Social Security is an important part of most family’s retirement plans. For special needs families, this benefit is of particular importance, because the adult child with a disability’s income can be tied to the primary earner’s benefit through the Social Security Disability (SSDI) insurance program.
People over 60 who qualify for Social Security benefits are mailed a benefit statement annually if they have not already established an online “My Social Security” account. For those who are not mailed a statement, it is a straightforward process to set up your account to obtain benefit information.
Since Social Security is relied upon by most retirees to help fund their retirement, it is important that families have a rough idea of what their benefits might be when they retire. This article discusses how benefit information can be obtained through the “My Social Security” website.
The steps of setting up a “My Social Security” account include:
• Go to My Social Security
• Hit “Create an account”
• Verify your identity by answering questions
• Create account after receiving security code sent to your phone or some other device
Once your account is established, you can see what your benefit estimates are at age 62, what they are at your “full retirement age”–which is the age at which the Social Security Administration determines the full benefit that you are entitled to–and at age 70.
Note that the benefit estimate provided is based on your current earnings extrapolated through your full retirement age. If, in the future, your work earnings are substantially more than your current wages, then your retirement benefit will likely be higher than the estimate provided; vice versa if your work earnings are less in the future. You can use the retirement calculator provided on the site to plug in different future work earning figures to determine how those earning differences might impact your Social Security benefit at a particular retirement age.
The “My Social Security” site is also a record of your work earnings (titled “Earnings Record” on the site). Your Earnings Record lists what Social Security has on file for each year since you first started working. Check to see if any of the earnings listed are unexpected. If there is a mistake, you should report that error to the agency so that your benefit calculation is correct when your benefits are started.
The Social Security benefit estimate should only be used as a rough guideline as to what your actual benefit might be. An example of an incorrect benefit estimate occurs when someone has worked as both a public and a private employee during their lifetime. In those situations, the benefit may be reduced by the “Windfall Elimination Provision” or “WEP” penalty.
The estimate provided either on the paper statement or online does not take this penalty into account. Likewise, if a spouse qualifies for a higher benefit than the other working spouse, the estimate provided on the website or statement does not take that into account. Therefore, the spouse might receive a higher Social Security benefit than what is estimated, because that estimate is only based on the one individual’s work earnings.
Once you have an idea of what your Social Security benefit is, you will then need to decide when to start collecting the benefit. For most healthy people, it is beneficial to wait until age 70 to collect the benefit; however, for special needs families the decision of when to start benefits is more complex, because the benefits of the parent can be tied to the benefit of the adult child. The decision of when to collect Social Security benefits will be discussed in the next issue of Disability Insights.
Contact us to learn more about planning your retirement and the Social Security benefit.