If you are approaching eligibility for Social Security retirement benefits – or are already past age 62 – you are used to receiving your latest statement in the mail every year. You may or may not have noticed that you didn’t receive one in 2011, but depending on how close you were to filing for benefits you may not have cared very much either way.
Getting Your Current Statement [This is new material!]
The Social Security Administration stopped mailing statements in 2011 as part of a cost-cutting effort, but resumed sending them in 2012 to people over age 60. I have recently learned that the mailed statement program will gradually go the way of the dinosaur, and that eventually we will all be required to obtain our statements online. 2012 also marked the launch of an SSA online initiative, which includes the opportunity for most of us to create an “account” and obtain our own statements on the SSA website.
I set up my account sometime last year and hadn’t been back there since September 2012 – until today. I went back today after I learned that it’s getting tougher to create one’s own account; I wanted to see if it would be tougher to get back in.
In 2013 SSA launched an even newer online initiative called my Social Security, which is intended to become a versatile portal for all things Social Security – and some things Medicare. Why is it tougher than when I signed up? Apparently SSA “upgraded our password services” on January 5, 2013, which in this case means it outsourced the process to Experian, which describes itself on its website as a “global leader in providing information, analytical tools and marketing services.” Many of us know Experian as a major player in the credit reporting industry.
This may help explain some experiences that friends and associates have described to me when they attempted to navigate this process within the past several weeks. One reported that she was asked questions related to her credit history, such as the date on which she opened a charge account at a certain department store. Not remembering the answer, she took a stab at guessing the correct answer, got it wrong, and was tossed out of the system with instructions to visit her local SSA office. My associate in Glens Falls, NY, reported yesterday that he was directed to visit his local office when he was unable to satisfy the questions on a credit-related issue.
I first told both of these folks to try calling the local office. However, this morning I was able to speak with an SSA Public Affairs Specialist in New Hampshire, who said that they would actually have to appear at the local office with satisfactory identification. I just got an email from my Glens Falls connection earlier today. It read: “Thanks for your help. Here is how it goes: I gave her my driver’s license; she gave me an access code. Problem solved.”
Meanwhile, I had minimal problems when I logged in. I learned that the password is good for only 180 days, so I had to invent a new one, but when that was done I was in the clear.
Anyway, here’s how you join the brave new world of Social Security online:
1. Go to http://ssa.gov/
2. Go to the Popular Services menu on the left side of the page and click on Get your Social Security Statement online, OR click on the tab just to the right of the Home tab which is conveniently labeled “my Social Security”. Alternatively, you can simply notice the box labeled my Social Security just to the right of Popular Services menu and click on it. Seemingly, all roads lead to where you are trying to go.
3. Click anywhere on the box that says: Sign In or Create an Account
4. Follow the instructions
Early in the process, you will encounter a statement that reads as follows:
You must be able to verify some information about yourself and:
- Have a valid E-mail address,
- Have a Social Security number,
- Have a U.S. mailing address, and
- Be at least 18 years of age.
You can create an account only to gain access to your own personal information. You cannot use this online service to access the records of a person:
- With whom you have a business relationship;
- For whom you are a representative payee; or
- For whom you are an appointed representative.
Unauthorized use of this service may subject you to criminal or civil penalties, or both. [Emphasis added]
This means that technically you cannot ask your financial advisor, attorney, CPA, or son-in-law to create your account for you without exposing them to possible criminal or civil liability. If you don’t have online access, or if you are unable to verify your identity online, you may visit your local Social Security office to obtain your statement. On the other hand, if you’re not prepared to do this yourself and your son-in-law is inclined to be a scofflaw, you can simply choose to ride shotgun while he opens the throttle.
Meanwhile, I had minimal problems when I logged in. I learned that the password is good for only 180 days, so I had to invent a new one, but when that was done I was in the clear.
Assuming that you are successful in creating your online account – and the most difficult part might be coming up with a password that fits their specifications – you may access your statement at any time. Here’s what it looks like:
Reading the Statement
If you’re like me, you will immediately run to the top of page 2 to see what your estimated retirement benefits will be at age 62, somewhere between 66 and 67 (depending on your date of birth), and age 70. You might be pleased to see that the numbers are larger than those that appeared on your last statement. Next, you will jump to your Earnings Record on page 3. Maybe you’ll be impressed seeing what you’ve earned over the years; or perhaps it will bring back fond memories of the fifteen years you spent out of the workforce raising your kids. Most often, you will be inclined to file the statement away at that point, in which case you might miss out on some useful information.
Page 1. Although not groundbreaking, there are a few items of interest on the first page. For example, the second paragraph says:
“Please read this Statement carefully. If you see a mistake, please let us know. That’s important because your benefits will be based on our record of your lifetime earnings.”
At first blush this seems like little more than patronizing boilerplate, but my wife had an experience that caused me to sit up and take notice. In 2012, I decided to do an analysis of our own Social Security claiming options and asked my wife to go online to get her statement, which she was able to do without incident. When I looked at her Earnings Record, I noticed a big fat zero in 2010. Well, I happen to know that her earnings were more than zero in 2010, since I keep the books for her corporation and do the taxes. I produced the W-2 and asked her to go down to our local SSA office with the evidence. Within a very few weeks, the statement was updated to include accurate earnings for 2010. This is particularly important for people, like my wife, who because of child rearing or other circumstances do not have a robust 35-year Social Security work history.
The next paragraph makes the point that:
“We’re more than a retirement program. Social Security also can provide benefits if you become disabled and help support your family after you die.”
Most people are probably aware that Social Security provides disability benefits but many – married men, in particular – act as if they do not understand Social Security survivor benefits. In general terms, a surviving spouse (more often than not, a widow) is entitled to receive the benefit her husband was receiving at the time of his death if it is higher than her own benefit. This can be an important component of a couple’s retirement income planning.
About Social Security’s future … My 2009 statement read as follows: “Without changes, by 2041 the Social Security Trust Fund will be exhausted and there will be enough money to pay only about 78 cents for each dollar of scheduled benefits.” 2012 statements made the point that: “Without changes, in 2036 the Social Security Trust Fund will be able to pay only about 77 cents for each dollar of scheduled benefits.” 2013 statements say: “Without changes, in 2033 the Social Security Trust Fund will be able to pay only about 75 cents for each dollar of scheduled benefits.” [emphasis added] Although there is not much an individual can do about this, other than communicate their concerns to their representatives in Washington, it illustrates dramatically how quickly the long-range economics of Social Security are becoming a near-term issue – unless changes are made very soon.
It should also be noted that the sound bites we hear that Social Security is “bankrupt” are simply not true. A well-known U.S. Senator who is very interested in this subject stated on February 9, 2013, that the Social Security Trust Fund currently has a surplus of over $2.7 trillion. Even if no changes are made soon, the Trust Fund is projected to be able to fund full benefits for the next 20 years, and 75% of benefits thereafter. The more rapid erosion over the past few years can be attributed at least partly to the 2% payroll tax cut that was in effect during 2011 and 2012.
Just above the Commissioner’s signature at the end of Page 1 notice the following: “… and when you’re ready to apply for benefits, use our improved online application—It’s so easy!” I’m all for using technology that makes things easy, and I suspect that this will work nicely for anyone who is simply filing an application for benefits on their own record. However, until experience has shown that the online application system can handle more sophisticated applications – for example, for spousal or divorced spouse benefits – I strongly advise my clients to go to their local SSA office, explain what they wish to do, and don’t leave until it’s done correctly.
Social Security on the Net… This section provides the URL to the Social Security Administration website: http://ssa.gov/ The SSA site is huge and packed with information which, unfortunately for most people, is fairly difficult to navigate and understand. The statement references a publication called When To Start Receiving Retirement Benefits, which provides a very basic introduction to the impact of starting age on the size of benefits, and it also mentions the availability on the website of SSA’s Retirement Estimator, a very useful calculator that enables one to run a variety of “what if” scenarios to estimate future retirement benefits. This can be especially useful as we proceed to Page 2 of your statement, which I will cover in my next post.