By Marcia Mantell, RMA
National Social Security Month is an excellent time to log in or create your my Social Security account on SSA.gov. This is where you securely find your most current Social Security statement and other information about your benefits.
Your Social Security statement is one of your most important retirement tools. During the COVID-19 pandemic, it underwent quite a facelift and the new design is noticeably different. The two-page statement is a significant departure from the statements you’ve been receiving for the past 20 years.
Unfortunately, there is a considerable amount of critical information eliminated or greatly scaled back on in this new statement. You can dig for it after you log in. It is there somewhere. But if you don’t even know to look, you’re out of luck.
In comparing the new statement versus the prior versions, here are some pros and cons.
Con: How Much Will You Get from Social Security?
Right off the bat, the big banner across the top of the statement showing your estimated benefit in giant-size type is completely missing.
So, how much do you get?
Don’t know yet. What had been clearly noted in the last version of the statement was the amount you are eligible to receive at your full retirement age (FRA). This is the single most important piece of information you need when planning for income in retirement from Social Security.
It is your estimated benefit payment when you claim at your full retirement age (between 66 and 67 for most). If you claim before FRA, you get less. Claim after FRA, you get more. Either way, you need to know your “anchor” amount.
Buried in the top left gray box, if you read it really carefully, you will find your full retirement age noted, but still no dollar amount of your primary benefit.
Looking at the graph on the right, you see nine different amounts you can get between ages 62 to 70. But nothing indicates which one is your primary insurance amount (PIA). You needed to read that gray box to figure out how to fit the puzzle pieces together.
In previous statement designs, Social Security provided three benefit estimates: Your estimate at full retirement age (again, the “anchor” benefit payment), at age 62 and at age 70. While helpful, most people retire somewhere between 62 and their full retirement age, often at age 65. You’d have to call Social Security or try to use the online tools to figure out your estimated benefit if it wasn’t shown.
This new graph accomplishes two goals:
- It visually shows the significant payment amount differences between ages 62 and 70.
- It fills in all estimated benefit amounts between the earliest claiming age (62) and the maximum claiming age (70).
However, this format gives the illusion of “bumping up” benefit amounts each year. tart benefits at 62, you’ll get $1,465 (the example provided on the “Wanda Worker” sample statement). Then, when you reach age 63, it appears your benefit bumps up to $1,569. And so on until age 70 when your benefit bumps up to $2,634.
That is not at all what happens. Once you select your claiming date, you have permanently locked in your benefit payment. Only the cost of living adjustments or additional earnings will increase your base amount. It’s simply not clear on the statement.
Con: Where Did Your Earnings History Go?
In a shocking move, the new statement does not provide your full earnings history. Considering that your personal earnings are the single most important input into your benefit calculation, it is stunning that your earnings are no longer listed.
Your benefit is calculated based on your highest 35 years of earnings, after indexing for wage growth. If you have any zeroes in your work history, you now may not see them on your statement. Tens of millions of Americans have some years of zeroes due to:
- Staying home with children
- Years in graduate/medical/law school
- Periods of unemployment
- Working for a state or local government
- Working in a union with a pension benefit
- Stepping out of the workforce to care for an elder or sick person
- Resigning during COVID-19
The zeroes don’t have to drag your benefit amount down, as long as you replace them with additional years of work. For those closer to retirement, you won’t see any of your wage detail for 30 or more years of your work history. Only the most current 16 years are shown.
Again, you can dig around the my Social Security page to find the full listing of your earnings history. But not having your entire work history at-a-glance significantly reduces your decision-making data.
This is quite a misstep in the newly designed statement.
Pro: Attaching Age-Based Fact Sheet to Your Statement
Fact sheets with additional decision-making information have been around for some time. But they were not previously included with the downloads of your statement. Now, they are attached.
The “Fact Sheet for Workers Ages 49 – 60” contains a brief summary about working during “retirement” while claiming, taxes, and benefits for others. Links to more complete information are provided. You’ll need additional information in each section before making your claiming decision.
A bonus point on the fact sheet: The Social Security Administration is upfront in pointing out the solvency issue. They give an example of how benefits could drop if Congress fails to solve the Reserve Account shortfall expected in the next 12 years. And, importantly, they provide a link where you can get current information.
Con: Big Miss on WEP and GPO
Millions of state and union workers who will get a public pension in lieu of Social Security misunderstand spousal benefits. While they understand they are “uncovered” workers, many think they will be eligible for spousal or ex-spousal benefits. Most of the time, they are not. Or, their spousal and survivor benefits will be reduced.
In prior versions of the statement, the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) weren’t explained completely. But at least there were two big paragraphs that appeared important.
This latest statement includes only three sentences plus a link. In the design of the page, most people who will be subject to WEP and/or GPO are bound to miss the sheer importance of this topic.
Pro: You Can See How Much You and Your Employers Paid In
Many people do not fully understand the value of their Social Security benefits. They think the dollars they contributed via FICA are theirs and they want them back.
In a nod to the SSA, they’ve left in the details: how much you paid over decades of work, and how much your employer(s) kicked in.
Take a moment to consider the payback: In Wanda Worker's case, she paid in $76,000 plus her employers kicked in $77,000 over about 40 years. With her monthly benefit of $2,000, all of the taxes-paid-in-on-her-behalf are returned to her in 6.4 years. Yet, the likelihood she’ll live well into her 80s and 90s is high, and those checks never stop arriving. Even after “her money” is long gone.
The Real Win Is the Benefit Itself
While the new statement addressed some issues and made some improvements, it remains a C+. The amount of critical information removed outweighs the new design.
Regardless of the statement’s design, the win is knowing you’ll receive a safety net throughout old age. Nearly 50 million Americans receive Social Security retirement benefits today, plus another 15 million receive Disability or Survivor benefits. The power is in the program. There’s still time to improve the statement.
About the author: Marcia Mantell, RMA®
Marcia Mantell is the founder and president of Mantell Retirement Consulting, Inc., a retirement business development, marketing & communications, and education company supporting the financial services industry, advisors, and their clients. She is author of “What’s the Deal with Retirement Planning for Women,” “What’s the Deal with Social Security for Women,” and blogs at BoomerRetirementBriefs.com.