Will You Get What You’re Paying In?
Most Americans just finished or are in the process of filing taxes and it’s a good time of year to do a little maintenance to make sure the documentation is in order so you can eventually collect benefits you are paying for.
Everyone pays Federal Insurance Contributions Act (FICA) tax one way or another: Employees see it removed from their paychecks and businesses and self-employed people must pay their respective contributions under the law. FICA, also known as payroll taxes, helps fund Social Security and Medicare benefits, which help to subsidize retirement years for many Americans.
Set the record straight
A lot of people faithfully pay their FICA taxes, but they rarely follow up to make sure the government has an accurate accounting of their income and benefit contributions. Here’s why this is important:
- The amount of Social Security income you receive in retirement is based on how much you earned in your working career
- Payment of retirement benefits requires 40 credits (10 years of work)
- Years where you did not work or had low earnings can affect your benefit amount and eligibility
Things like an incorrectly recorded Social Security number can cause errors in records of your earnings, contributions and employment years. Taxpayers should periodically review their records to make sure the government has correct information to avoid hassles and headaches down the line. You can do this by setting up a “my Social Security account” at www.socialsecurity.gov/myaccount and accessing your Social Security Statement. There is no fee to create a my Social Security account, but you must have an email address.
Itâ€™s smart to get professional advice with matters relating to your finances and retirement benefitsâ€¦weâ€™d be happy to provide you with recommendations!
Sources: Social Security Administration (SSA) Master Beneficiary Record, socialsecurity.gov