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Social Security primer
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June 13, 2000: 12:51 a.m. ET
Here's how to sort through the details of your benefits and what it all means
By Staff Writer Jennifer Karchmer
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NEW YORK (CNNfn) - As a 20-something starting your first job, you've got bills to pay and college loans -- and the last thing on your mind is Social Security. After all, you figure it will be decades until you need to think about it, right?
But even though you won't get a benefits check for like 40 years, experts say you should be aware of what Social Security is all about.
"Social Security is more than just a retirement program," said Kurt Czarnowski, regional public affairs officer for the Social Security Administration New England office. "The biggest misunderstanding is that it's a program for old folks."
Check your mailbox
You probably receive a lot of junk mail in your mailbox, like pitches to win $1 million and magazine subscription offers. But soon you will receive a four-page statement from the Social Security Administration that you won't want to toss into the garbage.
In October 1999, the Social Security Administration began using mailing lists provided by the IRS to send out benefits statements annually to anyone 25 and older who is not already receiving benefits. You should expect to receive something in your mailbox about three months before your birthday.
So take a few moments now to review the statement and check for errors. You've earned these benefits and you'll begin receiving them either at retirement or if you become disabled.
The statement will provide an estimate of your benefits, which are based on your highest 35 years of earnings.
(Click here to get details on how to read your Social Security statement.)
If you detect mistakes on your Social Security statement, find your W-2 earnings report for the years in question and call the Social Security Administration at 800-772-1213 to correct any errors.
Not on Social Security alone
Social Security was never intended as the sole source of income for retirees, Czarnowski says.
"It's a foundation, one that must be supplemented," he said. In fact, financial advisers say when planning for your golden years, take a three-pronged approach to your investments.
Your income during your golden years should come from three sources:
1. Social Security
2. IRAs and employer-sponsored plans, such as pensions or 401(k)s
3. Private savings, like mutual funds, stocks and other investments.
Let's say Josephine Q. Public, a 40-year-old, who began working in 1980, has an annual salary of $65,000. At her current earnings rate, if she retired at 67, which is considered her full retirement age, she would receive $1,580 a month from Social Security. Depending on how she plans to spend her retirement years, that amount may not meet her overall needs.
GenXers may have their doubts
Maybe you're like many younger workers who are skeptical about Social Security even being around when you retire in 40 years.
As members of the Baby Boom generation begin to retire in large numbers, some experts say Social Security faces increasing financial strains. Under current estimates, after 2015 the program's spending will begin to exceed revenues and by 2037 the trust fund will be exhausted, leaving recipients with about two-thirds of promised benefits.
Click here for frequently asked questions about Social Security benefits
But Czarnowski says despite the criticism, "Social Security is perhaps the most successful program the country has come up with."
Also, he and others emphasize that Social Security is more than just a retirement program. You are eligible to receive benefits today should you become disabled on the job. And your family would receive your survivor benefits should you die. So even if retirement seems light years away, the statement detailing your benefits can be useful.
So now that you have an estimate of how much your Social Security benefits will be, you can use an online retirement planner to map out your long-term savings plan. (Click here for the Social Security's Administration's retirement calculator.)
And did you know...?
You may be wondering how the Social Security Administration assigns each person a nine-digit number. Is it based on the year you were born? Or maybe the numbers are assigned alphabetically?
Actually, the first three digits of your Social Security number indicate the state where you lived when you filed an application for your number. For example, if your number begins with 050 to 134, you lived in New York State when you applied for your number. Massachusetts residents have numbers beginning with 010 to 034, according to Czarnowski.
Here's more on your Social Security # and what it means...
And when you get your paycheck next week, take a moment to look for a deduction labeled FICA, which is the Federal Insurance Contributions Act tax.
Since you started your first job at 16 as a sales assistant at the local hardware store, you've probably been supporting Social Security by paying FICA tax, which is 7.65 percent of your salary. Some state and local employees who have their own separate pension plan don't pay into the Social Security program and, therefore aren't eligible to receive Social Security benefits.
"Despite the size and age of the Social Security program, the myths and misunderstandings surrounding it are phenomenal," Czarnowski said. 
-- Staff Writer Jennifer Karchmer covers news about Social Security for CNNfn.com. Click here to send her email.
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