America
faces a retirement crisis, and Social Security is the one source of
funds that millions of retirees will count on to make ends meet once
they quit their jobs once and for all. Yet with all the discussion and
controversy surrounding when to claim Social Security benefits for
maximum effect, along with worries about the financial challenges that
the system faces, few people know about one danger that could result in
much lower Social Security checks than they deserve. Fortunately, once
you know about this threat, it's easy to meet it head-on. Let's take a
closer look at this often-overlooked aspect of Social Security and why
it can make a big difference to your benefits.
The importance of checking your Social Security statement
The
Social Security Administration has the monumental task of tracking the
work histories of hundreds of millions of current and former American
workers. The benefit calculations that the SSA makes are based on the
information the agency collects, but its Social Security payouts are
only as accurate as the data that the SSA has in its systems.
Back
in 2009, the SSA did an internal audit of its data collection processes
to see where potential problems could get into its data. Although the
agency's Master Earnings File holds a considerable amount of data, it
isn't all-inclusive; Social Security also keeps what it calls its
Earnings Suspense File to hold unposted items that haven't yet been
correctly assigned to a work record. Despite attempts to cross-check
earnings data as it becomes available, about 10% of wage reports that
the SSA receives each year don't get posted to its Master Earnings File
without at least some effort, and even computer routines designed to
scrub the data and resolve issues still leave about 4% of wage items
needing further attention. Some of the biggest culprits are employers
that get names and Social Security numbers wrong, along with name
changes that are not reflected correctly in earnings records.
The
result is that in some cases, the SSA may not have the right numbers to
reflect your actual work history. When calculating your benefits, Social
Security takes your wages and indexes them for inflation, and then it
picks the 35 highest-earning years to come up with average your
earnings. That average then gets plugged into a formula that determines
your primary insurance amount. Depending on whether you claim benefits
early, late, or at full retirement age, your PIA can get adjusted upward
or downward to reflect your decision.
If your wages are
understated in your earnings record, then the SSA will produce a lower
benefit amount than you deserve. In order to get what you deserve,
therefore, you need to tell the SSA about any errors you find.
Getting it right: How to fix mistakes
Fortunately,
there's a process for correcting errors in your Social Security work
history. But that process can be tougher than you'd think. If you see
problems in your Social Security statement, the first thing you should
do is collect information about the problem. The best proof of earnings
is your employer W-2, but additional resources like your tax return, pay
stubs, direct-deposit records, or other evidence of your pay can also
be helpful.
Even if you don't have any documentation to prove your
wages, it can be helpful to provide the SSA with information about
where and when you worked, your employer's name, how much money you
made, and whether you used the same name and Social Security number at
that time as you use now.
Once you gather that information,
contact the SSA to get the ball rolling on correcting your work history.
The SSA warns that the process can take time, as the agency will
cross-check your version of events with your employer's. In time,
though, getting errors corrected could help you get all the benefits
that you've earned throughout your career.
As important as Social
Security is to many Americans, it's essential not to allow potential
errors hurt your retirement prospects. By ensuring that your work record
is accurate, you'll give yourself the best chance to get all the Social
Security benefits that you deserve. (http://www.usatoday.com)
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