For millions of senior citizens and people who are physically incapable of working, social security is a primary source of income. The social security administration keeps close track of how much a person has earned and contributed to the system, and from that they determine what your annual benefit will be.
One way that the social security administration knows how much a person has earned is by tracking their earnings. Every year the federal government will receive report for each wage earner which outlines how much money they earned and how much was contributed to the social program. From here the government will track everyone’s contribution each year and provide each tax payer with a statement outlining how much they are on track to qualify for in the future.
The social security administration will also figure out how much a persona has earned by dealing with appeals from citizens. All citizens are going to be given a statement from the government each year which outlines how much of a benefit they have earned. If a citizen feels that this is understated, they have the right to contest the information. To contest it they will have to provide tax returns and pay stubs which outline how much they have actually paid.
The social security administration will also have to take other factors into consideration when determining how much you have earned. One of these factors is the year that you have collected your benefit. If you collect the benefit as early as you possibly can you will receive less of a benefit for the rest of your life.