by Richard Eisenberg, Next Avenue Editor
For years, the Social Security Administration has done a rather arduous job of telling Americans how much they are likely to receive in social benefits. But I’m glad to say that the agency has just replaced its text-heavy, four-page social security statement with a redesigned, more useful, more visual two-page version.
As a result, I strongly encourage you to visit Social security website to see the vital, clear information for your pension security. To do so, either visit your “my social security account” site or create one. Otherwise, you can only see your statement when it arrives in the mail when you turn 60. (Only 63 million Americans have my Social Security accounts, even though 176 million workers pay taxes to the Social Security program).
“The statement is streamlined and contains clear messages and makes it easy to find information in an instant,” Social Security Administration Acting Commissioner Kilolo Kijakazi told me. “So we hope this will help simplify what may be complex programs for the public.”
Complex says it kindly.
Social Security analyst Laurence Kotlikoff, an economics professor at Boston University and creator of software to help people claim social security wisely, has told me that there are 2,728 rules in the Social Security Handbook and 11 different social benefits. He believes that at least half of the people who claim social security “make big mistakes”.
Kotlikoff has a few issues with the new Social Security statement, as do some other critics; I will explain their concerns soon.
Major improvements in the new social security declarations
I see a few major improvements in the new social security statement:
The smart, simple, colorful bar chart called Personalized Monthly Retirement Benefit Estimations (Depends on the age you start). In the previous incarnation of the statement, you may have been led to believe that it was smart to start claiming social security as early as allowed – at 62 – or at full retirement age (now between 66 and 67, depending on when you were born) . But the new chart shows the benefit of postponing the claim if you can.
Social security rules essentially give you an 8% higher benefit for each year you defer applying for benefits after your full retirement age until you turn 70. Put another way, if you are now 66 and waiting until 70 to start applying, you will see 32% greater benefits than if you entered your full retirement age. But 62 is one of the most popular ages for people to start demanding social security.
The new social statement puts the value of delayed claims in sharp focus through its bar charts. As an example, a person born in 1960 who would continue to earn about $ 50,000 a year until starting benefits may see that claiming 62 will provide a $ 1,050 monthly benefit, but waiting until 70 will provide $ 1,860 a month.
“People need to be aware that if they retire early, it means an actuarial deduction for the amount they will receive, which will continue for the remainder of their retirement,” Kijakazi said. “Having the visual makes it clear instinctively to people what their choices are when they make theirs [claiming] decisions.”
Your personal earnings record. Your social security statement now shows most of your annual earnings taxed for social security and brings together some of your previous years of employment. You can find any year’s earnings on your “my social security” online account.
Survivors’ benefits. The statement shows exactly how much your spouse or a minor child can receive in monthly social security benefits if you die this year.
The bullet point called Important Things to Know About Your Social Security Services. This explains, for example, that after a married person dies, the age at which the benefits are claimed will affect the amount of benefits for their surviving spouse.
What Social Security Analysts Think
Gary Koenig, vice president of financial security at AARP, said the new statement “is much better than where it was.” He is particularly pleased that the Social Security Administration no longer uses the term “early retirement,” a phrase he believes is “frankly misleading.” But he wished the agency would have mentioned “a minimum benefit versus your maximum benefit.”
Phil Moeller, co-author of “Get What’s Yours: The Secrets to Maxing Out Your Social Security,” gives the revised Social Security Statement “a solid B.” He’s a fan of its new graphics, though he wished there were more explanations of the requirements.
However, an employee of the Social Security Administration told him that the agency is working to include benefit estimates, taxes paid and earnings in its sample statement, which “is more representative of a reality scenario.”
Jim Blair, of Premier Social Security Consulting, welcomes the way the new statement gives people a better idea of early retirement benefit reductions.
Martha Shedden, co-founder of the National Association of Registered Social Security Analysts, had a mixed review of the new Social Security Statement.
She liked its short length, layout and colored formatting “which makes it easier for workers to quickly understand their benefits,” Shedden told me. And she approved the monthly benefit estimates, the Declaration’s Retirement Ready Fact Sheet ‘for humans (based on their age decade) and links, rather than mysterious wordings, to some of Social Security’s requirements rules.
But, she said, “I would like to see more emphasis – bold or colored text – on that fact these personal estimates are based on your past earnings and assume you continue to earn $ xx, xxx per year until you start your benefits. “
Kotlikoff – who consulted with the Social Security Administration on the redesign of the statement – thought the visual improvements were “good” but had a few beefs.
First, “I do not like that you can not make a PDF of your entire earnings history to check if it is correct,” he said. Shedden also complained about this.
People from the Social Security Administration tell me that they are working on updating the statement to show people more of their earnings history.
Kotlikoff also quarreled with what he called “the somewhat ridiculous and potentially very unrealistic” economic assumptions behind the projections for a person’s social security benefits.
“They assume no inflation in the future and no wage growth in the economy forever,” he said. Kotlikoff also added, Social Security assumes, “that you get to work until you retire.”
Time to resubmit Social Security Declarations?
Other social security analysts, including AARP, believe the government should return to routinely sending all Americans 25 and older social security statements, as it did until a decade ago.
That is not happening at the moment, Kijakazi said. “If we were to send statements to all people aged twenty-five and older, it would increase our costs – print and mail – to between eighty million and ninety million dollars a year,” she noted.
Kijakazi added that she knows that a two-part bill in Congress – the Know Your Social Security Act – would require a return to paper declarations for workers aged 25 and older who do not receive social security benefits. “If the bill were to become law, we would work hard to ship as fully as possible. But still, there is a significant cost,” she said.
In the meantime, you can check your Social Security statement to make sure it is accurate and to see what you can receive in benefits one day. If you find errors in your earnings, call the Social Security Administration at 800-772-1213 to get things fixed.