How to Read Your Social Security Statement -- and What to Fix Before You Claim

Social Security is one of America's most important social programs, serving over 54.3 million retirees and helping keep many of them financially afloat in retirement. However, your involvement with Social Security begins well before you claim benefits.

This might be a shocker, but Social Security isn't perfect. It has a lot of moving parts, and sometimes things get messed up along the way. One way to help prevent potential errors from compounding is to be knowledgeable about your Social Security Statement (Statement).

Let's walk through what you should know about it.

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Accessing your Social Security Statement

The first step in accessing your Statement is to create an official account on the Social Security Administration's website (SSA.gov). This online account will be your virtual one-stop shop for accessing information about your work history and potential benefits.

The Statement should have a section that provides estimates of your monthly benefit based on the age at which you claim benefits. Claiming at your full retirement age means receiving your "baseline" benefit, called your primary insurance amount (PIA).

Anyone born in 1960 or later has a full retirement age of 67, but you can begin claiming benefits at 62 or delay them past your full retirement age until you reach 70. If your full retirement age is 67 and you claim benefits at 62, your PIA will be reduced by 30%. If you delay benefits until you turn 70, they'll be increased by 24%.

Pay attention to your earnings record

In addition to when you claim, your Social Security benefit is determined by your career earnings. The SSA uses the 35 years with your highest earnings and applies a formula to calculate your monthly benefit. That's why you should pay extra attention to your earnings record on your Statement, which lists your annual earnings for every year you worked.

If you have an employer, they report this info to the SSA; if you're self-employed, you automatically report it when you file taxes. You want to ensure the earnings match for each year and that a year you actually worked doesn't have a zero. If that zero-dollar year is one of the 35 years used in your benefit calculation, it will reduce how much you end up receiving.

If you find an error, make it a priority to fix it. Don't think that because you have years until retirement, you can just wait and do it later. The more time that passes, the harder it may be to locate the necessary paperwork that the SSA will require. This will likely need to be W-2s or similar tax forms, or potentially pay stubs.

To request a correction, you'll fill out a "Request for Correction of Earnings Record" (Form SSA-7008) form.

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