This article is reprinted with permission NextAvenue.org,
For years, the Social Security Administration has done a pretty tough job of telling Americans how much they’ll receive in Social Security benefits. But I’m happy to say that the agency has replaced its text-heavy, four-page Social Security statement with a redesigned, more useful, more visual, two-page version.
Consequently, I strongly urge you to visit social security website To see the clear information that’s important to your retirement security. To do this, you can eithermy social security account“On site or set up one. Otherwise, you can see your details only when it comes in the mail when you’re 60. (Only 63 million Americans have My Social Security accounts, though 176 million employees have Social Security accounts). pay taxes in the security program.)
“The details are streamlined and include clear messages and make it easy to get information at a glance,” Kilo Kizakazi, acting commissioner of the Social Security Administration, told me. “So, we’re hoping that this will help simplify complex programs for the public.”
Complex is putting it please.
Social Security analyst Lawrence Kotlikoff, professor of economics at Boston University and creator of Software to help people claim Social Security Wisely, told me there are 2,728 rules and 11 different Social Security benefits in the Social Security handbook. He thinks that at least half of the people claiming Social Security are “making big mistakes.”
Kotlikoff has some issues with the new Social Security statement, as do some other critics; I will address their concerns shortly.
Too Social Security proposal will increase revenue and temporarily increase benefits
Major improvements in new Social Security statements
I see some big improvements in the new Social Security statement:
Nifty, simple, colorful bar chart is called Personalized Monthly Retirement Benefit Estimation (depending on the age you started). In previous incarnations of the statement, you might have come to believe that it was smart to start claiming Social Security as early as possible — at age 62 — or at full retirement age (now between the ages of 66 and 67, it’s this way). Depends on when you were born). But the new chart shows the benefit of delaying claiming if you can.
Social Security’s rules essentially give you an 8% larger benefit for each year you defer claiming benefits until age 70, past your full retirement age. Put another way, if you’re 66 now and wait until 70 to start claiming, you’ll see 32% more benefits than if you filed at your full retirement age. But 62 is one of the most popular ages for people to start claiming Social Security.
The new statement puts the value of delayed claims in sharp focus through its bar chart. For example, someone born in 1960 who would continue to earn about $50,000 a year until starting benefits could see that claiming 62 would yield a $1,050 monthly benefit, but waiting until 70 would yield a benefit of $1,860 per month.
“People should be aware that if they retire early, it means an actuarial deduction of the amount they receive and that will continue for the rest of their retirement,” Kizakazi said. “Having that scene makes it intuitively clear to people what their choices are as they make their own [claiming] Verdict.”
your personal income record, Your Social Security statement now lists most of your year-to-date income taxed for Social Security and adds together your last few years of employment. You can find any year’s earnings in your “My Social Security” online account.
Survivor Benefit. This statement clearly shows how much of your spouse or minor child can receive monthly benefits from Social Security if you die this year.
The bulleted list is called the important things to know about your Social Security benefits. For example, it states that after a married person’s death the age at which they claimed benefits will affect the benefit amount for their surviving spouse.
What Social Security Analysts Think
Gary Koenig, AARP’s vice president of financial security, said the new statement is “much better than where it was.” He’s especially glad that the Social Security Administration no longer uses the term “early retirement benefits,” a phrase he feels is “blatantly misleading.” But he wanted the agency to mention “minimum profit versus your maximum benefit.”
Phil Moller, co-author of “Get What’s Yours: The Secrets to Maxing Out Your Social Security,” gives the overhauled Social Security statement “a solid B.” He’s a fan of its new graphics, though wishes there were more explanations about claiming the rules.
However, a Social Security Administration employee told her that the agency is working to include estimates of benefits, taxes paid and an earnings record on its sample statement that “are more representative of the real-life scenario.”
Jim Blair, of Premier Social Security Consulting, applauds the way the new statement gives people a better idea of deducting benefits for claiming early.
Martha Shedon, co-founder of the National Association of Registered Social Security Analysts, gave a mixed review of the new Social Security statement.
She liked its short length, layout, and colorful formatting “which makes it easy for workers to quickly understand their benefits,” Shaden told me. And it approved the rules for some of Social Security’s claims, rather than monthly benefit estimates, a “retirement ready fact sheet” of statements to people (based on their decade of age), and mysterious words.
But, she said, “I’d like to see more emphasis — bold or colored text — on the fact that These personalized estimates are based on your earnings to date and assume that you will continue to earn $xx,xxx per year until you start taking your benefits.,
Kotlikoff — who consulted with the Social Security Administration on the statement’s redesign — thought the visual improvements were “good,” but there was some beef.
For one: “I don’t like that you can’t create a PDF of your entire earnings history just to check if it’s accurate,” he said. Shaden also complained about this.
The folks at the Social Security Administration tell me they’re working on updating the statement to show people more history of their earnings.
Kotlikoff chimed in with the “slightly ridiculous and potentially highly unrealistic” economic assumptions behind estimates of an individual’s Social Security benefits.
“They believe that there is no inflation in the future and no wage growth in the economy forever,” he said. Plus, Kotlikoff said, Social Security assumes that “you’re going to work until you retire.”
Time to re-mail Social Security details?
Other Social Security analysts, including the AARP, believe the government should go back to regularly mailing Social Security statements to all Americans 25 and older as it was up to a decade ago.
Not happening at the moment, Kizakazi said. “If we mail the statement to everyone age 25 and older, that would increase our costs — print and mail — by between $80 million and $90 million per year,” she said.
Can Social Security cover all this federal spending?
Kizakazi said she knew a bipartisan bill in Congress — the Know Your Social Security Act — would require the return of paper statements for workers age 25 and older who are not receiving Social Security benefits. “If the bill became law, we would have worked diligently to match it as perfectly as possible. But there is a huge cost nonetheless,” she said.
In the meantime, check your Social Security statement to make sure it’s accurate and to see what you might one day receive in benefits. If you find a mistake in your earnings record, call the Social Security Administration at 800-772-1213 to have things rectified.
Richard Eisenberg is the senior web editor for Next Avenue’s Money & Security and Work & Purpose channels, and the site’s managing editor. He is the author of “How to Avoid a Mid-Life Financial Crisis” and has been the personal finance editor at Money, Yahoo, Good Housekeeping and CBS Moneywatch.
This article is reprinted with permission NextAvenue.org, © 2021 Twin Cities Public Television, Inc. All rights reserved.
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