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Social Security income explained

My partner and I often get many questions regarding social security benefits, so I decided to include this information again in this week’s piece.

Once you retire, figuring out your future Social Security benefits used to be a tough thing to do. But now it’s gotten much easier as the Social Security Administration provides a Social Security Statement to working taxpayers aged 25 and older. This statement, which is sent two to three months before your birthday, provides a report of how much you and your employer(s) paid in Social Security taxes as well a summary of the estimated benefits you may be eligible to receive.

The Social Security Administration will also provide a statement to any taxpayer who requests one. To request a statement, simply call 800-772-1213 or by applying online at

Based on this information and its own records of your previous Social Security payments, they will provide a four-page Social Security Statement that lists the benefits you’re likely to receive upon your retirement, as well as general facts about Social Security and Medicare and the assumptions used in estimating future benefits (more about Medicare at a later date).


Monthly benefit. The statement contains an estimate of the amount you would receive if you were to retire at age 62 (the earliest date you can receive benefits), the amount if you waited until full retirement age (which currently ranges from 65 to 67, based on birth year), and the larger benefit you would receive if you continued working until age 70 before claiming retirement benefits.


Survivor’s and disability benefits. The statement also shows what your disability benefit would be if you were to become fully disabled right away, as well as what your survivors might be entitled to if you were to die right now. For instance, your children would receive a percentage of your retirement benefit until they reach age 18, and your spouse would receive a specific benefit while caring for a child and a different amount when reaching full retirement age.


Statement of earnings. Finally, your report will contain a year-by-year synopsis of your earnings record (the years you worked, your taxed Social Security earnings, and how much you and your employers paid in Social Security taxes and Medicare). You should thoroughly check these numbers against your own records because the Social Security Administration can make a mistake. It’s best to resolve any differences before you need to claim your retirement benefits.

It’s interesting to note that the Social Security Statements now include a warning about the significant problems facing Social Security in the future. It mentions the possibility that later on this decade they we will begin to pay more in benefits than what they collect in taxes. Furthermore, it states that by 2037 the Social Security Trust Fund will be “exhausted” and there will only be enough money to pay about 75 percent of planned benefits.

This reminds us that we taxpayers are ultimately responsible for funding our own retirements and that future Social Security benefits may be lower than specified by our Social Security Statements.


Chip Gordy, MBA, CRPC is an Investment Advisor Representative with Coastal Wealth Management, LLC, specializing in Wealth and Retirement Planning. He can be reached at 410-208-4545 or Registered Representative, Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Coastal Wealth Management LLC & Cambridge are not affiliated.