The Expert: Why did my Social Security benefits fall?

I'll be 62 in August. As Newsday has reported, Social Security is no longer mailing annual benefit statements, so I accessed my statement online and compared it to my May 2010 statement. The new calculation is $21 per month less. I called SSA, which confirmed the online calculation. They said they've restructured the calculation formula. I earned more in 2010 than in 2009. How can my benefit at 62 be less than the calculation they provided last year?

First, remember that each annual estimate is just that -- an estimate. Second, Social Security adjusts the benefit calculation formula every year, partly to reflect changes in the average national wage and in consumer prices.

The calculation formula is more complex than most of us imagine. Your estimated future benefit is based on multiple, constantly changing factors. It includes assumptions not only about your future earnings and how many years you'll work, but also about economic factors like future annual cost-of-living adjustments.

The actuarial formula also uses an "index factor" that gives more weight to your earlier earnings history, in order to bring your wages from years ago closer to the value of current dollars. "The nearer you are to retirement age, the lower the index factor," says Jane Zanca, an agency spokeswoman. No index factor is used to weight your earnings after age 60.

There's also a time lag between the calculation of your benefits estimate and when your statement was issued. For example, it's possible that your May 2010 estimate included assumptions about cost-of-living adjustments that later proved invalid: In 2010, for the first time in 35 years, there was no cost-of-living increase in Social Security benefits. There was no increase in 2011 either.