What Social Security’s Personal Pay, Benefit Report Can Tell You
Since the Social Security Administration announced its new, free service of providing personalized wage and benefit reports to the nation’s workers late last week, its telephones have been overwhelmed with calls--so much so that it is adding another 120 lines to the 200 already set up to handle requests for the special form. Officials say they soon expect the system to be able to answer 15,000 calls an hour.
If you do get through on the 24-hour, toll-free number (1-800-937-2000), you should receive a request form (SSA-7004) in the mail in a few days, and Social Security promises to mail your personal report about three weeks after receipt of your request form.
What will the report tell you?
First, it will give you your Social Security history, explaining what you have earned in Social Security benefits year by year through 1986, depending on how long you have been working, and what you have paid in Social Security taxes.
Keep in mind, though, that to be insured for retirement benefits, in most cases you must have 40 Social Security “credits,” or what Social Security officials used to call “quarters.” (A worker can earn up to four “credits” each year he/she is employed.) If you’re currently short of the 40 credits necessary to collect retirement benefits, Social Security will still send you a personal report giving your projected retirement income based on the assumption that you will accumulate enough credits.
The computerized “Personal Earnings and Benefit Estimate Statement” also will provide a detailed estimate, in today’s dollars, of what you will get each month from Social Security when you retire--at age 62, 65 or 70--based on your current income and projected future earnings.
For instance, according to current benefit schedules, if you are now earning $23,000 and decide to retire at 62, you will receive about $730 a month, 80% of the benefit you are entitled to if you wait until age 65 to stop working. On a yearly income of $23,000, your full benefit at age 65 will be about $970. If you wait until age 70 to retire at the same income, your benefit will be approximately $1,285 each month, or 33% more than at age 65.
In addition, the statement will include estimates of what your spouse and dependent children would receive in monthly benefits if you died or became disabled. The form also explains the specific “credit” requirements that must be met before survivor or disability benefits will be paid.
‘Package of Protection’
“We call it our ‘package of protection,’ ” said Social Security Los Angeles area director Sheila Leiter. “It’s the first time we’ve given out such information about survivors’ benefits and disability, and I think people will be very pleased with it. The workers can really get a feel for what can happen to a family if there is a death or disability.”
Leiter and other Social Security officials admit, however, that the form is probably not particularly beneficial to a 25-year-old worker in terms of predicting a monthly retirement benefit 40 years down the road. But they feel it will be helpful to young workers with families to know what survivor and disability benefit possibilities are, in order to do sound financial planning, including evaluation of other investments and the possibility of taking out larger life insurance policies. “The survivor and disability estimates,” said Leiter, “will help them plan the future for their families and give them time to see what they will need in the future.”
Leiter suggested that the total form will be especially useful for “middle-aged” workers in their 40s and 50s, “who are at a time in their lives when they should be thinking more about retirement and family protection.” But people in their 30s should send for the form too, she said, since most of them “are totally unaware of what’s available in FICA (Social Security) taxes. This is a wonderful opportunity for people to find out what they’re building.”
People calling the 800-number for a request form will be asked to give their name, address and age in response to recorded questions. If you’re unable to reach the 800 number, Los Angeles area Social Security officials recommend that you call your local Social Security office listed in the phone book, or write to the Consumer Information Center, Dept. 55, Social Security, Pueblo, Colo. 81009 for the request form.
Easy-to-Read Form
Social Security administrators also caution workers to make sure they fill out the request properly, so that the computer will be able to process the most accurate estimates possible. There are 10 questions to answer, and the form--which took two years in preparation--is surprisingly concise and easy to read.
The somewhat confusing part is question No. 9, where you are asked to fill in an estimate of your future average yearly earnings, showing “an amount which you think best represents your future average yearly earnings between now and when you plan to retire.”
In bold letters, though, the form cautions that in No. 9, “Most people should enter the same amount as this year’s estimated earnings. . . . “
“The reason for this,” the form continues, “is that we will show your retirement benefit estimate in today’s dollars, but adjusted to account for average wage growth in the national economy.”
Only if you have reason to believe your future earnings will be substantially more than you are currently making should you “enter the amount in today’s dollars that will most closely reflect your future average yearly earnings.”
By the way, the SSA-7004 request form is not meant for those already receiving Social Security benefits, those with a current benefit claim pending or those age 65 or older. If you fall into any of those categories and do request the form, you will receive a modified version that does not contain as much in-depth information.
