How to check your benefit amount

For younger investors, Social Security seems to be on shaky ground.

At its current pace, the program needs to start with lower payouts from 2034. While politicians are unlikely to let the program die out by the time you retire, experts say it might make sense to view Social Security benefits as only a small part of your retirement.

“My mindset is to think of it as a little extra income in retirement,” says Nick Foulks, director of communications strategy and customer engagement at Great Waters Financial.

However, if you are planning a certain lifestyle in retirement, it would be good to know what that income might look like. Here’s how Social Security contributions are calculated and how you can find out what yours could be – even if you’re still years away from retirement.

Social Security benefits are designed to replace about 40% of your income, calculated as the average of your monthly earnings over your most lucrative 35 years of work and adjusted for inflation.

The amount you receive will vary depending on when you claim your benefits. For people born in 1960 or later, the full retirement age is currently 67 years. You can choose to retire as early as age 62, but early retirement can result in a reduction of up to 30% in the amount of your pension.

If you defer retirement beyond your full retirement age, you’ll receive an 8% annual increase in your payout until your benefit is maxed out at 70.

Depending on your financial situation, it may make sense to claim social insurance sooner or later. But regardless of when you retire, it’s important to make sure you’re getting the maximum benefit you qualify for. And that means making sure the Social Security Administration has your numbers right away.

“Make sure all your years are counted,” says Foulks. “Every year I check my income records to make sure my income is being counted correctly.”

The income listed for a given year should equal your total income before taxes. Mistakes could happen if you change jobs or start work in the middle of the year, Foulks says.

To verify your information, create an account on the Social Security Administration website (you’ll need to jump through a few hurdles to verify your identity) and download your Social Security Statement. This document sets out what you have earned each year so far and what your current benefit would be if you were claiming between the ages of 62 and 70.

Keeping track of your annual income now can save you a lot of trouble later. Should you find a discrepancy, you must submit a formal request for correction to the SSA, which will require you to submit documents proving your correctness of your income.

In other words, stay tuned for now, or you might find yourself digging up 20-year-old W-2s at some point.

Also, by checking your Social Security status now, you’ll have a better idea of ​​what you need to save to fund the lifestyle you want to lead in retirement.

“That can be a guide right there,” Foulks says. “You may not know all the pieces of the puzzle, but at least you get a rough idea.”

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