Social Security

If you thought taxes and health care were complicated, wait until you try to understand social security!

You may already have received in the mail the annual statement of earnings record provided by the Social Security Administration (SSA), required by law to be sent to workers age 60 and older. (You can also retrieve this information at any time from the SSA website once you create a mySocialSecurity account.) This document provides an overview of your expected social security benefits, showing what you would receive at age 62, at full retirement age, and at age 70. Benefits are calculated from the highest 35 years of earnings, and it is assumed that in the years between now and your retirement you will continue to earn at a similar rate.

Were it that straightforward in practice … the SSA rules and regulations appear to stymie even those who work there, which is why experts advise that you never rely on the first answer you are given. They also advise that you learn as much as you can before you call or schedule an appointment, which gives you a better chance of asking the correct questions. Remember, the good people at the SSA are not there to provide financial advice or show you ways to get the most out of social security. That’s your job!

For an overview of how benefits are calculated, see this article by The Motley Fool. If you’d like to model your specific situation, I recommend the user-friendly web-based software created by Laurence Kotlikoff, available here. To dig even deeper, read his book Get What’s Yours: The Secrets to Maxing Out Your Social Security, 2016 edition. And last, but not least, check out the online resources, such as this post, provided to the general public by the private investment company Vanguard Investments, long the industry leader in investor education.

No matter how social security benefits figure into your retirement planning, rest assured that your independent research now will be time well spent and could make a real difference to your future.