Social Security 2023: What To Know If You’re in Your 40s
If you’re in your 40s, collecting Social Security might seem like the very last of your financial concerns since you’re decades away from eligibility age. However, according to experts, there are good reasons to think ahead and plan in the ways that are in your control. Many people don’t even know that you can track your Social Security statement online and get a sense of where you’re at. Here we look at key information about Social Security that you need to know if you’re in your 40s.
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Check Your Social Security Statement
The first thing people in their 40s should do is pull their Social Security statement on my Social Security, according to Ryan Ortega, the founder of Third Line Financial Planning.
“This will show how much you made in each year you worked, along with your estimated benefit. It’s crucial for retirement planning to know these numbers,” he said.
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Your Social Security Earnings Are Based on Your Top 35 Years of Earnings
“Social Security benefits are based on the number of years you have worked, your annual earnings and the date you start receiving benefits,” said Steve Sexton, CEO of the Sexton Advisory Group. “Your main focus should be to maximize those Social Security payments in retirement.”
Your Social Security earnings are index-adjusted based on your top 35 years of earnings, Sexton explained. “If you work for more than 35 years, the additional years will replace smaller earnings years, increasing your Social Security benefit.”
Validate Your Earnings Every Year
To make sure you really are getting an accurate benefit down the road, David Freitag, a financial planning consultant and Social Security expert with MassMutual, recommends, “A good practice is to log in to your www.ssa.gov/myaccount every year when you are preparing your income tax return to ensure your earnings are being reported correctly.”
Avoid Zeros on a Social Security Statement
When possible, this means try not to go too long without work, Freitag said. “Given the widespread negative impact of the pandemic on businesses and jobs, and increased needs for caregiving of children and aging relatives, some will be coming out of the pandemic with zeros or greatly decreased earnings cited on their Social Security statements. Since retirement benefits are based on the top 35 years of earnings, if 35 or fewer years is all you have to show, this could negatively impact your benefits for life.”