In school, the thought of receiving a report card could strike fear into the hearts of even the best of students. Why? Because no matter how hard you tried, you almost never knew exactly what was going to be on that report. On the other hand, a report card can be a good indicator of your progress toward meeting your educational goals.
The same could be said for your Social Security statement that can provide you with valuable information about your financial future. The fact is, not knowing what's in your Social Security statement can make it difficult to gauge your progress in meeting your retirement goals. By getting a better understanding of what you can expect to receive in the way of benefits, you can better plan how much money you should be saving for retirement. If you're not familiar with what's on your Social Security statement - you should be.
How to find your Social Security statement
Until recently, the Social Security Administration (SSA) would mail an annual paper-copy of Social Security statements to those who were entitled to benefits. However due to budget cutbacks, the SSA now sends them out only once every five years. Fortunately, you can have access to your statement 24/7 through the SSA website at http://www.ssa.gov/myaccount.
Once you review your statement, check it for accuracy. A Social Security statement shows a year-by-year record of your earnings, as well as estimates of your retirement, disability, and survivor's benefits. You need to be sure that your earnings record is reflective of your past work history. Look for errors that should be corrected, otherwise you might end up receiving smaller benefits. If you find mistakes, contact the Social Security Administration (SSA) to dispute discrepancies.
Your projected Social Security benefits
Would you take a job without knowing the rate of pay? In a way, the same principle applies if you don't know what you're looking at when it comes to your estimated Social Security benefits. If you don't know what your number is, how do you know if it's going to be enough for you to maintain a comfortable lifestyle? Your statement will give you an estimated rundown of how much more you'll receive in benefits at full retirement age, as well as how much less you'll get if you claim early retirement benefits at age 62, and how much more you'll get if you delay further until age 70. This is a biggie. Know your estimated number.
A powerful retirement tool
Your Social Security replaces only a portion of your income after you retire. That means that the remainder is for you to make up. For this reason, it's critical that you continue to contribute and build your retirement funds to ensure that you have enough savings to supplement your Social Security benefits and not fall short of your goals.
Knowing your estimated Social Security benefits doesn't need to be difficult or complicated. It's more about just knowing what you can expect to receive so that you can put yourself in a much better position to meet the challenges of retirement planning. When you know how much you are going to get from Social Security, then you can compute the amount that you will need to supply from your own savings in order to achieve the amount of retirement income that you desire.