Social Security Unveils New Earnings Calculator

People planning for retirement got a new tool this week: a fast and easy online estimator for their Social Security benefits.

The Social Security Administration unveiled its new retirement estimator on its Web site Monday. It takes just a few points and clicks and some personal information to produce benefit estimates within a few minutes.

The new calculator will be followed this fall by an updated online application for benefits that Social Security Administrator Michael Astrue promises will reduce application time from the current 45-minute process to 15 minutes — and eliminate the need for follow-up visits to agency field offices.

''These initiatives will help us better handle the baby boomer wave and make it easier for the public to do business with us online,'' Astrue said.

Currently, workers get an annual benefit estimate mailed to them. It's based on prior earnings but assumes people's salary stays the same until retirement age. The online calculator supplements the annual mailing but won't replace it.

The online calculator permits future retirees to create a more accurate estimate of benefits since people can factor in a higher estimate of their upcoming earnings. People can also factor in different alternatives for retirement ages.

The calculator replaces a laborious online calculator that required people to type in their earnings history, which can involve guesswork for people who don't keep voluminous records. The new version uses the Social Security database to provide accurate earnings information, though the calculator requests the most recent year of earnings since there's a lag in getting salary information into the Social Security database.

There's inherent uncertainty about the estimates since for many people it's not easy to predict future earnings. That's especially the case for younger workers.

''The closer you are to the retirement age, the more accurate this estimate is going to be,'' Astrue said.

What is more, Social Security benefits are likely to be at least somewhat curbed in future years as lawmakers shore up the system to prepare for the retirement of millions of baby boomers. Social Security now runs a surplus and is expected to do so until 2017, when the agency will have to start cashing in special Treasury notes to help pay benefits.

Social Security's trustees say it's possible to produce actuarial balance over the next 75 years in various ways, including an increase in the combined payroll tax paid by workers and employers from 12.4 percent to 14.1 percent or an immediate reduction in benefits of 12 percent. More likely there will be some combination of the two.

Astrue also assured reporters that the agency has taken steps to make sure people's personal information won't be divulged. The agency has also worked up a new security system for when it accepts online applications, though many foreign-born recipients will still be required to furnish proof of retirement age at field offices.

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On the Net:

Online Social Security estimator: http://ssa.gov/estimator/