It's a benefit you've been purchasing your entire working
life, but like legions of other Americans, you may not be aware
of exactly what you've bought and, more importantly, the options
and strategies you have for redeeming it. To be sure, there is a
lot to know about Social Security - and, unfortunately, there is
no user's manual. But there is a statement.
It All Starts With the Statement
Your road to a better understanding of Social Security begins
with one four-page report, your Social Security Statement.
(SSA) prepares and maintains statements for every person over the
age of 25 who has paid into the system. You may or may not be
aware of this, because the SSA has changed (more than once) its
method of distributing the statement in recent years.
Starting in October of 1999, the statement was mailed to you
every year. No need to request it; it just came. Today, after a
series of changes, fits and starts in 2011 and 2012, the only way
to access your statement is to visit
and sign up for a "My Social Security" account.
Why should I go to the trouble, you ask? Well, the statement
contains some pretty important stuff:
1. Your Earnings History.
Found on page 3 of the statement, this is a record of every
dollar you've paid into the Social Security system. You will want
to check this for accuracy because it will determine the
approximate amount of your monthly SS check once you start
collecting benefits. Your earnings are listed year by year, and
the SSA will use the best 35 of those to determine your benefit.
If you find an error,
SSA and get it fixed!
2. Your Estimated Benefits.
Found on page 2 of the statement, this is an estimate of how much
money you may get at age 62 (currently the earliest eligibility
full retirement age
and at age 70. Importantly, this is only an estimate and is
subject to change. It assumes you will work to your collection
age and continue earning whatever you did last year. Generally
speaking, the closer you are to retirement, the more accurate
your estimate may be.
3. Program Summary.
A letter summarizing the health of the program is included on
page 1 of your statement. This year's letter estimates that the
system can meet all future liabilities through 2032. If nothing
changes between now and then, benefits will need to be cut by 23%
starting in 2033.
Beneficiary, Meet Statement …
I encourage you to introduce yourself to your Social Security
Statement. It's an important first step to ensuring the benefit
you've been working toward for years is maximized throughout your
Of course, this is only the tip of the iceberg. We have a lot
more to talk about, and I look forward to doing exactly that via
future posts. We'll cover everything from deciding
to collect to the intricacies of spousal benefits to special
considerations related to divorce. I'd love to make this a
dialogue, and encourage you to use the comments section below to
send me your questions. I'll provide answers in future posts.
Until then, here's what you can do right now:
Three Easy Steps to Take Now:
to download your Social Security Statement.
Meet with your financial professional to review how a
Social Security strategy fits into your broader retirement
Visit BlackRock's online
Retirement Resource Center
for more information on Social Security and other topics
related to retirement planning and investing.
Rob Kron, Managing Director, is the head of Investment
and Retirement Education for BlackRock's U.S. Wealth
Advisory group. He is the newest contributor to
, providing practical information on topics that are
important to every saver and investor of every age.
Sources: BlackRock; Social Security
Administration; Internal Revenue Service. Please see the
Social Security Administration's website at www.ssa.gov for
more information, restrictions and limitations about Social