WASHINGTON -- Whenever Donald W. Kellerman, a specialist in retirement planning for Dean Witter Reynolds, meets with new clients he recommends that they obtain a free government document describing the benefits on which two-thirds of retirees rely for at least half their income: Social Security.
"I always hold up one of these forms and tell them to send it in," said Kellerman, referring to the application for a Personal Earnings and Benefit Estimate Statement.
The Social Security Administration began offering the statement in 1988. This, along with information about one's company pension, is the starting point, he said, for anybody planning for retirement.
Yet, this mine of information is relatively unexploited. Less than 5 percent of the 133 million people with Social Security accounts request the statement in a given year, far fewer than could profitably use it.
Even savvy financial people, in fact, often assume that the Pebes (rhymes with webs) merely confirms that their employer has been paying into the account on their behalf and that they will ultimately qualify for benefits on retirement.
But the statement provides far more, making it an extremely valuable financial planning aid that can help determine, among other things, how long a person will need to work and what other financial provision he or she will need for retirement.
When I recently received my own statement, I learned that if I worked for the next 13 years and retired at 65 my monthly retirement benefit would be about $1,230, and that if I worked until my so-called full retirement age of 65 years, 4 months, the benefit would rise to $1,260. A gradual increase in the full-retirement age begins to take effect in the year 2000 until the age at which one can collect full benefits reaches 67 in 2027.
The statement also informed me that if I retired at 70, my estimated benefit would be $1,740 a month. These estimates are all figured on the basis of a presumed 1 percent annual increase in the average national wage between now and age 62, but they do not allow for inflation.
Social Security benefits are automatically raised each year, based on increases in the Consumer Price Index. (The rise for 1992, announced last week, is 3.7 percent.)
In addition to these figures, of which I previously had only a vague notion, the Pebes told me I would get $1,055 a month if I were disabled now, and detailed the amounts my wife and children would get if I should die.
Obtaining your Pebes is quite simple. First, telephone Social Security at (800) 772-1213 (a new number this fall) and give your name and address. This will bring a short form on which you supply your date of birth, Social Security number, the retirement age you desire (the minimum is 62, at which the benefit is 80 percent of the benefit at 65), your present salary and your projected earnings until retirement.
It takes about a month for the statement to arrive. You may apply for statements repeatedly if, say, you want to compare benefits at different retirement ages.
Besides describing and estimating benefits, the Pebes also provides a year-by-year record back to 1937 of a worker's earnings that were subject to Social Security taxes and the amount of taxes (formerly called contributions) the worker paid.
Among other things, this allows one to see the relation between taxes and benefits, a link seldom established in public discussion. You can see, for example, how long it will take after retirement to get back the amount paid in.