Hint: Pay attention to emails, ignore
phone calls
Sep 19, 2018 @ 11:32 am
A financial adviser
contacted me recently to ask if the email he received from the Social Security
Administration reminding him to review his estimated benefits statement online
was valid.
"Does Social
Security send out these types of emails, or is it a scam?" he asked.
Coincidently, I
received a similar email this week reminding me to review my online statement
to ensure that my earnings record is correct and to see my latest benefits
estimate.
We can all breathe
easier. The Social Security email is valid, and it's an excellent idea to
review your benefits statement at least once a year. While it is your
employer's responsibility to report your earnings each year, it is up to you to
make sure they are accurate. If your earnings record is wrong, it could affect
your future benefits.
But the Federal
Trade Commission recently issued a warning to
ignore phone calls from official-sounding callers who tell you your Social
Security number has been suspended due to fraudulent activity and then ask you
for your personal information to reactive your account. It's a scam. Your
Social Security number is never suspended.
To review your
estimated benefits statement, log on to the Social Security website and sign on to your account.
Warning: Passwords expire every six months, so you may need to reset it. You
also must have a second method to verify your identity — either a cell phone or
an email address — where you can receive a security code to authenticate your
account.
The Social Security
statement is a treasure trove of financial information. Page 2 of the four-page
document lists your estimated Social Security benefits at age 62 (if you are
younger than that), at your full retirement age and at age 70. The estimates do
not include cost-of-living adjustments that will be applied to your future
benefits once you claim them, meaning your actual benefits could be larger.
The retirement
benefit estimate assumes you will continue to work and make about the same as
you did in 2017. Generally, the older you are and the closer you are to
retirement, the more accurate the retirement estimates will be.
For example, my
estimated retirement benefit at full retirement age increased by
about $800 per year from last year's statement because I continue to work and
pay taxes. My latest year of earnings replaced one of the earlier,
lower-earning years used in the 35-year calculation used to determine future
benefits. My husband's benefit estimate remains the same as last year. Although
he has reached full retirement age, he has not yet claimed benefits, and his
part-time earnings over the past few years have not boosted his average
lifetime earnings.
Advisers often ask
me what happens to a client's benefit if he retires now but doesn't plan to claim
Social Security until later. The Social Security Administration's Retirement Estimator can
calculate personalized benefit estimates in
such cases. If you have clients who are public employees who
have pensions based on work where they did not pay FICA taxes and who also
worked long enough in the private sector to earn a Social Security benefit, be
aware their future benefit could be smaller than their estimated benefit
statement indicates.
The statement also
includes an estimate of your benefit if you became disabled right now and how
much your spouse and any eligible minor child could receive in survivor benefits if
you were to die this year.
Pages 2 and 3 list
your year-by-year lifetime earnings up to the maximum taxable wage base subject
to Social Security taxes and total wages if above that annual amount subject to
Medicare taxes. It serves as a timeline of your lifetime earnings and can help
you map out plans for clients' retirement savings and future income needs.
You and your
employer each paid 6.2% of your earnings up to the taxable wage base of
$128,400 in 2018. If you are self-employed, like me, you pay the combined
employee and employer amount, which is 12.4%, up to the maximum taxable wage
base. In addition, you and your employer each pay 1.45% (2.9% for
self-employed) on all of your wages, including those above the taxable wage
base, in Medicare taxes. High-income workers ($200,000 single/$250,000 married
filing jointly) also pay 0.9% in Medicare taxes on earnings above those
thresholds.
Page 3 also lists
the total amount in Social Security and Medicare taxes that you and your
employers have paid over your entire career. That cumulative Social Security
tax should serve as a stark reminder of why you should try to maximize your
Social Security benefits and coordinate your claiming strategy with your spouse
if you are married.
https://www.investmentnews.com/article/20180919/BLOG05/180919916/determining-if-a-message-from-social-security-is-a-scam
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