I recently received a notification via email that my annual Social Security statement is now available, so I logged on at the Social Security Administration's (SSA) online portal to take a look. This is a great habit to get into, as a yearly check of your Social Security statement can provide you with some incredibly important information about your future retirement benefits and much more.
Here's a rundown of some of the valuable information you'll find on your annual Social Security statement and why it can be such an excellent retirement planning tool.
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An estimate of your future benefits
First and foremost, your Social Security statement tells you if you're eligible for retirement benefits based on your work record. If you've worked for at least 10 years, you probably are.
It also provides a personalized estimate of your future retirement benefits at a variety of claiming ages. In fact, you'll see your estimated monthly benefits if you start collecting your checks at every age from 62 through 70 -- and you might be surprised at the difference that waiting can make.
There's one big caveat to keep in mind. While the estimate is based on your actual work record, it also assumes you're going to maintain the same level of income (in today's dollars) until you start your benefits.
Disability benefits
There's a lot more to Social Security than retirement benefits. Your statement will also let you know if you've worked enough to qualify for disability benefits, and how much you would receive if you were to become disabled. Your potential disability benefit depends on several different factors, and it can give you peace of mind knowing how much to expect if you were unable to work.
Survivors benefits
Another part of the Social Security system is survivors benefits, and it's something that many people aren't too familiar with. If you die, your survivors might be able to receive income based on your work record. Your Social Security statement includes estimates for your minor children and your spouse, as well as the maximum combined benefit that all of your family members might be able to receive.
Other information on your Social Security statement
In addition to all of this, you'll find information about your Medicare eligibility, as well as a year-by-year breakdown of your earnings that were taxed for both Social Security and Medicare purposes.
The latter can be especially important if this is the first time you're reading your Social Security statement. It's important to check your earnings record for errors (especially missing earnings), as this is the information the SSA will base your future benefits on.
How to check your Social Security statement
It's fairly easy to check your latest Social Security statement. Simply create a mySocialSecurity account online at ssa.gov if you haven't done so already, or log in to your existing account. A link to your most recent Social Security statement will be prominently displayed toward the top of the home screen.
Your Social Security statement can be a valuable tool in your retirement and overall financial planning. Not only will you have a good idea of how much retirement income you can expect, but you'll know how much income your heirs can expect if you were to die prematurely, as well as the financial effects of early or late retirement.
