It’s a benefit you’ve been purchasing your entire working life, but like legions of other Americans, you may not be aware of exactly what you’ve bought and, more importantly, the options and strategies you have for redeeming it. To be sure, there is a lot to know about Social Security — and, unfortunately, there is no user’s manual. But there is a statement.

It All Starts With the Statement

Your road to a better understanding of Social Security begins with one four-page report, your Social Security Statement.

The Social Security Administration (SSA) prepares and maintains statements for every person over the age of 25 who has paid into the system. You may or may not be aware of this, because the SSA has changed (more than once) its method of distributing the statement in recent years.

Starting in October of 1999, the statement was mailed to you every year. No need to request it; it just came. Today, after a series of changes, fits and starts in 2011 and 2012, the only way to access your statement is to visit and sign up for a “My Social Security” account.

Why should I go to the trouble, you ask? Well, the statement contains some pretty important stuff:

1.   Your Earnings History. Found on page 3 of the statement, this is a record of every dollar you’ve paid into the Social Security system. You will want to check this for accuracy because it will determine the approximate amount of your monthly SS check once you start collecting benefits. Your earnings are listed year by year, and the SSA will use the best 35 of those to determine your benefit. If you find an error, contact SSA and get it fixed!

2.   Your Estimated Benefits. Found on page 2 of the statement, this is an estimate of how much money you may get at age 62 (currently the earliest eligibility age), at full retirement age and at age 70. Importantly, this is only an estimate and is subject to change. It assumes you will work to your collection age and continue earning whatever you did last year. Generally speaking, the closer you are to retirement, the more accurate your estimate may be.

3.   Program Summary. A letter summarizing the health of the program is included on page 1 of your statement. This year’s letter estimates that the system can meet all future liabilities through 2032. If nothing changes between now and then, benefits will need to be cut by 23% starting in 2033.

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