Those paper Social Security statements, which we used to get every year, but which have been on AWOL since 2011, may now coming to a mailbox near you.
The operative word here is “may.”
You will get a paper statement this year only if you are age 25, 30, 35, 40, 45, 50, 55 or 60 and only if you have not signed up to view your statements online.
Starting last month, the Social Security Administration (SSA) decided to eat the snail mail cost (about 50¢ per mailed statement) and resumed delivery of annual statements — to some. As long as you have not signed up online to view your statements you will receive the latest accounting of your benefits — once every five years.
Three years ago, the SSA put a halt to annual mailings in an effort to save some cash. Indeed, they saved $70 million per year in postage costs. But the agency has been criticized for ending a popular service. In response to critics — and bolstered by an improved budget outlook — the SSA has implemented a compromise solution.
According to Reuters, 10 million American workers have signed up at www.ssa/gov to view their Social Security benefits online. That represents just 6% of all eligible employees. None of these wage earners will receive paper statements.
The annual statement includes an estimate of monthly Social Security benefits at various ages. It also documents your work history and the amounts you’ve contributed to Social Securty over the years. Whether you get your statement online or in the mail, it’s worth reviewing. Here are a few things to look for.
1) Double check your earnings history – In preparation for the move online, the SSA converted over 150 million accounts. Do you think there’s a chance that there could be a mistake or two in there? Your Social Security benefits are based on your earnings record. If your record is incorrectly low, it’s up to you to spot the discrepancy and request a correction. Otherwise, you could be shortchanged throughout your (and your spouse’s) retirement.
2) Calculate your expected benefits – In 20 years, will the Social Security Trust Fund have enough in its coffers to pay you 100 cents on the dollar? No one knows for sure. However, the Social Security trustees are predicting that there will only be enough revenue to cover 75-80% of benefits staring in 2033. A number of remedies have been suggested, from raising contribution limits to raising the retirement age. Which changes, if any, willl be adopted is anybody’s guess. But in all likelihood, men and women who are already collecting benefits will not see a reduction. Depending on your age and income level, you may want to factor in a 25% reduction in benefits down the road.
3) Use Social Security as the foundation of your retirement income – What percentage of your income will Social Security replace? The average is 35-40%. That means most people need to supplement Social Security with additional savings. An annuity might be something to consider. The best ones work just like Social Security in that they pay you a guaranteed income you can’t outlive.
4) Don’t forget Social Security’s 3 Other Benefits – Most people evaluate Social Security in one dimension – in terms of their own retirement benefits. This is a mistake. Social Security also offers spousal benefits, survivor benefits and disability benefits. How and when you decide to claim can affect all your benefits. Sometimes it makes sense to take less money in your early retirement years in order to get more for you and your spouse in later years. The difference can be tens or even hundreds of thousands of dollars over the course of your retirement.
Social Security is an asset. It’s an asset that you control and influence — and can grow, in some cases at over 8% per year. Most people are passive about Social Security. They file for benefits 30 days after they retire and their attitude is, “I’ll get what I get.” Adopting this approach is a good way to shortchange yourself. Instead, you’ll want to take an active role in its management. And it all starts with the annual statement.