Planning for retirement can feel overwhelming. You have to figure out what your expenses will look like, whether your savings can support your lifestyle, and how much to withdraw each year. You also have to navigate when to sign up for Medicare, which plan to choose, and how to make sure you’re using your coverage wisely.
But if there’s one retirement planning task that’s not so hard, it’s figuring how much money you can expect Social Security to pay you every month. You can get that answer in 15 minutes or possibly less if you know what to do.
The easy way to know how much Social Security you’re in line for
Your Social Security benefit isn’t a mystery. If you want to know what that number looks like, create an account on SSA.gov and review your Social Security earnings record. Your most recent earnings statement should have an estimate of your monthly benefit so you know what to anticipate.
Of course, the closer you are to retirement, the more accurate that number should be. On the flipside, if you’re 10 years away from retirement and plan to keep working, that number could wiggle quite a bit.
That’s because the Social Security Administration takes your 35 highest-paid years of wages into account when calculating your retirement benefit. If your earnings at the end of your career increase or decrease substantially, your actual benefit may be different than the estimate you see today.
But if you’re only a year or two away from retiring, there’s a good chance the number you see will be pretty spot-on. And that should help you not only choose the right filing age, but know how to incorporate Social Security into your broad financial plan.
It’s an important exercise to do
Checking your earnings record doesn’t just tell you how much Social Security to anticipate each month in retirement. It also gives you a chance to correct errors that may be working against you, leading to smaller monthly checks.
As mentioned earlier, your top 35 years of earnings are factored into your benefits calculation. If your earnings history is incomplete or contains errors, your benefit estimate may be lower than it should be. Even a single year of missing wages could reduce your lifetime benefits.
And mistakes may be more common than you’d think. Employers occasionally report incorrect earnings, names may not match Social Security records after a marriage or divorce, or side income from consulting or freelance work may simply be missing. If you don’t review your earnings history, you may not discover a problem until you’re ready to file for benefits.
The good news is that errors can often be corrected if you have documentation, such as W-2 forms or tax records, to support your claim. Catching those mistakes well before retirement is generally much easier than trying to resolve them after you’ve already applied for benefits.
Make it a yearly task
If you’re not particularly close to retirement, checking your Social Security earnings record should become a yearly habit. Reviewing your earnings record allows you to confirm that your most recent wages have been reported correctly and gives you updated benefit estimates as your income evolves.
And the more information you have, the clearer a picture of your future finances you might get.
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