Maurie Backman

The Motley Fool

Millions of seniors today rely on Social Security as a crucial source of income in retirement. But if you're not careful, you could end up losing out on benefits due to nothing more than a clerical error.

Your Social Security benefits are calculated based on how much you earned during your 35 highest-paid years of earnings. The age you file at will play a role in determining your monthly payments as well. Waiting until full retirement age (either 66, 67, or somewhere in between) ensures that you get the full monthly benefit your earnings record entitles you to. Filing ahead of full retirement (you can claim benefits as early as 62) reduces your benefits, while delaying your filing past full retirement age increases your benefits (though this incentive runs out at age 70).

No matter when you file for Social Security, however, at the core of your benefits calculation is the information contained in your earnings record. But if that information is erroneous, you could lose out on critical income that's rightfully yours. The good news, however, is that you can avoid such a scenario by taking one simple step: checking your earnings statements year after year.

Be vigilant to avoid losing out

Your annual Social Security statements show what your taxable earnings look like, how much you've paid in Social Security and Medicare taxes, and what your monthly benefit might look like based on that information. But if these statements contain mistakes about your earnings, it could impact the amount you ultimately collect in benefits.

Imagine you earned $60,000 last year, only for some reason, the Social Security Administration (SSA) shows no income for you on file. That $0 could bring down your average wage over the 35-year period used to determine your benefits, thereby slashing your monthly payments.

That's why it's so important to review your Social Security statements year after year. If you're 60 or older, you'll get a copy of those statements in the mail, so all you need to do is not toss them out, and examine them instead. If you're not yet 60, you'll need to create an account on the SSA's website and access your statements there. Then, if you spot an error, you'll need to report it to the SSA immediately. The agency might ask for proof of your claim in return, such as pay stubs, tax returns, or any information that supports your assertions.

Don't give up money that's rightfully yours

As of 2018, less than half of the 39 million Americans with online Social Security accounts had checked their earnings statements over the previous 12 months. This means that a large chunk of workers are at risk of seeing their benefits lowered because of a reporting or administrative glitch. If you'd rather that not happen, set a yearly calendar reminder to log onto the SSA's website and review your statements. And if you're eligible to get yours in the mail, for the love of your future income, don't throw them away until you've had a chance to read them thoroughly.

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