What is an "Annual statement of earnings"?

The "Annual statement of earnings" is a summary of a worker's earnings history that is essential for calculating future Social Security benefits. This document includes information about the worker's earnings for each year they worked and contributed to Social Security. It is crucial for individuals to review their earnings statement regularly to ensure accuracy, as the amounts listed directly affect the benefits they may receive upon retirement, disability, or death.

Accurate recording of earnings is fundamental to the Social Security system, as benefits are calculated based on an individual's work history and the income that has been reported to the Social Security Administration. By reviewing their annual statement, workers can verify that all their earnings are correctly documented, which helps prevent any potential issues when they apply for benefits in the future.

The correct option aligns specifically with how Social Security determines eligibility and calculates benefits, which is central to understanding the function of this document within the broader Social Security system.