If You Work, Have You Checked Your Social Security Account?
Verify your earnings history and check your future benefits
Note: To help build your financial literacy, I have an idea for you that I share with my SMU students. A third personal finance pro tip that follows exploring your credit report and why a brokerage account with a cash management feature is what most households need.
Your Social Security Account
Do you know what your earnings look like to the Social Security Administration? If you have a reported earnings history, you have an account here. Social Security.gov, which warehouses earnings history and projects benefits.
Today’s Exercise: I will walk you through establishing your online credentials, logging in, verifying your data, and poking around.
Step 1. Ensure you are going to the correct site. If you have never signed in, you must establish your access, which you can do with Login.gov or ID.me. Security is a big deal, so be patient. Once in, check out your benefits estimate. If you receive benefits, you can manage them.
Step 2: You have logged in. What will you see? Below is a screen capture of an actual account.
Four items that hit the nail on the head.
You can download your Social Security statement
Replace your Social Security card
A letter verifying benefits or showing if you currently are not receiving benefits or are waiting for verification
Your full earnings record to date. As a worker, you and your employer pay 6.2% of taxable Social Security earnings this year. The cap is $168,600 this year, and it increases every year. In addition, you and your employer pay 1.45% to Medicare, a taxable amount without a cap. If you make more than $200k, add another 0.9% of tax on the margin for Medicare. If you are self-employed, you pay tax as if you are both the employee and employer. Ouch! But, now you can see potential benefits.
Lastly, regardless of age, you might be amazed at the estimated level of Social Security retirement benefits. Because they are indexed for inflation, these benefits have significant financial planning implications and should be included in every economics-based financial planning decision. In PFE, built financial plans include those estimates.
Something that i was thinking about was the fact that self employed individuals get hit in two directions as it relates to Social Security and Medicare. It was also mentioned briefly in this substack post that this is the case because you pay as both the employee and the employer. It makes me wonder about the long term financial planning and specific tax deductions to help deal with this situation.