When was the last time you checked your earnings report? If you’re like most people, the answer is probably “never.” Many individuals go through life assuming that their Social Security contributions are being handled correctly, trusting that their employers and the Social Security Administration (SSA) remain on top of things.
But this blind faith can backfire. Errors and even fraud can creep into your records, leaving your future retirement benefits at risk. Whether you’re just entering the workforce or closing in on retirement, regularly checking your earnings report is a vital step in protecting your financial future.
Staying proactive not only helps ensure your retirement benefits are accurate, but also saves you from potential headaches years down the road.
An Earnings Report Review Is For Everyone
Contrary to what many people think, checking your earnings report isn’t just for retirees or those inching closer to retirement age—this habit benefits everyone. Why? Because even younger workers or mid-career professionals are vulnerable to reporting errors and fraud.
The deductions you see on your paycheck should align perfectly with your records at the SSA, as these contributions directly impact your Social Security benefits. Over time, these contributions will determine two essential factors for your Social Security:
1. The size of your future retirement check (calculated based on your average earned income across your career).
2. Whether or not you qualify for benefits at all, which hinges on meeting work-credit thresholds.
Unfortunately, the system isn’t infallible. There’s a growing problem of errors and fraudulent filings within the SSA system that could go unnoticed unless you take the time to review your report.
The Problem With Ignoring Your Earnings Report
If you’re under the impression that Social Security tracking is nothing to worry about, think again. The SSA is currently being inundated with fraudulent W-2s and 1099s. These fraudulent filings make it increasingly difficult for the administration to detect and resolve errors in real time.
Even legitimate filings by honest taxpayers can generate mistakes, often due to employer reporting errors or simple data entry mishaps at the SSA. The unfortunate reality is that you might not realize there’s a problem until it’s too late—and correcting errors long after they’ve occurred can be challenging.
Here’s why ignoring your earnings report can have serious consequences:
1. Incorrect Income Reporting
If the SSA fails to receive a W-2 or wage statement from your employer, your income for that year could go uncredited. This is more than just a matter of convenience; missing income records lead to lower reported earnings, which in turn results in a smaller retirement check. Social Security uses your lifetime average earnings to calculate your monthly benefits, so even one missed year can lower this average permanently.
2. Reduced Work Credits
To qualify for retirement benefits, you need to have worked a minimum of 40 quarters (10 full years). If reporting errors go unnoticed and uncorrected, it can reduce your credited quarters, potentially leaving you ineligible for benefits altogether.
3. The Time Limit For Corrections
The SSA allows earnings record corrections up to three years, three months, and 15 days after the year in which the income was initially earned. While exceptions exist for certain cases, such as fraud or obvious clerical errors, it’s far easier to fix any problems immediately after they occur rather than risk missing the correction window entirely.
Take Action To Protect Your Retirement Savings
Here’s the good news: It’s easier than ever to check your earnings report and catch discrepancies before they disrupt your financial future. The SSA provides an online tool that allows you to access your historic earnings statements at any time by visiting www.ssa.gov.
How To Use The SSA Online Tool
1. Sign Up: Start by creating an account on the SSA website. This process has several layers of security, including ID verification. This step requires using a valid photo ID and taking a live photo of yourself for identity protection.
2. Access Your Statement: Once you’ve logged in, navigate to your earnings report to review your history.
3. Look For Errors: Comb through your records for missing income, incorrect earnings totals, or other discrepancies.
4. Correct Issues Immediately: If you discover a problem, act quickly to resolve it. The SSA allows you to report errors via phone or mail at the following:
By Telephone:
1-800-772-1213
By Mail:
Social Security Administration Office of Earnings Operations
PO Box 33026
Baltimore, MD 21290-3026
In addition to these steps, consider making a habit of reviewing your earnings report whenever you finish filing your taxes. Staying diligent on this front can make all the difference in ensuring your records remain accurate year after year.
Why Timing Matters
The best time to check your earnings reports is now—no matter your age. Waiting until retirement to discover errors in your records might leave you with limited options for resolution. By being proactive and addressing problems as they arise, you’ll secure your financial foundation and protect your hard-earned benefits.
What Minton CPA & Associates Can Do For You
At Minton CPA & Associates, we understand how overwhelming it can be to stay on top of your financial responsibilities, especially when errors threaten your future. As a trusted CPA firm, we specialize in comprehensive tax planning and preparation services to help you navigate the complexities of tax regulations and Social Security.
Our team can guide you on reviewing your earnings reports, ensuring accuracy in your financial records, and strategizing for a brighter financial future. Don’t let reporting errors compromise your retirement benefits—get expert advice and proactive solutions today.
Ready to take control of your financial future? Call us now at 757-546-2870 to schedule a consultation!