Beyond waiting as long as possible up to age 70 to claim Social Security or claiming spousal benefits to maximize payments, there is one simple step workers can take to get the benefits they’ve worked for: verifying their earnings records with the Social Security Administration.
Each year, your employer sends a copy of your Wage and Tax Statement, or W-2, to the administration. The earnings shown on those statements are used to determine whether you will receive benefits and, if so, the amount of those benefits.
If an employer fails to properly report just one year of your earnings, it could cost you tens of thousands of dollars in benefits over your lifetime. Among other reasons, earnings could be missing from your record because your employer reported them using the wrong name or Social Security number; you were married, divorced or changed your name and didn’t report that to the administration; or because you worked using a Social Security number that didn’t belong to you.
You can review your Social Security statement, verify your earnings record, and get estimates of future benefits by creating a my Social Security account on the administration’s website. Check that your account shows the correct amount you earned each year and the correct name and date of birth.
It pays to check at least once a year because you could lose your tax or earnings records over time or an employer could go out of business or relocate, making it more difficult to pin down proof of your earnings.
Ordinarily, you can’t correct your earnings after three years, three months and 15 days from the end of the taxable year in which your wages were paid. However, you may correct your record after that timeframe under some circumstances. For more information on when you can correct your earnings record, check the administration’s website.
“Check it every year if you can, and at least every three years,” because in many cases, it will be a lot harder to fix outside of that window, says Audrey Blanke, a financial planner at Baird in Milwaukee. She’s been told several times in seminars and client conversations about errors that were discovered in earnings records, she says.
If you do spot an error in your earnings record, try to collect proof of any missing or incorrect earnings, such as a W-2 form, tax return or wage stub. If you aren’t able to collect those documents, try to rememberthe name of your employer, the dates you worked there, and how much you earned. You may be able to correct your earnings record online, but you can also contact the Social Security Administration online or 800-772-1213 to work to correct your record.
Sole contractors and businessowners should make sure that their payroll is reported accurately, and those who get a divorce and change their names should check carefully for errors, says Stephen Tally, chief operating officer at Leo Wealth, a Iselin, N.J.-based wealth-management firm.