Why It Pays to Keep a Careful Eye On Your Earnings Record

By Deborah Banikowski

Whether you’re ready to retire, just joining the workforce, or somewhere in between, regularly reviewing your Social Security earnings record could make a big difference when it’s time to collect your retirement benefits.

Just think, in some situations, if an employer did not properly report just one year of your work earnings to us, your future benefit payments from Social Security could be close to $100 per month less than they should be. Over the course of a lifetime, that could cost you tens of thousands of dollars in retirement or other benefits to which you are entitled.

Social Security prevents many mistakes from ever appearing on your earnings record. On average, we process about 236 million W-2 wage reports from employers, representing more than $5 trillion in earnings. More than 98 percent of these wages are successfully posted with little problem.

But it’s ultimately the responsibility of your employers — past and present — to provide accurate earnings information to Social Security so you get credit for the contributions you’ve made through payroll taxes. We rely on you to inform us of any errors or omissions. You’re the only person who can look at your lifetime earnings record and verify that it’s complete and correct.

So, what’s the easiest and most efficient way to validate your earnings record?

• Visit www.socialsecurity.gov/myaccount to set up or sign in to your own my Social Security account;

• Under the “My Home” tab, click on “Earnings Record” to view your online Social Security Statement and taxed Social Security earnings;

• Carefully review each year of listed earnings and use your own records, such as W-2s and tax returns, to confirm them; and

• Keep in mind that earnings from this year and last year may not be listed yet.

If you notice that you need to correct your earnings record, check out our one-page fact sheet at www.socialsecurity.gov/pubs/EN-05-10081.pdf.

Sooner is definitely better when it comes to identifying and reporting problems with your earnings record. As time passes, you may no longer have past tax documents and some employers may no longer be in business or able to provide past payroll information.

If it turns out everything in your earnings record is correct, you can use the information and our online calculators at www.socialsecurity.gov/planners/benefitcalculators.html to plan for your retirement and prepare for the unexpected, such as becoming disabled or leaving behind survivors. We use your top 35 years of earnings when we calculate your benefit amounts. You can learn more about how your benefit amount is calculated at www.socialsecurity.gov/pubs/10070.pdf.

We’re with you throughout life’s journey, from starting your first job to receiving your well-earned first retirement payment. Learn more about the services we provide online at www.socialsecurity.gov/onlineservices.


Q&A

Q: I just started my first job and my paycheck is less than I expected. Why am I paying for retirement benefits when I have a lifetime to live before retirement?

A: Besides being required by law, you are securing your own financial future through the payment of Social Security and Medicare taxes. The taxes you pay now translate to a lifetime of protection, whether you retire or become disabled. And when you die, your family (or future family) may be able to receive survivors benefits based on your work as well. Aside from all the benefits in your own future, your Social Security and Medicare payments also help today’s retirees. To learn more, visit our website at www.socialsecurity.gov.

Q: I am nearing my full retirement age, but I plan to keep working after I apply for Social Security benefits. Will my benefits be reduced because of my income?

A: No. If you start receiving benefits after you’ve reached your full retirement age, you can work while you receive Social Security and your current benefit will not be reduced because of the earned income. If you keep working, it could mean a higher benefit for you in the future. Higher benefits can be important to you later in life and increase the future benefit amounts your survivors could receive. If you begin receiving benefits before your full retirement age, your earnings could reduce your monthly benefit amount. After you reach full retirement age, we recalculate your benefit amount to leave out the months when we reduced or withheld benefits due to your excess earnings. Learn more about Social Security reading our publication, How Work Affects Your Benefits, at www.socialsecurity.gov/pubs/10069.html.

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