Are You Certain That Your Social Security Benefit Amounts Are Correct?
I recently began working with new Relaxing Retirement members who had a host of questions about social security that they never thought about until now.
They just worked and continued to pay their payroll taxes.
Now, however, it’s on the top of their mind for a good reason.
Ron and Rita, as I will refer to them to protect their identity, are both 63 and contemplating retiring in the next few months.
What I revealed to them regarding social security was rather detailed and completely new for them, so I thought I’d share some of my thoughts with you as well.
Since there’s a lot to know in order to properly benefit from social security, I’ll try and answer as many questions as I can over the next few weeks.
What actually kicked off our conversation was a mistake we found on their social security benefits statement.
As part of the process of designing a Retirement Blueprint™ for our members, among a host of other things, we examine their last 2 income tax returns as well as their social security benefit statements to spot opportunities and inconsistencies.
While doing this for Ron and Rita, we discovered that the income amounts listed on their benefit statements didn’t match up with their W-2s and tax returns for the last few years.
In fact, it wasn’t even close in 2009 and 2010.
Now, it’s quite possible that this could have been caught when they went in to apply for benefits, but I certainly wouldn’t want to count on it.
This specific “catch” may result in a benefit increase of over $125 per month!
Certainly not all the money in the world, but $125 per month is a nice dinner out each month that you could be giving up!
Have You Questioned Your Benefits?
This leads me to a question for you: If you’re already collecting social security retirement income, are you receiving what you’re entitled to?
If you’re not collecting yet, are you certain that social security will pay you what you’re entitled to?
Assuming that you’re receiving the correct benefit amount from social security may be a costly mistake.
Although it appears that they have gotten better, we continue to find numerous errors on social security benefit statements and payments.
Most people get lazy about this and assume that social security’s records are correct, and that whatever benefits they’re receiving, or slated to receive, are 100% correct.
Our experiences leave me with a different opinion.
Incorrect Date of Birth
The other scenario I see quite often is an incorrect birthday listed on your social security statement. The social security statement has the correct birth ‘day’, but the birth ‘year’ is wrong, thus making you 2 years younger, for example.
Benefits are calculated based on the age you begin collecting benefits. The older you are when you begin collecting benefits, the more your benefit is.
In the average situation, each additional year of age results in another $75 per month or $900 per year of benefits! Run that number over your life expectancy.
That’s another $25,000!
What You Can Do
The bottom line here is not to assume that the benefits you’re receiving, or scheduled to receive, are correct.
If you’re already receiving social security benefits, call your local benefits office and ask them to send you the earnings history and date of birth being used to calculate your current benefit.
Compare their records against your tax returns and W-2s to make sure they’re in sync.
If you’re not receiving benefits yet, grab your most recent social security benefits statement and, on page 2, verify:
- the correct spelling of your name
- your correct social security number
- your correct home address
- your correct date of birth (especially the year)
Then, on page three, verify the earnings history they provide for you against your records.
In either case, if you notice a discrepancy, call your local social security office and speak to one of the advisors.
And, be sure to follow up. If you receive nothing in writing within a month, call again until you do. This is the only way to make sure that the change has been made.
This exercise may take you 15 minutes to do, but it’s worth it. Think about all the money you’ve paid over your lifetime in payroll taxes.
You don’t want to leave any money on the table because of a mistake they might have made.