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A New Social Security Bill Aims to Protect Workers' Benefits

By Maurie Backman – Dec 12, 2019 at 10:04AM

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That's good news for the millions of Americans who will no doubt rely on Social Security in retirement.

The amount of money you earn in your lifetime is used to calculate your Social Security benefits. Specifically, the Social Security Administration (SSA) takes your average monthly wage, indexed for inflation, from your 35 highest-paid years of income and applies a formula to it that determines what your monthly retirement benefit looks like.

But when the SSA receives incorrect wage information, it could result in lower benefits for workers impacted by such errors. That's why it's important for workers to check their earnings statements every year. These statements, issued by the SSA, summarize taxable wages for Social Security purposes on an annual basis, and also provide an estimate of workers' future retirement benefits.

A Social Security card.


Checking your annual earnings statement for wage-related errors could prevent you from losing out on money in your benefits down the line. For example, if the SSA only has $42,000 of income on file for you during a year when you actually earned $86,000, that lower number could get factored into your personal benefits calculation, resulting in less Social Security income for you -- for life. But most of today's workers aren't getting their earnings statements by mail, and as such, are missing out on an opportunity to review those documents and correct errors that work against them.

A new bill, however, aims to change that. It's called the Know Your Social Security Act, and it calls for the SSA to mail annual earnings statements to all workers aged 25 and over. Right now, only workers who are 60 and older get those statements by mail. Younger workers can access them online, by creating an account on the SSA's website, but most people with such accounts don't take that extra step to view those statements. The goal of the Know Your Social Security Act is to make those statements more accessible so that workers are motivated to actually review them.

Don't be left in the dark

Reviewing your annual Social Security earnings statement is actually important for two reasons: first, because it gives you a chance to correct errors that could hurt your benefits calculation, but secondly, because it gives you a sense of how much income you can look forward to from Social Security in retirement.

The latter is important, because many workers assume they can neglect their personal retirement savings and live solely, or largely, on Social Security when they're older. The reality, however, is that the typical senior today gets less than $1,500 a month in benefits, or less than $18,000 in annual income. Seeing similar numbers on an earnings statement could therefore prompt more workers to take savings matters into their own hands, as opposed to relying too heavily on an income stream that will likely prove less robust than anticipated.

Of course, the downside to mailing out paper statements, at least from the SSA's perspective, is cost. Printing and postage are a more expensive prospect than making those statements available online. But proponents of the bill say an uptick in worker awareness is well worth the added cost. Furthermore, under the new proposal, the SSA won't have to send a paper statement to every worker; those who'd rather conserve resources and not be bothered with paper can opt out of that mailing and revert to online access.

Regardless of how you're able to view your next earnings statement, be sure to give that document a thorough look. If you spot a mistake that relates to your wages, contact the SSA and aim to get it fixed at once. And if the information on that statement appears correct from a wage perspective, pay attention to how much money the SSA expects you to collect each month once you retire. If it doesn't seem like a whole lot, use it as a push to start ramping up contributions to your IRA or 401(k).

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