If you’re like many Americans, you’re depending on Social Security to be a major source of income for your retirement. But what do you actually know about Social Security?  Do you know how much you’ll get each month?  Do you know when you can start to receive payments? Do you know if you qualify?

You can find these answers by looking at your Social Security benefits statement.

There are two main reasons to look at your Social Security benefits statement now — even if you’re many years away from retiring.

First, you need to know how much money to expect. Social Security isn’t intended to be your only source of retirement income. To fill the gap, you must save accordingly in your 401(k), IRA, or other savings vehicles. And the only way to know how much you need to save is to know how much you can expect to receive from Social Security. 

Second, you need to make sure your Social Security records are correct. Social Security eligibility is based on your earnings record and work history. Your employer deducts FICA taxes from your paycheck and reports your earnings to Social Security. If you are self-employed, you pay your own FICA taxes and report your earnings when you file your federal income tax return. These taxes go toward Social Security and are used to determine your eligibility and how much money you receive. Both of eligibility and payment amount can be affected if there are any errors or periods of missed earnings in the Social Security records. It will be a lot easier to have corrections made now rather than years later when you may not have your own records anymore.

How do you qualify for Social Security retirement benefits?

To qualify for Social Security, you need to earn a minimum amount of credits. Anyone born after 1929 needs 40 credits.

In 2019, you earn one credit for every $1,360 of earned income and you can earn up to 4 credits in a year.

The amount needed to earn one credit increases over the years. And even though you may make enough money in one year to earn more than 4 credits, you are limited to 4 per year. What this all comes down to is you have to work at least 10 years to qualify.

You can have breaks in employment, however. Once you earn a credit, you don’t lose it for not working.

How much will your Social Security payments be?

The amount of your monthly benefit is based on your lifetime earnings. The benefit is referred to as your primary insurance amount (PIA). PIA is calculated based on your average monthly earnings (adjusted or indexed for changes in the average general wages) for 35 years.

If you worked more than 35 years, the average will be based on the years when you had the highest earnings. If you worked less than 35 years, the years with no earnings will be included in the average as zero. As you can see, it is imperative to make sure your earnings are being reported accurately.

When can you start receiving Social Security benefits?

You can begin to receive your full monthly retirement benefits when you reach your full retirement age, which is based on your year of birth. If you were born in 1960 or later your full retirement age is 67. You can start to receive your benefits as early as age 62, but if you do, your monthly benefit will be permanently lowered. You can also delay receiving your benefits until age 70 to permanently make your monthly benefit higher.

What if you’re married and have low or no earnings because you stayed home to raise a family? There are special rules for marriage. You can qualify to receive retirement benefits based on your spouse’s earnings record, and you may also qualify even if you’re divorced.

So how do you check your Social Security benefits?

You can easily check the status of your Social Security benefits by creating a “My Social Security” account online. Once your account is established, you can view your Social Security Statement, verify your reported earnings, and see your estimated benefits.

There was a time when Social Security used to mail paper statements to future recipients during their working years.  This is no longer the case. Today, only persons age 60 or over who are not yet receiving benefits and who have not created a My Social Security account will receive a paper statement.

What if you don’t want to create a My Social Security account just yet? You can still view your estimated retirement benefit online. Just go to the Social Security website’s Retirement Estimator. It will ask you for some identifying information and about your recent earnings.  Then just like that, you’ll see your estimated Social Security benefits.

The Estimator will display what you can expect if you take Social Security when you reach your full retirement age, if you take it early at 62, and if you wait until you are 70.