

    Also, the statement does show wages over the SS cap. Medicare has no cap and those wages are listed seperately.

    Here’s an idea… either do away with the statements or make them available online and do away with the expensive mailing and wasted paper.

  22. sth_txs: $572,640.83 if compounded monthly ( and don’t forget that your employer pays the other half of the SS bill)

    Jim B: How about doing away with Social Security in it’s current form 🙂

    Raising the cap sounds nice but it’s very unfair to those affected. Like Artie said, you’d have to tell the people affected (people earning over the current cap of 97,500) that they have to fund someone else’s retirement without getting anything in return. That’s socialism at it’s best. I was hoping that privatizing SS would go through. I’d rather put my SS tax dollars in my own account than send it off to be wasted by the federal government only to be told when I retire that I get no SS benefits for my trouble. Too bad the majority of the population doesn’t want to be responsible for their own retirement and ideas like this come under attack by politicians that don’t want people in control of their own lives.

  23. “sth_txs: $572,640.83 if compounded monthly ( and don’t forget that your employer pays the other half of the SS bill)”

    Yes, with $40k, that would include the employer’s contribution.

  24. Yes, I was pleased that my survivor benefit to my husband and daughter would actually meet our monthly bills by itself, without any additional insurance. I do have some l/i through work (2x salary), but I don’t pay for it. Because of this though — I don’t think I need any additional insurance.

  25. If you purchase life insurance from a company that is rated A or better you can pretty much guarantee that the company will be around to pay out a claim should something happen to you in 20 years. Do you think you can count on social security in the same way?

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