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Social Security Begins Issuing Annual Statements To 125 Million Workers

(September 30,1999)
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Fact Sheet


SOCIAL SECURITY


SOCIAL SECURITY STATEMENT

  • In October, SSA will begin to mail annual, individualized Social Security Statements to 125 million workers age 25 and older who are not receiving Social Security benefits.
  • SSA is required by the Omnibus Budget Reconciliation Act (OBRA) of 1989, modified by OBRA 1990, to send annual statements.

HOW THE MAILINGS WILL WORK

  • The statements are available in English and, upon request, Spanish. (A Spanish version of the statement will automatically be mailed to residents of Puerto Rico.)
  • The statements will be mailed about 3 months before the worker's birth month. The statement for a working spouse will be mailed about 3 months before the spouse's birth month.
  • Mailings will be staggered over a year-long period.
    • Every workday statements will be mailed to approximately 500,000 people.
    • A total of about 10 million mailings will be delivered each month.
  • The Statements cost about 56 cents to produce and mail, for a total cost of approximately $70 million.

WHAT'S IN THE STATEMENT

  • The statement contains:
    • An estimate of the monthly retirement benefit that the worker would receive at age 62, full retirement age and age 70;
    • A projection of the amount of monthly disability benefit the worker could be entitled to should he/she become disabled; and
    • An estimate of the monthly benefit that the worker's family could receive should the worker die.
      • How the benefit projections are calculated:
        • First SSA checks to see that the worker has worked enough over the years to qualify for a Social Security benefit. If the worker does not currently qualify for any type of benefit, he/she is informed that they may receive an estimate in the future if they continue to work.
        • SSA estimates the amount of each benefit using the worker's average earnings over his/her working lifetime. For earnings for the current year and for years up to retirement, SSA assumes the worker will continue to work and make about the same as the latest earnings shown on the record.
        • The current year's benefit formula (methodology) is used in the benefit computations.
  • The statement also contains:
    • An annual breakdown of the worker's earnings to date, and
    • A total of the Social Security taxes paid by the worker and his/her employer over the individual's working career.

BACKGROUND

  • SSA recently redesigned the statement to make it more user-friendly.
    • The language was simplified.
    • The number of pages was reduced from six to four.
    • The redesigned statement was tested with focus groups and through a mail survey of 16,000 workers.
  • SSA prepared for the mandated mailing by automatically sending statements to individuals in select age categories beginning in 1995.
    • From 1995 to date, SSA mailed nearly 73 million statements to individuals age 40 and older.
  • Workers have been able to request a statement since 1988.
    • SSA has responded to approximately 37 million requests for statements.

THE IMPORTANCE OF THE STATEMENT

  • The Social Security Statements are a valuable financial planning tool.
    • They provide workers an estimate of their retirement, disability and survivors' benefits.
    • They provide workers an easy way to determine whether their earnings are accurately posted on their Social Security records.
    • Social Security benefits are based on an individual's life-long wage record.
  • Social Security is more than just a retirement program, it is America's family protection plan.
    • One out of every three Social Security beneficiaries is not a retiree but a disabled worker, or a member of a disabled worker's family, or a survivor of a worker who has died.
    • Almost 3 in 10 of today's 20 year-olds will become disabled before reaching age 67.
    • Social Security provides disability coverage for a worker with a family equivalent to about a $233,000 disability policy.
    • One in 6 Americans will die before reaching age 67.
    • Social Security provides survivors protection equivalent to about a $354,000 life insurance policy.
  • The results of a recent Gallup survey, undertaken at the request of SSA, revealed that individuals who had received a statement:
    • Had a significantly increased basic understanding of Social Security, and
    • An increased understanding of some important basic features of Social Security:
    • The amount of Social Security benefits depends on how much people earned;
    • Social Security pays benefits to workers who become disabled;
    • Social Security provides benefits to dependents of workers who die; and

Social Security was designed only to provide part of total retirement income.
 

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