This Social Security Saboteur Can Go Undetected for Years

Squeezing the most money out of Social Security is about doing the right things: working hard, paying Social Security taxes, and claiming at the right time for your age and life expectancy. It's also about avoiding the wrong things, and these can be harder to spot.

For example, there's one Social Security mistake that could permanently reduce your lifetime benefit, and you could be making it right now without even knowing it. Fortunately, it's often easy to correct once you realize it's there.

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How mistakes in your earnings record could rob you of Social Security benefits in retirement

The amount of income you pay Social Security payroll taxes on is one of the biggest factors in determining the size of your retirement benefit, so the government tracks it carefully. It lists how much money you've paid these taxes on each year in your earnings record. You can view yours by setting up a my Social Security account.

This data comes directly from the IRS, so it's normally accurate. But errors can happen, especially around job changes or name changes. For example, if you fail to notify your employer that you recently changed your name or you mix up some digits in your Social Security number when filling out new employment paperwork, then some of your income may not appear tied to you in your earnings record for that year.

When the Social Security Administration calculates your retirement benefit, that'll mean less money -- potentially a lot less if your earnings record is missing whole years of income. But fortunately, this issue isn't too difficult to spot and correct.

How to fix an error in your earnings record so it doesn't cost you

Start by creating a my Social Security account if you haven't already. This will enable you to view your earnings record. The numbers listed there should match the income you earned in each of those years. You can check them against your tax returns for the corresponding years.

The only people this may not be true for are high earners. They may not pay Social Security payroll taxes on all their income. If you earned more than the taxable wage base in any given year, your earnings record will correctly show the wage base for that year instead of your actual income.

If you spot a problem with your earnings record, fill out a Request for Correction of Earnings Record form and submit it to the Social Security Administration, along with copies of any proof you have of your actual income that year, such as tax returns or W-2s.

Ordinarily, you must act within three years, three months, and 15 days of the end of the taxable year with the incorrect information. But it is sometimes possible to make corrections after this deadline, depending on the reason for the mistake.

If you have any questions, contact the Social Security Administration for more information. You can also schedule an appointment at your local Social Security office.

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