Each year, for many years, workers would receive a paper statement of their Social Security Benefit estimate in the mail. Looking for ways to reduce costs around the time of the 2008 financial crisis, the Administration decided to send the paper statements out to workers every five years for anyone under the age of 60, but continue annual mailings to workers age 60 or older. Since that time, without much fanfare, the Administration has quietly stopped sending those paper statements to anyone under the age of 60. Considering Social Security benefits make up about 40% of the average retiree’s income, knowing what your annual benefit in advance of retirement is very important.
The best way for workers to regularly obtain and review their benefit information now is to sign up online through the Social Security Administration directly. Annual updates to your benefit estimates are available for your review approximately three months prior to your birth date. Employers normally report your earnings to the Social Security Administration by March of each year; and although it does not happen frequently, your employer could mistakenly report incorrect earnings information, potentially reducing your future retirement benefit. Therefore, reviewing your benefit information regularly is paramount. It’s much easier to correct a clerical error in the year or two after it occurred rather than fixing it 30 years later. If you have worked as long as I have, you probably can’t imagine your employer from back then providing documentation to correct the error.
Another incentive to create an online account is the added layer of defense it provides against fraudsters looking to access your benefits. When trying to open an account, one individual was told that an account had already been opened under her Social Security number. However, since the security questions used to establish her identity and the answers provided were erroneous, she was able to prove the fraud.
Social Security planning expert, Elaine Floyd, shared a story of an individual who had planned to file for benefits at age 70, but received a letter one month after turning 67 congratulating him on initiating his retirement benefits. It turns out a thief had applied for benefits using his Social Security number and stole $19,000 in benefits before it was discovered. Although the thief had applied for benefits online using his Social Security number, the email address, phone number, and bank were provided were all incorrect. Because the online application would not allow the mailing address to be changed, the letter went to the owner of the Social Security number, thereby uncovering the fraud. Apparently this is a trend, as fraudsters will wait until people are six months beyond their full retirement age in order to obtain six months of retroactive benefits paid out in a lump sum.
Opening an account and checking it regularly are two steps that will increase your ability to stay on top of your retirement plan. Additionally, monitoring your benefits will help you spot potential identity thieves before they have a chance to harm your future retirement benefits. If you have any questions, need help setting up your account, or if you want to review the best Social Security claiming strategy, please give us a call at (509) 735-7507. As Your Financial Partner For Life, we are always happy to help.
Bob Lagonegro, CFP®
