Social Security isn't just something you need to think about after retiring. You need to take steps during the course of your life to make sure you get the benefits you deserve -- and to make certain you have plenty of money to live on in your later years.
If you're not sure exactly what to do right now to be better prepared for your future, here are three Social Security steps you should put on your to-do list before the New Year rolls around.
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1. Check your earnings record
Your Social Security benefits are based on the average wages you earn over your career. The Social Security Administration collects data on how much you earn and develops an earnings record for you so the agency can do this benefits calculation when it comes time for you to retire.
It's crucial you make sure your earnings record is actually correct so you don't end up with a benefit based on smaller wages than you actually earned. You can sign into your mySocialSecurity account to see your earnings record, and you should do so at the end of each year.
If you notice a discrepancy in what you earned versus the amount in Social Security's records, it is going to be a lot easier for you to get the problem corrected now while you have all the paperwork providing proof of wages than to fix things decades from now when the documentation may have been lost (or when you may not even remember exactly what you earned and may not notice there's a problem).
2. Check your estimated benefit
Your mySocialSecurity account should also have information on what your estimated benefit will be when you retire. It's worth taking a look at this at the end of each year as well. Your benefits estimate can change based on how your earnings are fluctuating over time, so it's helpful to get an updated idea of how much income you can expect Social Security to provide.
You may be surprised when you check your estimated benefit to see just how low it actually is. The reality is, you aren't supposed to rely solely on Social Security to fund your retirement, as these benefits only replace around 40% of pre-retirement earnings -- not the 80% to 90% most financial experts advise you to try to replace.
Getting an idea of how much you can expect from Social Security can help you assess how your nest egg is stacking up, whether you're on track with your retirement goals, or whether you need to increase the amount you're investing to have enough supplementary income as a senior.
3. Think about when you plan to file for benefits
Finally, each year you should take the time to consider when you're likely to file for Social Security benefits. Your answer to this question can change based on many factors, including your health status and job opportunities available to you. It's worth thinking about, because your age when you claim benefits will profoundly affect how much income they provide.
If you plan to claim Social Security at a young age, you should be aware you'll take a big cut to your monthly check due to early filing penalties. If you plan to delay, though, you need to be prepared for what will happen if it turns out that's not financially feasible for you.
By taking these three steps each year, you can both protect your benefits by avoiding errors and protect your future by ensuring you understand exactly what role Social Security will actually play in your retirement. It doesn't take much time, so be sure to check all three items off your to-do list before 2022 comes to an end.
