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How are social security benefits calculated?

On my annual social security report, my income for 6 of the past 19 years were incorrect, significantly lower than they should have been. Are benefits upon retiring based on your average income over your working life, or only based on the last year's income that you worked? Is it worth the hassle to correct what was on the report? Will those errors impact the monthly benefit I receive upon retiring? I think my former employer cooked the books and didn't pay SS taxes - is that why the statement is in error? Can I use my old tax returns to prove that I actually made more money than the statement shows? I have a lot of questions but any answers I receive will be greatly appreciated.

Public Comments

  1. theyre calculated based on how much taxes youve paid, but i wouldnt count on any benefits from the american govt. theyre not exactly a welfare state. in a capitalist system, the govt does very little to provide for its citizens
  2. In UK they are means tested, but do not understand your question.
  3. Call or visit ss office they will walk you through everything you need to know.
  4. I'd correct the figures, or at least try to. If you have your W-2's from those years, you should be able to. Good luck.
  5. See link below for calculators. Your W-2's should agree with SSA records - if not contact them on what to do. Use calculators to see if it worth the hassle to change any incorrect records. All years do impact your benefits but maybe not enough to worry about. http://www.socialsecurity.gov/planners/calculators.htm
  6. They're based on your lifetime earnings. That is clearly and plainly explained on the annual statement - try reading it! It also explains how to correct incorrect information on your SS earnings record. Copies of old tax returns will help you get the amounts corrected. Just keep in mind that in the past, certain wages were exempt form SS taxes. If you worked in one of those areas, you may have some exempt wages that were not taxed and therefore would not show up on your earnings record. Again, most of your questions are already sitting right in front of you on the earnings statement and the accompanying documentation.
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