Regardless of age, it is an important step that many overlook
Many people that aren’t retired haven’t thought much about their Social Security benefits statement. The Social Security Administration used to mail estimated benefit statements to workers every five years starting at age 25, but they no longer mail them until age 60 now. It is important to review your information on your own, regardless of your age, since it tells you about how much you are projected to receive based on your earnings. It should be part of your overall retirement planning.
Estimating how long you will live and what you will need is certainly a challenge. On average, Social Security is designed to replace about 40 percent of your annual pre-retirement earnings. Therefore, it is super important that you understand your potential future benefits so you can determine how to save and how many years to work. Social Security benefits are certainly not intended to be your only source of income when you retire.
Your estimated benefit at your full retirement age is located at the top right corner of your benefits statement. This estimate is based on the average earnings over your working lifetime. Your statement will be more accurate the closer you are to retirement and full retirement age is between 65 and 67. Page two includes your retirement benefits at various ages plus potential disability benefits if you are unable to work, and more. The actual amount you will receive at retirement is determined when you apply for benefits.
Another good reason to request and review your Social Security benefits statement is that there could be errors that need correction. The statement lists your earnings for each year, and it does happen sometimes that income is inaccurately reported. Errors or missing earnings from your record will require proof of earnings in the form of a W2 form, tax return, wage stub and possibly other documentation. Any errors are correctable by contacting the Social Security Administration offices.
As of last year, the Social Security Administration began including additional information on statements. Check out this Social Security benefit statement example which reflects what the actual statement from the Social Security Administration looks like. To get your statement, you’ll need to create a “my Social Security” account on the administration website.
Your statement contains information that you need to make financial decisions. This statement can help you understand how retiring early can affect your benefits and even the benefits that your spouse may receive. Knowing this amount can help to project what you need to save and how many years you should work to reach your goals. It is a foundation of retirement planning and over time, the difference in your chosen retirement age can mean a lot of dollars, so don’t ignore one of your largest assets as you plan for retirement.
If you have questions about your retirement plan and Social Security, or if you would like your current financial plan reviewed, schedule an appointment on Bayntree’s online calendar by selecting the date and time that is most convenient for you! You can also always reach us by emailing info@bayntree.com.
Bayntree Wealth Advisors provides comprehensive financial planning and wealth management. The Bayntree team specializes in all aspects of financial health, including retirement planning, risk management, investment advice, tax strategies, estate planning and insurance.
Bayntree does not provide specific legal or tax advice. Please consult with your tax advisor or legal professional for guidance with your individual situation.
