Understanding Your Social Security Statement Page-by-Page

In a previous post, we considered the question: “Will You Ever Recoup What You Paid into Social Security?” This leads to another question: “How much have you actually paid into Social Security?“  To answer that question, you need look no further than Your Social Security Statement.  In addition to answering the above question, there is a lot of information you should be paying attention to in those statements. 

Graphic of Social Security Statement and Card

Some of you may be asking, what Social Security Statement? You can see sample statements based on your age group on the Social Security website. These statements are mailed annually to workers age 60 and over who are not receiving Social Security benefits and do not have an online mySocialSecurity account. The statements are mailed three months before your birthday. If you do not currently receive statements and want to review your personal information, you can create your account online.

What Can You Expect in Retirement? Page 1

The first page of the Social Security Statement describes what is covered in the statement. In addition to showing how much you have paid into Social Security and Medicare, it provides estimated monthly benefits you could receive in retirement, if you become disabled and what your surviving family members may be eligible to receive at your death.  

How Much Have You Paid into Social Security? Page 3

Let’s look at our initial question first: How much have you paid into Social Security taxes? You will find this in the mid-section of Page 3. This shows the total taxes you, as well as your employer(s), have paid into your account over your working years. If you have self-employment income, both the employee and employer portions are included under the You Paid total.   

While you’re here, be sure to check out the top section of the page. This lists your Social Security earnings for each year you have worked. Your future Social Security benefits are determined by the earnings reported. If you think there is an error in the earnings reported, then it is important to contact Social Security as soon as possible.

What are Your Estimated Benefits? Page 2

Retirement: You need to have earned at least 40 “credits” to qualify for retirement benefits. You earn up to 4 credits each year for your work based on your earnings. For 2020, you earn one credit for each $1,410 of wages or self-employment income. You receive the maximum of 4 credits for the year when your earnings reach $5,640 in 2020.  If you do not have enough credits, then your statement will not provide an estimated retirement benefit. 

The estimated monthly benefits shown for full retirement age (increasing from age 66 to 67 over the next several years), age 70 and age 62 are calculated assuming you will continue working until you apply for benefits and that you will earn about the same as you did in the last year of reported earnings.

Of course, earnings can fluctuate significantly due to many different factors. The Social Security website provides an online Retirement Estimator that you can use to prepare a more personalized benefit estimate based on your expected earnings and retirement age. You can access the Social Security estimator here.

Note: All The benefit amounts shown on your Social Security Statement are in today’s dollars; they do not reflect any cost of living adjustments that may occur between now and the age you begin benefits. 

Disability: The number of “credits” you need to receive Social Security disability benefits depend on how old you are when you become disabled.

  • Less than age 24: 6 credits (1½ years of work) during the 3 years before you were disabled
  • 24 – 30: credits for half of the time between age 21 and when you became disabled
  • 31 – 42: For ages 31 over, at least 20 credits in the 10 years immediately before you became disabled
  • 43 – 62: 20 credits plus 1 credit for each year of age over 42.
  • 62+: 40 credits

The monthly benefit shown on your statement assumes you became disabled immediately. If you are receiving disability benefits at your full retirement age, your benefit will convert to a retirement benefit automatically and the benefit amount will remain the same.  

Note: if you receive retirement or disability benefits, your spouse and children may also qualify for benefits. 

Survivor: Per the Social Security website, “The number of credits needed for family members to be eligible for survivors’ benefits depends on your age when you die. The younger you are, the fewer credits needed. Nobody needs more than 40 credits.

“Under a special rule, we can pay benefits to your children and your spouse caring for your children, even if your record doesn’t have the number of credits needed. They can get benefits if you have credits for one and one-half year’s work (6 credits) in the three years before your death.

“If you are already receiving retirement or disability benefits at the time of your death, we will pay your survivors based on that entitlement. We will not have to determine your credits again.”

The survivor benefits shown on your statement assume you die this year. The statement shows benefits for your child, your spouse who is caring for your child, your spouse if benefits begin at full retirement age, and the maximum family benefit. The maximum monthly benefit varies, but is generally 150% to 180% of the decedent’s basic benefit rate. You can see that if you have more than two eligible surviving beneficiaries, the combined benefits would exceed the maximum. In this case, the maximum benefit would be allocated proportionally between the eligible survivors.

Surviving family members eligible to receive benefits include:

  • Spouse age 60 or older, 50 or older if disabled
  • Spouse at any age if caring for your child under age 16 or disabled and receiving benefits on their record
    • Spouse no longer eligible for benefits if remarries before age 60, 50 if disabled
  • Unmarried child under age 18, up to 19 if still in primary or secondary school.
  • Disabled child 18 and older if the disability began before age 22
  • Under certain circumstances, 
    • Stepchild, grandchild, step-grandchild, adopted child 
    • Parents who are 62 or older who were dependent on you for at least half of their support

Please be sure to check your birth date shown on the statement, there have been errors.  

How Your Benefits Are Estimated Page 2 (lower section)

This section gives a little more detail on the assumptions used for the benefit estimations. It also brings up an important issue if you are or have been a government employee. If you are eligible for a pension based on employment where you did not pay Social Security taxes, then your Social Security benefit amount may be impacted and the amount shown on your statement may be reduced. In this section the two programs that address the issue are described.  

Windfall Elimination Provision (WEP): If you do not have 30 or more years of Substantial Earning where you had Social Security taxes withheld from your earnings your benefit will be reduced.  

Government Pension Offset (GPO): If you receive a pension based on federal, state, or local government work where you did not pay Social Security taxes and you are eligible for a spousal Social Security benefit as a spouse, former spouse, widow or widower, you will likely fall under GPO and your spousal Social Security benefit will be reduced by two-thirds of your government benefit, and could be zero. 

Final thoughts

There are many factors to be aware of when planning for your family’s financial security. Social Security is a big part of that plan, and our financial planning services include analyzing various scenarios for retirement, disability, and death so that we might better assist clients in making the best decisions for their family’s needs. Reach out to us if you would like us to help you better understand your Social Security statement.


small photo of peggy sherman

Post written by Peggy Sherman, CFP®.  She joined our team in 2007 and has expertise in Social Security and Tax Planning. Learn more about Peggy here.

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