Why it is Important to Check your Social Security Wage Record

I recently have been reading a book by Bob Carlson called Where’s My Money?  The book is all about the exciting topic (sarcasm) of Social Security claiming and getting the most out of this important retirement benefit.
 
One of the topics of the book is the importance of checking your Social Security wage history. Bob Carlson makes the case that you should do so for two reasons:

1. To make sure your wage history is accurate and complete; and
2. To see if there are ways you can influence that history to maximize your Social Security Benefits.

 
Let us start with why your history is important.
 
Your earnings history is a record of your progress toward your future Social Security benefits. The Social Security Administration (SSA) uses your highest thirty-five years of earnings to calculate your benefit amount when you sign up for benefits.
 
If there are errors or omissions in your earnings record, you may not get credit for money you paid in payroll taxes, leading to lower future Social Security benefits.
 
You can maximize your benefits by:

1. Working at least 35 years and ensuring you have at least 35 years of earnings to maximize your benefit calculation.
2. Earn more if possible: Higher earnings contribute to a larger benefit amount.
3. Consider delaying claiming until age 70: Waiting to claim benefits until age 70 can significantly increase your monthly payments.
4. If you are eligible, consider claiming spousal benefits based on your spouse’s earnings history.
5. Know retirement earning limits: Be aware of how working during retirement can impact your benefits.
6. Remember, your Social Security benefits play a crucial role in your retirement planning.

 
After reading this section of the book, I checked my wage history and even developed a spreadsheet to see my 35-year average wage history (very nerd-like indeed). From here, I factored in my expected wages over the next several years to see how they will impact this average wage history.
 
I then logged into the Social Security website and on the home pages is a feature where you can see how future expected income through retirement affects your monthly social security payout.
 
To be honest, my expected income did not really move the needle of either my benefit in the future or my average wage base. My wages have been pretty consistent.
 
However, when I did this same exercise for my spouse, I found a different story. Because she was a stay-at-home mom for a number of years, her social security could be greatly influenced by a few changes to our plan.
 
The most obvious is she is now working in a job paying her more than when she was a stay-at-home mom ($0 in wages). Just by working a few additional years raises her wage base and average wage for those 35 years. Strangely enough, my wife did not like that idea since we had previously agreed she will stop working early in a little over a year from now.
 
In fact, it got quite chilly in the room when we discussed working longer!
 
Another option is to earn more. However, this is easier said than done in many cases.
 
I thought of a third option and that is, if you are self-employed, consider adding your spouse to the payroll so she can boost her Social Security wage record.
 
In my case since I am not a fan of additional taxes, I considered paying my spouse my salary and taking no salary. It would boost her wage record and have minimal impact on mine. The problem is I work in a regulated industry, and I could see myself facing possible scrutiny over wages, work, and licensing (i.e., she is drawing wages and is not a licensed adviser).
 
I ultimately decided to leave well enough and just hope my spouse finds some kind of part-time paying gig that might push her Social Security wage record up further before she reaches her full retirement age (FRA) at 67.
 
Let me quickly demonstrate the math here. Let us suppose your social security record says that based on your current wage record you will receive a benefit of $1,982 at your FRA. However, by raising your wages or working longer before retiring, the SSA projects your benefit can increase to $2,039 per month at your FRA.
 
You might say “who cares, that is just $57 more per month. That does not move the needle, Jeff.
 
However, I want to point out that that $57 per month over an estimated 23 years (to age 90) at 8% (what the SSA pays you in extra benefits for delaying) totals to more than $44,957.67 in extra benefits over that hypothetical period.
 
That in my opinion is real money and worth exploring!
 
Let us know how we can help you.