Not nearly enough individuals are aware that they should be checking their Social Security earnings record at least once a year after reaching the age of 50. It’s crucial to check this information to ensure that it doesn’t contain any errors that could have a negative effect on your benefit payments when the time comes to withdraw them. Even the smallest error could have a tremendous impact on your retirement.
What is your Social Security Earnings Record?
Your Social Security Earnings Record is a timeline of any income you’ve received during the years that you’ve been working, and the benefits you eventually receive will be based off of the 35 years in which you earned the most money. If one of those years is mistakenly listed as a zero earning year, this will affect your benefit calculations and this will in turn cause you to receive smaller benefit checks than you should.
A simple error like this could result in you receiving as much as $100 a month less than you’re actually entitled to – and this can make the difference between barely surviving or at least being able to cover your expenses comfortably during retirement.
When you should Start Checking
In reality, it’s never too early to start checking your Social Security earnings report – so you can even start keeping records as soon as you start earning an income. However, individuals who haven’t yet checked their report should at least start doing so when reaching the age of 50. This will provide enough time to address and correct any errors that may crop up.
It’s possible to inspect your earnings report online by visiting www.socialsecurity.gov/myaccount. You will need to create an account if you don’t already have one set up and you’ll be able to log in at any time after doing this.
Keep in mind that a statute of limitations is in place with regards to the amount of time that can pass before any errors on your Social Security earnings report can be amended, and this is currently three years, three months and 15 days. Some exceptions to this ruling include deliberately fraudulent entries, clerical and/or mechanical errors.
What to do if Errors are Detected
If you discover any incorrect information, you will need to inform the Social Security Administration (SSA) immediately, and the best way to do this is by submitting a form referred to as the, “Request for Correction of Earnings Record.”
When filling this form out, you will be required to provide relevant evidence with regards to the wages that you’ve earned. Examples of paperwork that you may be asked to provide can include:
- Wage verification from an SSA-approved business or company
- Tax return documents
- Employee-issued or original pay stubs – these will need to include your full name, gross earnings, social security number and the timeframe covered
- W-2 paperwork
- Written and or/verbal statement from the relevant employer or company
It’s essential that you respond as promptly as possible to any correspondence that the SSA may send to you regarding errors that have been detected. This will help ensure that they are rectified as quickly as possible. Although an amount of $100 may not seem like a lot right now, it could make all the difference between being able to cover living expenses or not during retirement.Continue reading
Although virtually everyone is aware of how important it is to save money towards your retirement years, very few individuals know where to start, how much they will need to save each month and how to ensure that what they are saving will be enough to let them enjoy their golden years without worrying about finances any more than what’s totally necessary.
Pensions – No Longer as Popular as Before
In years gone by, many individuals relied almost entirely on pension schemes to see them through after retiring. If you were fortunate enough to land a decent job, remained in the same position for 20 to 30 years and then retired from that company, you would have been able to enjoy receiving monthly pension payments that were usually sufficient to cover virtually all of your living expenses.
Good pension plans allowed employees to invest small sums of money into Certificates of Deposit (CDs) and bonds so that they could even enjoy a few extra luxuries as well.
Sadly, most companies no longer offer pension scheme benefits to their employees anymore. This means that retirees must now rely on alternative income sources – and not just Social Security benefits either anymore.
Start Saving as Early as Possible
The sooner you implement a savings plan for retirement, the better. Financial experts usually recommend that you should start investing in a diversified portfolio at least 15 years before your planned retirement date. However, if you’re able to do this earlier, you’ll be able to take advantage of compounding interest over a longer period of time.
Develop a Workable Plan
It’s essential to have a plan set up that details the amount of money which will be withdrawn from your nest egg each month – also keep in mind that there may be some months where expenses will be higher than others, like at Christmas time. As such, you’ll need to determine your monthly living expense requirements and plan on withdrawing 4% or less of your retirement savings annually.
Diversification is Crucial
Although stocks and other investments can increase substantially in value, they can also take a sudden dive when least expected. As such, it’s essential that your retirement portfolio be diversified so that it includes annuities, bonds, CDs and stocks.
Social Security as a Supplement to your Income
While Social Security payments will currently provide a steady form of monthly income, it’s recommended that you only start claiming these funds well after the age of 65 – otherwise you could lose as much as 20% of what your payments could actually be.
At present, the minimum age for retirement is 62. However, most individuals won’t qualify for their full Social Security amount until reaching between 66 and 70 years of age. If you’re not keen to wait this long before retiring, you may either have to continue working until this time or ensure that you can receive income from alternative sources until reaching the right age to claim from Social Security.
If you would like to ensure that your retirement is as financially stress free as possible, get in touch with our team today. We’ll be happy to assist you with setting up a realistic savings and investment plan.Continue reading