MetLife - Social Security Income : Article: Social Security Income

Social Security Income

Estimating your future Social Security benefits used to be a difficult task, but not any longer. Every year, the Social Security Administration (SSA) provides a Social Security Statement to working taxpayers aged 25 and older. This statement, which is sent automatically two to three months before a taxpayer’s birthday, provides a report of how much the taxpayer and his or her employer paid in Social Security taxes and a summary of the estimated benefits the taxpayer may be eligible to receive now and in the future.

The Social Security Administration will also provide a statement to any taxpayer who requests one. To request a statement, simply submit a copy of the Social Security Statement request form (SSA-7004). You can obtain a copy by calling 800-772-1213 or by applying online at www.ssa.gov.

This form will ask you for a number of facts, including your name, Social Security number, date and place of birth, your mother’s maiden name, your previous year’s earnings and an estimate of your current and future earnings, and the age at which you plan to retire.

Based on this information and its own records of your previous Social Security payments, the SSA will produce a four-page Social Security Statement, which will arrive in two to four weeks, that lists the benefits you’re likely to receive upon your retirement, as well as general facts about Social Security and Medicare and the assumptions used in estimating future benefits.

Monthly Benefit

The Social Security Statement contains an estimate of the amount you would receive if you were to retire at age 62 (the earliest date you can receive benefits), the amount if you waited until full retirement age (which currently ranges from 65 to 67, based on year of birth), and the larger benefit you would receive if you continued working until age 70 before claiming retirement benefits.

Survivor’s and Disability Benefits

The statement also shows what your disability benefit would be if you were to become fully disabled right away, as well as what your survivors might be entitled to if you were to die right away. For example, your children would receive a percentage of your retirement benefit until they reach age 18, and your spouse would receive a specific benefit while caring for a child and a different amount when reaching full retirement age.

Statement of Earnings

Finally, your report will contain a year-by-year summary of your earnings record (the years you worked, your taxed Social Security earnings, and how much you and your employers paid in Social Security taxes and Medicare). You should carefully check these numbers against your own records; occasionally, the Social Security Administration can make a mistake. It’s best to resolve any discrepancies long before you need to claim retirement benefits.

It’s interesting to note that the Social Security Statement includes a warning about the serious problems facing Social Security in the future. Language mentions the possibility that “the current law may change because, by 2040, the payroll taxes collected will be enough to pay only about 74% of scheduled benefits.” This is a reminder that taxpayers are ultimately responsible for funding their own retirements and that their future Social Security benefits may be lower than indicated by their Social Security Statements.