This problem is fixable, but only if you know it exists.
At what age should I start receiving Social Security benefits?
Find the best age to claim Social Security benefits based on calculations and life expectancy. Should I wait or claim sooner?
To squeeze the most money out of Social Security, it’s important to do the right thing. Work hard, pay your Social Security taxes, and claim them at the right time for your age and life expectancy. It’s also about avoiding doing the wrong things, but finding them can be difficult.
For example, one Social Security mistake can permanently reduce your lifetime benefits, and you may be making one right now without even realizing it. Fortunately, once you realize the problem exists, it’s often easy to fix.
How errors in income records can strip you of Social Security benefits after retirement
The amount of income you pay Social Security payroll taxes on is one of the biggest factors in determining the amount of your retirement benefits, so the government tracks it closely. The amount you pay these taxes each year is recorded on your income record. You can view your account by setting up my Social Security account.
This data comes directly from the IRS and is usually accurate. However, errors can occur, especially when it comes to changing jobs or changing names. For example, if you didn’t notify your employer that you recently changed your name or mistyped a digit in your Social Security number when filling out a new employment document, some of your income may not be associated with your earnings record for the year.
When the Social Security Administration calculates your retirement benefits, the amount will be less. If your income record is missing years of income, the amount could be significantly lower. But fortunately, this problem is not that difficult to find and fix.
How to fix errors in revenue records without spending money
First, create a Social Security account if you don’t already have one. This will allow you to see your earnings records. The numbers listed there should match the income you earned each year. You can check this against the corresponding year’s tax return.
This only applies to high-income earners. They cannot pay Social Security payroll taxes on all their income. If you earn more than your taxable wage base in a particular year, your earnings record will correctly show that year’s wage base instead of your actual income.
If you notice a problem with your income record, fill out the Income Record Correction Request Form and submit it to the Social Security Administration along with a copy of your actual income for the year, such as a tax return or W-2.
Generally, you have three years, three months, and 15 days after the end of the tax year to act on the incorrect information. However, depending on the reason for the mistake, you may be able to correct it after this deadline.
If you have any questions, please contact the Social Security Administration for more information. You can also make an appointment at your local Social Security office.
The Motley Fool has a disclosure policy.
The Motley Fool is a USA TODAY content partner providing financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.
