Review Social Security benefits before you expect to need them

BONDY ON MONEY

August 14, 1994|By SUSAN BONDY | SUSAN BONDY,Creators Syndicate

Q: Recently, I mailed in the new Social Security form SSA-7004, and I just received the summary of my retirement benefits. The following statement puzzled me: "Your monthly benefit at 62 in today's dollars will be about $330."

I'm 48 years old. Let's assume that when I turn 62, a dollar will be worth about half of what it is today In 2005, will my check be $165, $330 or $660?

A: Social Security benefits are adjusted for inflation, so the face amount of the check would grow as long as we have a positive inflation. With your assumed inflation rate, the check will read $660. At 5 percent compounded for 14 years, a dollar will grow to $1.98. Put another way, you would need twice as many dollars to buy the same basket of goods.

I do commend you on requesting this information from the Social Security Administration. For readers who have not already done so, Form SSA-7004 provides estimates of monthly retirement benefits at age 62, 65 and 70. It also lists your survivors' benefits if you were to die this year, your disability benefits should you become disabled this year and a summary of your past earnings.

This information can help in these three ways:

* The disability and survivors' benefits numbers could prevent you from getting too much private insurance coverage. You also might gain some peace of mind by knowing an additional source of income is there in case of a catastrophe.

* The retirement benefits information could help you determine how much other income you will need when you retire. * You can check the accuracy of Social Security's records of your earnings history. You have only three years, three months and 15 days after the close of your taxable year to correct any mistakes made in crediting your earnings. After that, your record may only be changed for a limited number of reasons, such as to correct clerical errors by Social Security, errors caused by fraudulent reporting or errors in allocating reported earnings to the right individual or period, or to conform Social Security's records to tax returns filed with the Internal Revenue Service. Records can also be corrected when an employer did not report wages or reported less than the correct amount of wages. But early detection of the error will make it easier to obtain the evidence necessary to establish the correct amount of your earnings.

For estimates of your retirement payments and survivors' and disability benefits, call Social Security's toll-free number ([800] 772-1213), and ask for Form SSA-7004.

Susan Bondy founded her namesake financial services company 1980 to provide financial planning and asset management.

She is a frequent guest on "Good Morning America," the "Today Show" and National Public Radio. She is the author of "How to Make Money Using Other People's Money." Write to Susan Bondy in care of The Sun, 501 N. Calvert St., Baltimore, MD 21278. All letters will be treated confidentially.

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