Social Security can be a big part of your retirement income, so it helps to know if the federal government calculated your benefits correctly.
A Social Security statement details your earnings history and estimated monthly retirement benefit. The Social Security Administration (SSA) mailed 47.9 million paper statements in the 2016 fiscal year, which ended September 2016. And more than 26 million people have a My Social Security account that allows them to check their statements online.
"Most clients don't realize the statements are not mailed each year and can't remember the last time they looked," said certified financial planner Jan Valecka, owner of Valecka Wealth Management.
Not everyone receives a paper Social Security statement each year.
The SSA mails paper statements to workers at ages 25, 30, 35, 40, 45, 50, 55 and 60 who aren't receiving retirement benefits and do not yet have a My Social Security account. After age 60, people will receive a statement every year. The statements are mailed three months prior to your birthday.
The SSA has been mailing paper statements this way since 2014. In 2011, the agency stopped sending everyone paper statements to save $70 million annually on printing and postage costs, but had to backtrack after beneficiaries and lawmakers complained.
People who have an online Social Security account receive an annual email reminder to review their statements.
The Social Security statements are far from perfect.
Last year, Valecka double-checked her statement and noticed that her 2014 earnings were not reported. She is still waiting for her earnings history to be corrected. She reviews her clients' Social Security statements annually.
Your monthly Social Security retirement benefit is based on your highest 35 years of earnings, so make sure your income is correctly reported on the statement.
If you worked for 45 years, your 10 lowest-earning years will not count in the benefits calculation. If you worked 30 years, your benefit would be reduced because of the five years you did not work. You must work a total of 10 years to qualify for retirement benefits from Social Security.
The SSA processed 92,000 complaints about statements in the 2016 fiscal year. That official figure may vastly understate the problem.
"Typically the statement does not reflect accurate earnings, which is a big deal," said Andy Tate, a CFP and financial advisor at North Star Resource Group. "I have seen errors on about 25 percent of them [for his clients]."
The Government Accountability Office recently found that the SSA often fails to give out key details to people in face-to-face meetings and online that could cost them tens of thousands of dollars in benefits.
The clock is running if you spot an error on your earning record with Social Security.
Officially, you have to correct errors within 3 years, 3 months and 15 days following the year of the mistake.
"As a result, it's quite possible that mistakes aren't found until after the deadline to fix them has passed," said Randy Bruns, a CFP and private wealth advisor at HighPoint Planning Partners.
Even if the time limit has expired, Bruns recommends people still attempt to fix errors on their earnings record because the "SSA has been known to correct mistakes beyond the deadline."
You'll need to prove what you've earned to have the SSA correct your record. A W-2 form, a tax return or a pay stub will suffice as evidence.
If you don't have those documents, at least have the name of your employer, the dates you worked and how much you've earned when you contact the SSA for a correction.
"The easiness of correction is directly tied to how recent the error was committed," said Matthew Boersen, a CFP with Straight Path Wealth Management. That is why it is important to check your statement every year.
If you haven't found an error, it is not wasted time.
"Even if there are no errors, reviewing the statements can influence someone's incentive to improve their earnings record," said Larry Luxenberg, managing partner and chief investment officer of Lexington Avenue Capital Management.