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How to Read Your Social Security Statement

If you have a job, you’re paying into the Social Security program. Social Security, or more officially and appropriately, the Old age, survivors, and disability insurance program (OASDI); is more than just a check when you retire or a payroll deduction on your pay stub. In addition to the “old age” portion, it is also a disability insurance program that provides for individuals who are unable to work because of a disability.

Each month, you pay 6.2% of your paycheck into the OASDI program, up to a limit of $6,621.60 a year (the tax is only on the first $106,800 of earnings). Three months before your birthday, you will receive a Social Security Statement. This post will explain how to read and review that Social Security statement.

Are You Receiving It?

Roughly three months before your birthday, you should receive a pamphlet from the Social Security Administration titled “Your Social Security Statement.” My birthday was in mid-August, I received my statement dated May 7th. If you aren’t receiving your statement, you need to call 1-800-772-1213 and make sure your address on record is accurate. There are some pieces of sensitive information in the document such as your birthday, your name, former address, and the last four digits of your social security number. If you haven’t received it, you can request your statement from the SSA using this form [3].

Reviewing Your Estimated Benefits

Page 2 contains Your Estimated Benefits, which will outline how much of a benefit should you will receive based on current law. As you can see, there are four sections to the estimated benefits: retirement, disability, family/survivors, and medicare. Under each there is an outline of how much of a benefit you’d receive if you were to qualify right now. For example, this is what mine looks like at the moment:

Reviewing Your Earnings Record

Page 3 contains Your Earning Record, which lists every year in which you’ve had reported earnings for the purposes of Social Security and Medicare. Below that section is a smaller section listing how much they estimate you’ve paid into the Social Security and Medicare program. I didn’t take a scan of that section because it’s pretty basic. There wouldn’t be much to see after I cleared out the personalized data.

Red Flags to Look For

Here is the important part – double checking the different sections. You need to closely review Your Earnings Record (page 3) to ensure that the amount listed under the “Your Taxed Social Security Earnings” and “Your Taxed Medicare Earnings” is accurate. If you find that the SSA is inaccurate, you will want to call them at 1-800-772-1213.

If the numbers are too low, you could be shortchanged in retirement. It’s better to get it resolved now than when you retire. If the numbers are too high, it could be a signal that someone else is using your Social Security Number (if that is the case, I recommend requesting your government-mandated free credit report from AnnualCreditReport.com [4]). It might seem like a good problem to have, seeing as how you could get more out of Social Security if you kept quiet, but if the person using your SSN illegally decides not to pay their taxes, you have to explain it. Accuracy is paramount in this case.

Reviewing the statement only takes a few moments and you never know what you’ll find!