Tuesday, March 14, 2006

More financial paperwork: your social security statement

I'm part of the generation that considers Social Security something mysterious and mythic -- I gather it's supporting a large chunk of the population in their old age and infirmity, but it's nothing I'm banking on in my own retirement planning. Still, it's interesting to have some idea of how it works and where you stand on earning benefits. That's where your annual Social Security statement comes in.

The full story of Social Security's intricacies would require a thesis to explain, but the quick gist is that to earn retirement or disability benefits, you need to accrue "credits" for working. For 2006, you earn one credit for each $970 of wages or self-employment income. You can earn a maximum of four credits per year, so it takes at least 10 years of work to accrue enough credits for retirement payments. Those years don't need to be contiguous, though -- you can earn a few credits, have no income for few years, and pick up again with no problem.

Your annual statement shows how many credits the SSA has on record for you, which is useful to check against your own work records. It also estimates your expected benefits for retirement or disability, and the survivors' benefits that would be available to your family if you die. A sample statement, with explanations, is available at the SSA website.

The SSA automatically sends out statements annually three months before your birthday. If you feel the need to see one sooner, you can also request it online, although the statement will still come to you via snail mail. David's turned up recently, and we realised we haven't seen one for me in a long time. Because we bounce around a lot, I rang the SSA to ask about changing my address in their files. It turns out they pull address information from annual tax filings to the IRS -- so, if you're filing taxes, the SSA should find you and get your statement mailed out properly.

Also, like many government agencies, the Social Security Administration is in charge of all sorts of bizarre, semi-random tasks. Such as compiling lists of the most popular baby names each year. (2004 winners: Jacob and Emily. The records go back to 1880, when the top names were John and Mary. Stacy has been plunging like a stone since its popularity peak in 1973.)