Social Security Statements
Observations on SSA's Plans for the Social Security Statement Gao ID: GAO-11-787T July 8, 2011The Social Security Statement (the statement) is the federal government's main document for communicating with more than 150 million workers about their Social Security benefits. Provided annually, it serves as a key financial literacy tool that can educate the public about Social Security Administration (SSA) program benefits, aid in financial planning, and ensure that workers' earnings records are complete and accurate. The statement is also a key tool for communicating with the public about the long-term financial challenges the Social Security system faces. However, due to budget constraints, SSA chose to suspend mailings of the statement in March 2011. GAO examined (1) the current status of the statement and (2) ways SSA plans to improve the usefulness of the statement. To address these issues, GAO interviewed SSA officials and reviewed agency documents and our prior work on the statement's understandability. GAO also provided a draft of this testimony to SSA for review and comment.
SSA is currently preparing to make the statement available online; however, the agency does not yet know the timeline for implementation and has not finalized its plans for publicizing its availability or addressing access issues. SSA is developing a new Web portal to allow individuals to access personalized SSA information online. However, because the portal and online statement are currently in the initial development phases and thus have not yet been fully tested, agency officials do not know when the online statement will be available to the public. In addition, SSA does not yet have plans in place for publicizing the online statement or ensuring access for individuals without Internet access or English proficiency. Finally, because the agency does not have a total cost estimate for the online statement project, and it is unclear how many workers will request mailed statements after this information is made available online, it is unknown if SSA will realize the budget savings it expects from suspending statement mailings, at least in the short-term. Although SSA expects to improve the usefulness of the statement for some by moving it to an online format, the agency is taking only limited steps to improve the statement's overall content and design. A key agency official said that the first publicly released version of the online statement will be as similar to the mailed paper statement as possible, and SSA has no plans to update the paper statement's content or design at this time. However, over the years, GAO and others have reported that the design of the statement could be modified and certain information contained in the statement could be clarified to improve the statement's usefulness for recipients. For example, focus group participants in our prior study suggested that using graphics to replace text would make information more easily understandable. Furthermore, while SSA's own financial literacy initiative also provides detailed information on ways to improve the statement's usefulness in helping people plan for retirement, the extent to which staff from SSA's office responsible for this initiative have been consulted on the design or content of the online statement is unclear. As SSA considers moving forward with an online statement, we recommend that the Commissioner of SSA ensure access to the statement for all workers, including those without Internet access or English proficiency. In comments, SSA noted that paper statements will continue to be available, on request, in English and Spanish.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Barbara D. Bovbjerg Team: Government Accountability Office: Education, Workforce, and Income Security Phone: (202) 512-5491GAO-11-787T, Social Security Statements: Observations on SSA's Plans for the Social Security Statement
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United States Government Accountability Office:
GAO:
Testimony:
Before the Subcommittee on Social Security, Committee on Ways and
Means, House of Representatives:
For Release on Delivery:
Expected at 9:00 a.m. EDT:
Friday, July 8, 2011:
Social Security Statements:
Observations on SSA's Plans for the Social Security Statement:
Statement of Barbara D. Bovbjerg, Managing Director:
Education, Workforce, and Income Security:
GAO-11-787T:
GAO Highlights:
Highlights of GAO-11-787T, a testimony before the Subcommittee on
Social Security, Committee on Ways and Means, House of Representatives.
Why GAO Did This Study:
The Social Security Statement (the statement) is the federal
government‘s main document for communicating with more than 150
million workers about their Social Security benefits. Provided
annually, it serves as a key financial literacy tool that can educate
the public about Social Security Administration (SSA) program
benefits, aid in financial planning, and ensure that workers‘ earnings
records are complete and accurate. The statement is also a key tool
for communicating with the public about the long-term financial
challenges the Social Security system faces. However, due to budget
constraints, SSA chose to suspend mailings of the statement in March
2011. GAO examined (1) the current status of the statement and (2)
ways SSA plans to improve the usefulness of the statement. To address
these issues, GAO interviewed SSA officials and reviewed agency
documents and our prior work on the statement‘s understandability. GAO
also provided a draft of this testimony to SSA for review and comment.
What GAO Found:
SSA is currently preparing to make the statement available online;
however, the agency does not yet know the timeline for implementation
and has not finalized its plans for publicizing its availability or
addressing access issues. SSA is developing a new Web portal to allow
individuals to access personalized SSA information online. However,
because the portal and online statement are currently in the initial
development phases and thus have not yet been fully tested, agency
officials do not know when the online statement will be available to
the public. In addition, SSA does not yet have plans in place for
publicizing the online statement or ensuring access for individuals
without Internet access or English proficiency. Finally, because the
agency does not have a total cost estimate for the online statement
project, and it is unclear how many workers will request mailed
statements after this information is made available online, it is
unknown if SSA will realize the budget savings it expects from
suspending statement mailings, at least in the short-term.
Although SSA expects to improve the usefulness of the statement for
some by moving it to an online format, the agency is taking only
limited steps to improve the statement‘s overall content and design. A
key agency official said that the first publicly released version of
the online statement will be as similar to the mailed paper statement
as possible, and SSA has no plans to update the paper statement‘s
content or design at this time. However, over the years, GAO and
others have reported that the design of the statement could be
modified and certain information contained in the statement could be
clarified to improve the statement‘s usefulness for recipients. For
example, focus group participants in our prior study suggested that
using graphics to replace text would make information more easily
understandable. Furthermore, while SSA‘s own financial literacy
initiative also provides detailed information on ways to improve the
statement‘s usefulness in helping people plan for retirement, the
extent to which staff from SSA‘s office responsible for this
initiative have been consulted on the design or content of the online
statement is unclear.
Figure: SSA‘s Current Message on the Statement:
[Refer to PDF for image: web page illustration]
Social Security Statement:
Information Regarding the Social Security Statement:
In light of the current budget situation, we have suspended issuing
Social Security Statements.
You may be able to estimate your retirement benefit using our online
Retirement Estimator.
Source: http://www.ssa.gov/mystatement.
[End of figure]
What GAO Recommends:
As SSA considers moving forward with an online statement, we recommend
that the Commissioner of SSA ensure access to the statement for all
workers, including those without Internet access or English
proficiency. In comments, SSA noted that paper statements will
continue to be available, on request, in English and Spanish.
View [hyperlink, http://www.gao.gov/products/GAO-11-787T] or key
components. For more information, contact Barbara D. Bovbjerg at (202)
512-7215 or bovbjergbj@gao.gov.
[End of section]
Mr. Chairman, Ranking Member Becerra, and Members of the Subcommittee:
I am pleased to be here today to discuss Social Security, particularly
the Social Security Administration's (SSA) developing plans for the
Social Security Statement (the statement). Because the Social Security
system is currently facing long-term financial challenges that may
necessitate reform, communicating these changes to the public and
ensuring that individuals understand the implications of these changes
will be important. The statement is the federal government's main
document for communicating with more than 150 million workers about
their Social Security benefits. As required by law, since fiscal year
2000, SSA has provided annual statements with benefits and earnings
information to virtually all American workers.[Footnote 1] SSA mailed
these statements up until a few months ago, when the agency chose to
suspend mailings because of its budget constraints. Because the
statement has been mailed annually to so many homes and provides
important information about retirement benefits, it is a key financial
literacy tool that can educate the public about SSA program benefits,
aid in financial planning, and ensure that workers' earnings records
are complete and accurate. In light of potential reforms, the
statement may take on added importance as a tool for communicating
with the public about potential changes in Social Security. During the
years when SSA first began providing the statement to workers, SSA
made significant revisions to improve the statement's clarity and
understandability, based in part on our work. As SSA considers the
future of the statement, it is crucial that the agency remain
committed to these goals to help prepare Americans for long-term
financial security.
My testimony today will focus on SSA's current plans for the
statement. Specifically, I will discuss the current status of the
statement and ways SSA plans to improve its usefulness. My statement
is based on interviews with SSA officials and documents obtained from
the agency in June 2011, as well as our prior work assessing the
statement's understandability. Our work was conducted in accordance
with generally accepted government auditing standards. Those standards
require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings
and conclusions based on our audit objectives. We believe that the
evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
Background:
Almost all American workers are covered under Social Security, and in
2011, 55 million Americans are receiving Social Security benefits. The
statement is a key tool for communicating with the public about these
benefits and the long-term financial challenges the system faces. At
present, the cost of Social Security benefits is projected to exceed
sources of funding, and the program is projected to be unable to pay a
portion of scheduled benefits by 2036.[Footnote 2] The shortfall stems
primarily from the fact that people are living longer and labor force
growth has slowed. In 2010, for the first time since 1983, the Social
Security trust funds began paying out more in benefits than they
received through payroll tax revenue, although trust fund interest
income more than covers the difference, according to the 2011 report
of the Social Security trust funds' Board of Trustees.[Footnote 3] The
projected long-term insolvency of the Social Security program
necessitates system reform to restore its long-term stability and
assure its sustainability. Accomplishing these goals for the long-term
requires that either Social Security receive additional income
(revenue increases), reduce costs (benefit reductions), or undertake
some combination of the two. A wide variety of options for reform have
been proposed. Some of the reform options focus on restoring long-term
stability; however, a few aim to enhance benefits for specific groups,
such as widows and low-earners who are especially at risk for poverty.
Our prior work has noted that reform proposals should be evaluated as
packages that strike a balance among the individual elements of a
proposal and the interactions among those elements, and that the
overall evaluation of any particular reform proposal depends on the
weight individual policy makers place on various criteria. Our
framework for evaluating reform proposals considers not only solvency
but other aspects of the program as well. Specifically, the framework
uses three basic criteria:
* the extent to which a proposal achieves long-term stability and how
it would affect the economy, including overall savings rates, and the
federal budget;
* the relative balance struck between the goals of individual equity
(rates of return on individual contributions) and income adequacy
(level and certainty of benefits); and:
* how readily a proposal could be implemented, administered, and
explained to the public.[Footnote 4]
If reform is enacted, educating the public about program changes and
how they will affect benefits will likely be a high priority for SSA,
and the statement is likely to be one of the agency's key mechanisms
for accomplishing this goal.
The Social Security Act requires SSA to provide annual statements with
benefits and earnings information to individuals age 25 and older who
have a Social Security number and wages or net earnings from self-
employment, or whose pattern of earnings indicate a likelihood of
noncovered employment.[Footnote 5] The law requires each statement to
contain the following:
* an estimate of the potential monthly Social Security retirement,
disability, survivor, and auxiliary benefits and a description of the
benefits under Medicare;[Footnote 6]
* the amount of wages paid to the employee and income from self-
employment;
* an estimate of the individual's aggregate contributions paid to
Social Security, including employer contributions;
* an estimate of the individual's aggregate contributions paid to
Medicare, including employer contributions; and:
* for individuals with noncovered employment, an explanation of the
potential effects of the Windfall Elimination Provision and the
Government Pension Offset on their monthly Social Security benefits.
[Footnote 7]
The requirement to provide the annual statements was phased in
beginning in fiscal year 1995, when SSA was required to provide the
statement--then named the Personal Earnings and Benefit Estimate
Statement (PEBES)--to eligible workers who had attained the age of 60
by October 1, 1994, who were not receiving Social Security benefits
and for whom a current mailing address could be determined.[Footnote
8] Starting in fiscal year 2000, SSA was required to provide the
annual statement--now called the Social Security Statement--to
eligible workers age 25 and older.[Footnote 9] These statements
generally have been provided about 3 months before the worker's
birthday. In addition, since fiscal year 1990, eligible workers have
had the option of requesting a copy of the statement from SSA at any
time.[Footnote 10]
Between 1995, when SSA began providing this information to workers
annually, and March 2011, when the agency suspended this effort due to
budgetary concerns, SSA has mailed the statement to workers by using
addresses on file with the Internal Revenue Service. In addition,
between March and April 1997, SSA permitted online dissemination of
the statement in an attempt to respond to customer information needs
and move toward electronic service delivery. However, the brief effort
was suspended after public outcry amid concerns about the privacy of
sensitive information on the Internet. Indeed, we have identified
federal information security as a governmentwide high-risk
area[Footnote 11] and emphasized that ineffective information security
controls can result in significant risks, including inappropriate
access to sensitive information, such as personal information, and the
undermining of agency missions due to embarrassing incidents that
diminish public confidence in government.
The current statement has evolved over the years, partly in response
to our recommended changes. The initial PEBES was a six-page document
and contained information such as the worker's earnings record,
benefits estimates, and a question-and-answer section about Social
Security. However, in a previous report, we found that PEBES did not
clearly communicate the complex information that workers needed to
understand SSA's programs and benefits.[Footnote 12] In response, SSA
made significant changes to the format and presentation of the PEBES
and began mailing a four-page Social Security Statement to the public
in October 1999. While the newer statement was shorter, better
organized, and easier to read, our follow-up review in 2000 identified
some remaining areas of concern, including clarity of the statement's
purpose and explanations of benefits.[Footnote 13] In our 2005 review
of the statement's understandability, we again found weaknesses in the
statement's design and recommended that SSA develop a plan for
regularly evaluating and revising the statement.[Footnote 14] In 2006,
SSA implemented changes to the content of the statement as a result of
new requirements included in the Social Security Protection Act of
2004.[Footnote 15] These changes included adding a description of the
Windfall Elimination Provision and the Government Pension Offset of
the Social Security Act. However, at that time and since, SSA has not
made some of the changes to the statement we recommended in 2005, such
as using graphics to aid readers in quickly comprehending information.
[Footnote 16]
Over time, SSA also began including inserts for specific age groups
with the statement. For example, in October 2000, the agency began
sending a "Thinking of retiring?" insert to workers age 55 and older.
Because SSA considers the statement to be one of the three key
elements of the agency's financial literacy initiative, "Encourage
Saving,"[Footnote 17] this insert was updated in 2008 to improve and
clarify benefits information provided to this age group and a new
insert was created to provide age-appropriate benefits information to
younger workers. Since February 2009, SSA has sent "What young workers
should know about Social Security and saving" with the statement to
workers age 25 to 35.
SSA is Preparing to Make the Statement Available Online:
Since SSA suspended mailings of the statement in March 2011, the
agency has been assessing the feasibility of making the statement
available online. Based on the Commissioner of SSA's earlier testimony
to Congress, as well as our interviews with officials from various SSA
offices, SSA is currently considering making the statement available
online for all eligible individuals and resuming mailings of the
statement to eligible individuals age 60 and older who have not yet
begun claiming benefits. Further, when mailings resume, SSA expects to
allow anyone to request the paper statement, including those younger
than 25.[Footnote 18] At best, officials said the provision of the
statement, both online and through the mail, may be resumed early in
calendar year 2012, though they are currently unsure of the timeline.
Although the Commissioner has not yet announced a final decision on
how SSA will proceed with the provision of the statement, SSA
officials expect he will make a final decision this summer. In the
interim, copies of the statement are not available from SSA,[Footnote
19] and SSA is instead directing individuals to the agency's online
Retirement Estimator to estimate their future benefits.[Footnote 20]
However, because the estimator does not provide individuals with their
earnings records or personalized information on other SSA benefits,
such as those for disability, certain statement information is
currently unavailable.
Although SSA's first attempt to make the statement available online in
1997 was short-lived due to privacy concerns, SSA may now be better
positioned to move forward with this approach, though it is unknown
when the agency will be fully ready. SSA is developing a new
electronic authentication system[Footnote 21] and a "MySocialSecurity"
Web page to allow individuals to access personalized SSA information
online. Officials report that both the authentication system and the
"MySocialSecurity" Web page have already undergone initial testing to
assess their feasibility and public opinion about such an approach.
While the agency had not determined what information would initially
be made available through this portal, when the Commissioner suspended
mailings of the statement in March of this year, SSA decided that the
statement would be the top priority. According to officials, both the
authentication system and the statement page for "MySocialSecurity"
are currently in the initial development phase, as staff build the
prototypes. Once the prototypes are completed, SSA will conduct
additional testing both internally and with the public, on an
iterative basis, until the agency determines that both the
authentication system and the statement page on "MySocialSecurity"
provide sufficient safeguards and are user-friendly. Recently,
officials conducted a risk assessment of the information contained in
the statement to determine that the authentication system has the
appropriate safeguards in place.[Footnote 22] SSA officials said that
testing of the online statement page will begin in August, but they
could not provide a date for when the authentication system testing
will begin. Because officials do not know how long the testing phase
will last, they could not provide a date for when the statement will
be available to the public online.
Although officials told us that they plan to fully assess the portal's
safeguards before moving ahead with the online statement, SSA's
Inspector General recently expressed concerns about the agency's
information technology systems, including service delivery.
Specifically, in a recent report on SSA management challenges,
[Footnote 23] while the Inspector General noted his support of SSA's
decision to offer more services online to enhance customer service, he
cautioned the agency to proceed carefully with this initiative,
ensuring proper authentication controls are in place before full
implementation. As we have reported over the years, protecting
sensitive information is a governmentwide concern. Consistent with the
evolving and growing nature of the threats to federal information
systems, federal agencies are reporting an increasing number of
security incidents. These incidents put sensitive, personally
identifiable information at risk, which can expose individuals to loss
of privacy, identity theft, and financial crimes. One of the three
most prevalent types of incidents reported by federal agencies during
fiscal year 2010 was unauthorized access, where an individual gains
logical or physical access to a system without permission.
While SSA officials reported that upcoming tests of the portal will
focus on its user-friendliness, they do not have plans in place for
publicizing the online statement. Specifically, the project lead for
the online statement said that an internal work group is currently
considering options for SSA's public roll-out of the online statement,
but the agency has not yet developed a plan for carrying it out.
However, if significant numbers of workers do not choose to access the
statement online, SSA could face increased requests for mailed paper
copies of the statement and higher administrative costs. Key SSA
officials involved in the project said they are optimistic that once
the statement is available online, many people will want real-time
access to this information. Nonetheless, through its own 2010 survey
of statement recipients, SSA found that only 21 percent expressed a
preference for receiving the statement electronically instead of by
mail, including 8 percent who said they would prefer to receive the
statement on request via e-mail and 13 percent who said they would
prefer to obtain it online. These data suggest that SSA will need to
employ a substantial public relations strategy to ensure workers are
made aware of and encouraged to access the online statement.[Footnote
24]
SSA officials also could not provide information on how they plan to
address access issues related to the online statement. Although SSA
currently has a pilot project underway that has made computer
workstations available to the public in selected field offices,
[Footnote 25] SSA officials have not yet determined how those could be
used to access the portal and online statement. However, such use may
be needed by individuals who do not otherwise have Internet access. In
addition, key officials involved in the online statement project could
not provide information on any other plans SSA is developing to
address Internet access issues. Concerning access to the online
statement for workers with limited English proficiency, officials
explained that they would like to develop Spanish versions of the
portal and online statement in the future, but the first publicly
released versions will be in English only.[Footnote 26] However, when
SSA resumes mailings of the paper statement, workers will be able to
request paper statements in English or Spanish.
Finally, while the Commissioner cited budget constraints as the reason
for suspending mailings of the statement March 2011,[Footnote 27]
total costs associated with the agency's plans for resuming provision
of the statement are unknown. Although SSA is required to provide the
statement annually to eligible individuals who meet the statutory
requirements, officials said SSA suspension of the statement mailings
is expected to save the agency $30 million in fiscal year 2011.
Further, officials said that the agency decided not to renew the
contract for mailing the statements for another year as one of several
measures to ensure SSA remained within its budget. SSA officials
indicated that the agency's fiscal year 2011 appropriation for
administrative expenses, which is used for the provision of the
statement, was $1 billion below the President's budget request and
about $23 million below its fiscal year 2010 appropriation.[Footnote
28] While the suspension may save SSA administrative costs in the
short-term, the full extent of savings is unknown, as officials could
not provide us with an estimate of the total cost of the online
statement project. SSA officials said they expect that this project
will be cost-effective over time; however, it may involve greater
costs in the short-term for development, testing, and publicity.
Further, SSA officials in charge of drafting the new contract for
mailing statements acknowledged that it is unknown how many workers
will request mailed statements once the online statement is available,
as that number will depend on factors such as individuals' willingness
and capability to access the statement online. The new contract for
mailing statements, likely only for those age 60 and older who have
not yet begun claiming benefits and those who request it, is currently
being drafted as a cost reimbursement contract, which is considered
high risk for the government because of the potential for cost
escalation.
Beyond Format Enhancements, SSA is Taking Only Limited Steps to
Improve the Statement's Usefulness:
SSA officials said they expect to improve the usefulness of the
statement for some by moving it to an online format. While they
acknowledged that budgetary constraints were the driving factor behind
the agency's consideration of online statements, they also suggested
that the online format has advantages for individuals. Specifically,
individuals will have immediate access to their statements through a
format that is commonly used by banks, health care providers, and
others. For those with Internet access, the information will be
available whenever they are thinking about retirement planning.
Further, in the event that they spot an error in their earnings
information and request a correction, verification that their earnings
history has been accurately updated will be easier because the online
statement will be readily available.[Footnote 29]
Further, SSA plans to make some limited design enhancements to the
online version of the statement. Specifically, officials told us the
online format offers the agency an opportunity to provide links to
related information, thereby allowing SSA to minimize some lengthy
descriptions and add richer information without adding to the
statement's length. For example, officials told us they plan to link
some of the information currently contained on the last page of the
statement to the related benefits and earnings data in the online
version, as well as add links to SSA's online tools for estimating and
applying for retirement benefits. We have previously noted that the
length of a document can influence how useful it is to beneficiaries,
and some groups have concerns that too much information can overwhelm
beneficiaries. The project lead for the online statement acknowledged
this and told us SSA plans to draw upon industry best practices for
screen design and layout in order to make the online statement more
reader-friendly than the paper statement. (According to officials, a
prototype was not available at the time of our review.) In addition,
SSA plans to integrate content from its special inserts for workers
age 55 and older and those age 25 to 35 in the online statement and
make electronic facsimiles of the paper inserts available for viewing
and printing.
While SSA is making these limited changes, the project lead said the
first publicly released version of the online statement will be as
similar to the current mailed statement as possible. Further, the same
content that is currently available on the inserts will be made
available online. While SSA plans to incorporate some graphics into
the online statement, these are limited to what is already present in
the paper statement and inserts. However, in our prior work, using
graphics to replace text and make information more quickly and easily
understandable was a common theme that emerged in the suggestions made
by focus groups and a benefits consulting firm.[Footnote 30]
Officials told us they have no current plans to update the paper
statement, which will still be in use, even though we and others have
suggested ways to improve its design. Under SSA's current plans, in
addition to mailing the paper statement to individuals meeting certain
criteria[Footnote 31] and any other eligible individuals who request
it, SSA will allow individuals to view and print a facsimile of the
paper statement when accessing the online statement. Officials told us
they do not plan to change the statement's content because much of it
is statutorily required and individuals have expressed a high level of
satisfaction with the statement in SSA's surveys and focus groups.
[Footnote 32] For example, in SSA's 2010 survey, 41 percent of
respondents said they were very satisfied with the statement overall
and another 44 percent reported being somewhat satisfied. However, we
and others have previously identified ways in which SSA could modify
the design of the paper statement to improve its usefulness for
recipients. For example, in our 2005 report,[Footnote 33] we noted
that the paper statement lacks white space and is text-intensive,
which means that important concepts may not stand out. Similarly, in
SSA's own focus groups, participants frequently noted that the
statement has too much text, although in the agency's 2010 survey,
some respondents said the statement is missing key information about
their retirement benefit amount. According to a 2009 report from the
Social Security Advisory Board, "information is presented as a laundry
list of facts and data, rather than cogent summaries of things that
people need to know to make informed decisions."[Footnote 34]
Furthermore, even though we and others have previously reported that
certain information contained in the statement is confusing, SSA has
no plans at this time to change its content in either the paper or
online version. In focus groups conducted for our 2005 report, during
which participants reviewed the statement's content and design and
compared them with those of a private sector benefits statement,
participants provided detailed insights about the areas of the
statement they understood and how confusing information might be
improved. For example, participants identified some cases where they
did not understand the actual meaning of a word or phrase, such as
"actuary" or "intermediate assumption." Also, the phrase "compact
between the generations," used to describe the pay-as-you-go nature of
Social Security, was unclear to many. Participants across focus groups
also did not understand explanations of certain concepts discussed in
the statement, such as the role of credits in determining their
eligibility for retirement benefits versus the role of earnings in
determining their actual retirement benefit. Information about the
financial stability of the Social Security system was also confusing
for most focus group participants. Phrases such as "we will need to
resolve these issues soon" did not provide the information many felt
they needed to understand the problem and what personal action, if
any, they were expected to take. Additionally, according to a benefits
consulting firm that evaluated the statement, it does not compare the
retirement benefit with how much income a person may need in
retirement or offer suggestions and strategies for meeting income
goals through other sources of retirement income.[Footnote 35] As a
result, we concluded workers may not fully understand their benefits
and the role Social Security should play in their retirement planning.
SSA's own financial literacy initiative also provides detailed
information on opportunities for improving the statement's usefulness,
particularly to help people plan for retirement, and SSA considers the
statement to be a key component of this initiative. However, the
extent to which staff from the office in charge of the initiative have
been consulted on the design or content of the online statement, or on
decisions about which groups should continue to receive a print
statement, is unclear. According to the key SSA official responsible
for the initiative, the initiative's studies and the work of other
researchers have found that the way information is packaged can affect
how individuals respond. One research project that was funded through
SSA's Financial Literacy Research Consortium[Footnote 36] found that
the presentation of benefit information can affect the age at which
people report they will claim Social Security benefits.[Footnote 37]
For example, emphasizing gains (delaying claiming by one year will
increase your annuity by $X per month) rather than losses (claiming
one year earlier will reduce your annuity by $X per month) led to
study respondents reporting they would delay claiming.[Footnote 38]
Another project examined how alternative approaches for presenting
information on future estimated benefits might assist individuals in
retirement planning and reduce the potential for confusion.[Footnote
39]
Other SSA-funded research also provides insights into areas where SSA
might focus future efforts to improve the statement's usefulness. One
study of near-retirees' ability to estimate their Social Security
benefits found the accuracy of their estimates has not improved since
the statement has been universally distributed.[Footnote 40] According
to the researcher, individuals' ability to accurately estimate their
benefits has implications for their savings rates and investment
decisions, among other considerations. Additionally, the study found
that many people may interpret Social Security benefits as accruing to
households rather than to individuals and therefore estimate their
benefits at either half or double their actual value. This
misunderstanding may be attributable to the statement lacking a
general explanation of spousal benefits and not cautioning recipients
that the estimates are based on their own individual earnings records
and may also depend on their spouses' earnings if they are married. A
separate project examined what people know about various aspects of
the benefits offered by Social Security and assessed their knowledge
gaps.[Footnote 41] Half of those responding to a seven-question quiz
on basic Social Security knowledge, included as part of a survey of
working-aged adults, received a grade of D or F. While two-thirds of
the respondents reported that they recalled receiving the statement
within the last 6 months, very few respondents understood how their
Social Security benefits are calculated.[Footnote 42]
Conclusions and Recommendation:
Although SSA's budgetary decision to suspend statement mailings will
leave some Americans without a statement this year, it has also
created the impetus for SSA to seek new and more cost-effective ways
to distribute this information. Providing the statement online could
be one of those ways, and if SSA can assure the security of this
sensitive information, this approach holds real promise: it can both
meet the electronic demands of an increasingly Internet-literate
population while providing flexibility for improved statement design.
Yet because the decision to suspend was made relatively abruptly, the
agency faces pressure to take quick action that will restore public
access to the statements. As a result, officials currently are not in
a position to fully redesign the statement to improve its usefulness
and clarity. Furthermore, SSA has not yet considered how they will
reach those who cannot or will not obtain the statement online, though
at least some will not be able to read statements provided only in
English. Because people in these groups may likely be lower earners,
they can least afford to remain uninformed about their Social Security
benefits. Access must be addressed before the online statement can be
considered a success, yet because the statement is currently
unavailable, there is limited time for SSA to consider these important
questions in a measured way.
Still, it is vital that SSA address the issues of access and design.
Any changes made to the Social Security program to restore fiscal
stability or for any other reasons must be explained to the American
people clearly and quickly, to assure that participants in this
important social insurance program understand what benefits they can
expect and when. The statement is SSA's best option for communicating
this important information and, as such, deserves to occupy a position
of higher priority in SSA planning and decision making.
Therefore, as SSA considers moving forward with an online statement,
we recommend the following:
* the Commissioner of SSA should take steps to ensure access to the
statement for all eligible workers, including those without Internet
access or English proficiency. Doing so will assure that the statement
remains an important tool for communicating with all workers about the
Social Security program.
We provided a draft of this testimony to SSA for review and comment.
SSA provided technical comments, which we incorporated as appropriate.
Chairman Johnson, Ranking Member Becerra, and Members of the
Committee, this concludes my prepared statement. I would be happy to
respond to questions.
Contacts and Staff Acknowledgments:
For further questions on this testimony, please contact me at (202)
512-7215 or bovbjergb@gao.gov. Individuals who made key contributions
to this testimony include Michael Collins, Rachel Frisk, Kristen
Jones, Amy Anderson, David Chrisinger, Carla Craddock, Sarah Cornetto,
Sheila McCoy, Susan Offutt, Frank Todisco, Walter Vance, Christie
Motley, Mike Alexander, David Hong, and Brandon Pettis.
[End of section]
Appendix I: 2011 Social Security Statement:
Social Security Administration:
Prevent identity theft-”protect your Social Security number:
Your Social Security Statement:
[hyperlink, http://www.socialsecurity.gov]
Prepared especially for Wanda Worker:
January 3, 2011:
See inside for your personal information:
Wanda Worker:
456 Anywhere Avenue:
Maintown, USA 11111-1111:
What's inside:
Your Estimated Benefits:
Your Earnings Record:
Some Facts About Social Security:
If You Need More Information:
To Request This Statement In Spanish:
(Para Solicitar Una Declaracion en Espanol)
What Social Security Means To You:
This Social Security Statement can help you plan for your financial
future. It provides estimates of your Social Security benefits under
current law and updates your latest reported earnings.
Please read this Statement carefully. If you see a mistake, please let
us know. That's important because your benefits will he based on our
record of your lifetime earnings. We recommend you keep a copy of your
Statement with your financial records.
Social Security is for people of all ages:
We're more than a retirement program. Social Security also can provide
benefits if you become disabled and help support your family after you
die.
Work to build a secure future:
Social Security is the largest source of income for most elderly
Americans today, but Social Security was never intended to be your
only source of income when you retire. You also will need other
savings, investments, pensions or retirement accounts to make sure you
have enough money to live comfortably when you retire.
Saving and investing wisely are important not only for you and your
family, but for the entire country. If you want to learn more about
how and why to save, you should visit [hyperlink,
http://www.mymoney.gov], a federal government website dedicated to
teaching all Americans the basics of financial management.
About Social Security's future:
Social Security is a compact between generations. Since 1935, America
has kept the promise of security for its workers and their families.
Now, however, the Social Security system is facing serious financial
problems, and action is needed soon to make sure the system will be
sound when today's younger workers are ready for retirement.
In 2015 we will begin paying more in benefits than we collect in
taxes. Without changes, in 2037 the Social Security Trust Fund will be
able to pay only about 78 cents for each dollar of scheduled
benefits.* We need to resolve these issues soon to make sure Social
Security continues to provide a foundation of protection for future
generations.
Social Security on the Net:
Visit [hyperlink, http://www.socialsecurity.gov] on the Internet to
learn more about Social Security. You can read publications, including
When To Start Receiving Retirement Benefits; use our Retirement
Estimator to obtain immediate and personalized estimates of future
benefits; and when you're ready to apply for benefits, use our
improved online application”-It's so easy!
Signed by:
Michael J. Astrue:
Commissioner:
* These estimates are based on the intermediate assumptions from the
Social Security Trustees' Annual Report to the Congress.
Your Estimated Benefits:
Retirement:
You have earned enough credits to qualify for benefits. At your
current earnings rate, if you continue working until:
* your full retirement age (67 years), your payment would be about
$1,554 a month;
* age 70, your payment would be about $1,938 a month;
* age 62, your payment would be about $1,072 a month.
Disability:
You have earned enough credits to qualify for benefits. If you became
disabled right now, your payment would be about $1,419 a month.
Family:
If you get retirement or disability benefits, your spouse and children
also may qualify for benefits.
Survivors:
You have earned enough credits for your family to receive survivors
benefits. If you die this year, certain members of your family stay
qualify for the following benefits:
* Your child: $1,107 a month;
* Your spouse who is caring for your child: $1,107 a month;
* Your spouse, if benefits start at full retirement age: $1,477 a
month;
* Total family benefits cannot be more than $2,720 a month;
* Your spouse or minor child may be eligible for a special one-time
death benefit of $255.
Medicare:
You have enough credits to qualify for Medicare at age 65. Even if you
do not retire at age 65, be sure to contact Social Security three
months before your 65th birthday to enroll in Medicare.
Your estimated benefits are based on current law. Congress has made
changes to the law in the past and can do so at any time. The law
governing benefit amounts may change because, by 2037, the payroll
taxes collected will be enough to pay only about 78 percent of
scheduled benefits.
We based your benefit estimates on these facts:
Your date of birth (please verify your name on page 1 and this date of
birth): April 5, 1970.
Your estimated taxable earnings per year after 2010: $42,492.
Your Social Security number (only the last four digits are shown to
help prevent identity theft): XXX-XX-1234.
How Your Benefits Are Estimated:
To qualify for benefits, you earn "credits" through your work ” up to
four each year. This year, for example, you earn one credit for each
51,120 of wages or self-employment income. When you've earned $4,480.
you've earned your four credits for the year. Most people need 40
credits, earned over their working lifetime, to receive retirement
benefits. For disability and survivors benefits, young people need
fewer credits to be eligible.
We checked your records to see whether you have earned enough credits
to qualify for benefits. If you haven't earned enough yet to qualify
for any type of benefit, we can't give you a benefit estimate now. If
you continue to work, we'll give you an estimate when you do qualify.
What we assumed ” If you have enough work credits, we estimated your
benefit amounts using your average earnings over your working
lifetime. For 2011 and later (up to retirement age), we assumed you'll
continue to work and make about the same as you did in 2009 or 2010.
We also included credits we assumed you earned last year and this
year.
Generally, the older you are and the closer you are to retirement, the
more accurate the retirement estimates will be because they are based
on a longer work history with fewer uncertainties such as earnings
fluctuations and future law changes. We encourage you to use our
online Retirement Estimator at [hyperlink,
http://www.socialsecurity.gov/estimator] to obtain immediate and
personalized benefit estimates.
We can't provide your actual benefit amount until you apply for
benefits. And that amount may differ from the estimates stated above
because:
(1) Your earnings may increase or decrease in the future.
(2) After you start receiving benefits, they will be adjusted for cost-
of-living increases.
(3) Your estimated benefits are based on current law. The law
governing benefit amounts may change.
(4) Your benefit amount may be affected by military service, railroad
employment or pensions earned through work on which you did not pay
Social Security tax. Visit [hyperlink,
http://www.socialsecurity.gov/mystatement] to learn more.
Windfall Elimination Provision (WEP) -- In the future, if you receive
a pension from employment in which you do not pay Social Security
taxes, such as some federal, state or local government work, some
nonprofit organizations or foreign employment, and you also qualify
for your own Social Security retirement or disability benefit, your
Social Security benefit may be reduced, but not eliminated, by WEP.
The amount of the reduction, if any, depends on your earnings and
number of years in jobs in which you paid Social Security taxes, and
the year you are age 62 or become disabled. For more information,
please see Windfall Elimination Provision (Publication No. 05-10045) at
[hyperlink, http://www.socialsecurity.gov/WEP].
Government Pension Offset (GPO) ” If you receive a pension based on
federal, state or local government work in which you did not pay
Social Security taxes and you quality, now or in the future, for
Social Security benefits as a current or former spouse, widow or
widower, you are likely to be affected by GPO, If GPO applies, your
Social Security benefit will be reduced by an amount equal to two-
thirds of your government pension, and could be reduced to zero. Even
if your benefit is reduced to zero, you will be eligible for Medicare
at age 65 on your spouse's record. To learn more, please see
Government Pension Offset (Publication No. 05-10007) at [hyperlink,
http://www.socialsecurity.gov/GPO].
Your Earnings Record:
Year You Worked: 1986;
Your Taxed Social Security Earnings: $578;
Your Taxed Medicare Earnings: $578.
Year You Worked: 1987;
Your Taxed Social Security Earnings: $1,427;
Your Taxed Medicare Earnings: $1,427.
Year You Worked: 1988;
Your Taxed Social Security Earnings: $2,534;
Your Taxed Medicare Earnings: $2,534.
Year You Worked: 1989;
Your Taxed Social Security Earnings: $4,215;
Your Taxed Medicare Earnings: $4,215.
Year You Worked: 1990;
Your Taxed Social Security Earnings: $5,813;
Your Taxed Medicare Earnings: $5,817.
Year You Worked: 1991;
Your Taxed Social Security Earnings: $7,199;
Your Taxed Medicare Earnings: $7,199.
Year You Worked: 1992;
Your Taxed Social Security Earnings: $9,045;
Your Taxed Medicare Earnings: $9,045.
Year You Worked: 1993;
Your Taxed Social Security Earnings: $11,245;
Your Taxed Medicare Earnings: $11,245.
Year You Worked: 1994;
Your Taxed Social Security Earnings: $13,585;
Your Taxed Medicare Earnings: $13,585.
Year You Worked: 1995;
Your Taxed Social Security Earnings: $15,837;
Your Taxed Medicare Earnings: $15,837.
Year You Worked: 1996;
Your Taxed Social Security Earnings: $18,155;
Your Taxed Medicare Earnings: $18,155.
Year You Worked: 1997;
Your Taxed Social Security Earnings: $20,718;
Your Taxed Medicare Earnings: $20,718.
Year You Worked: 1998;
Your Taxed Social Security Earnings: $23,177;
Your Taxed Medicare Earnings: $23,177.
Year You Worked: 1999;
Your Taxed Social Security Earnings: $25,703;
Your Taxed Medicare Earnings: $25,703.
Year You Worked: 2000;
Your Taxed Social Security Earnings: $28,197;
Your Taxed Medicare Earnings: $28,197.
Year You Worked: 2001;
Your Taxed Social Security Earnings: $29,851;
Your Taxed Medicare Earnings: $29,851;
Year You Worked: 2002;
Your Taxed Social Security Earnings: $30,982;
Your Taxed Medicare Earnings: $30,982.
Year You Worked: 2003;
Your Taxed Social Security Earnings: $32,430;
Your Taxed Medicare Earnings: $32,470.
Year You Worked: 2004;
Your Taxed Social Security Earnings: $34,617;
Your Taxed Medicare Earnings: $34,617.
Year You Worked: 2005;
Your Taxed Social Security Earnings: $36,544;
Your Taxed Medicare Earnings: $36,544.
Year You Worked: 2006;
Your Taxed Social Security Earnings: $38,822;
Your Taxed Medicare Earnings: $38,822.
Year You Worked: 2007;
Your Taxed Social Security Earnings: $41,162;
Your Taxed Medicare Earnings: $41,162.
Year You Worked: 2008;
Your Taxed Social Security Earnings: $42,601;
Your Taxed Medicare Earnings: $42,601.
Year You Worked: 2009;
Your Taxed Social Security Earnings: $42,492;
Your Taxed Medicare Earnings: $42,492.
Year You Worked: 2010;
Your Taxed Social Security Earnings: Nor yet recorded;
Your Taxed Medicare Earnings: Not yet recorded.
You and your family may be eligible for valuable benefits:
When you die, your family may be eligible to receive survivors
benefits.
Social Security may help you if you become disabled--even at a young
age.
A young person who has worked and paid Social Security taxes in as few
as two years can be eligible for disability benefits.
Social Security credits you earn move with you from job to job
throughout your career.
Total Social Security and Medicare taxes paid over your working career
through the last year reported on the chart above:
Estimated taxes paid for Social Security:
You paid: $31,027;
Your employers paid: $31,027.
Estimated taxes paid for Medicare:
You paid: $7,625;
Your employers paid: $7,625.
Note: In 2011, you pay 4.2 percent of your salary, up to $106,800, in
Social Security taxes and 1.45 percent in Medicare taxes on your
entire salary. Your employer pays 6.2 percent in Social Security taxes
and 1.45 percent in Medicare taxes for you. If you are self-employed,
you pay the combined employee and employer amount of 10.4 percent in
Social Security taxes and 2.9 percent in Medicare taxes on your net
earnings.
Help Us Keep Your Earnings Record Accurate:
You, your employer and Social Security share responsibility for the
accuracy of your earnings record. Since you began working, we recorded
your reported earnings under your name and Social Security number. We
have updated your record each time your employer (or you, if you're
self-employed) reported your earnings.
Remember, it's your earnings, not the amount of taxes you paid or the
number of credits you've earned, that determine your benefit amount.
When we figure that amount, we base it on your average earnings over
your lifetime. If our records are wrong, you may not receive all the
benefits to which you're entitled.
Review this chart carefully using your own records to make sure our
information is correct and that we've recorded each year you worked.
You're the only person who can look at the earnings chart and know
whether it is complete and correct.
Some or all of your earnings from last year may not be shown on your
Statement. It could be that we still were processing last year's
earnings reports when your Statement was prepared. Your complete
earnings for last year will be shown on next year's Statement. Note:
If you worked for more than one employer during any year, or if you
had both earnings and self-employment income, we combined your
earnings for the year.
There's a limit on the amount of earnings on which you pay Social
Security taxes each year. The limit increases yearly. Earnings above
the limit will not appear on your earnings chart as Social Security
earnings. (For Medicare taxes, the maximum earnings amount began
rising in 1991. Since 1994, all of your earnings are taxed for
Medicare.)
Call us right away at 1-800-772-1213 (7 a.m.-7 p.m, your local time)
if any earnings for years before last year are shown incorrectly.
Please have your W-2 or tax return for those years available. (If you
live outside the U.S., follow the directions at the bottom of page 4.)
Some Facts About Social Security:
About Social Security and Medicare:
Social Security pays retirement, disability, family and survivors
benefits. Medicare, a separate program run by the Centers for Medicare
& Medicaid Services, helps pay for inpatient hospital care, nursing
care, doctors' fees, drugs, and other medical services and supplies to
people age 65 and older, as well as to people who have been receiving
Social Security disability benefits for two years or more.
Medicare does not pay for long-term care, so you may want to consider
options for private insurance. Your Social Security covered earnings
qualify you for both programs. For more information about Medicare,
visit [hyperlink, http://www.medicare.gov] or call 1-800-633-4227 (TTY
1-877-486-2048 if you are deaf or hard of hearing).
Retirement:
If you were born before 1938, your full retirement age is 65. Because
of a 1983 change in the law, the full retirement age will increase
gradually to 67 for people born in 1960 and later.
Some people retire before their full retirement age. You can retire as
early as 62 and take benefits at a reduced rate. If you work after
your full retirement age, you can receive higher benefits because of
additional earnings and credits for delayed retirement.
Disability:
If you become disabled before full retirement age, you can receive
disability benefits after six months if you have:
* enough credits from earnings (depending on your age, you must have
earned six to 20 of your credits in the three to 10 years before you
became disabled); and;
* a physical or mental impairment that's expected to prevent you from
doing "substantial" work for a year or more or result in death.
If you are filing for disability benefits, please let us know if you
are on active military duty or are a recently discharged veteran, so
that we can handle your claim more quickly.
Family:
If you're eligible for disability or retirement benefits, your current
or divorced spouse, minor children or adult children disabled before
age 22 also may receive benefits. Each may qualify for up to about 50
percent of your benefit amount.
Survivors:
When you die, certain members of your family may be eligible for
benefits:
* your spouse age 60 or older (50 or older if disabled, or any age if
caring for your children younger than age 16); and;
* your children if unmarried and younger than age 18, still in school
and younger than 19 years old, or adult children disabled before age
22.
If you are divorced, your ex-spouse could be eligible for a widow's or
widower's benefit on your record when you die.
Extra Help with Medicare:
If you know someone who is on Medicare and has limited income and
resources, extra help is available for prescription drug costs, The
extra help can help pay the monthly premiums, annual deductibles and
prescription co-payments. To learn more or to apply, visit [hyperlink,
http://www.socialsecurity.gov] or call 1-800-772-1213 (TTY
1-800-325-0778).
Receive benefits and still work:
You can work and still get retirement or survivors benefits. If you're
younger than your full retirement age, there are limits on how much
you can earn without affecting your benefit amount. When you apply for
benefits, we'll tell you what the limits are and whether work would
affect your monthly benefits. When. you reach full retirement age, the
earnings limits no longer apply.
Before you decide to retire:
Carefully consider the advantages and disadvantages of early
retirement. If you choose to receive benefits before you reach full
retirement age, your monthly benefits will be reduced. To help you
decide the best time to retire, we offer a free publication, When To
Start Receiving Retirement Benefits (Publication No. (15-10147), that
identifies the many factors you should consider before applying. Most
people can receive on estimate of their benefit based on their actual
Social Security earnings record by going to [hyperlink,
http://www.socialsecurity.gov/estimator]. You also can calculate
future retirement benefits by using the Social Security Benefit
Calculators at [hyperlink, http://www.socialsecurity.gov].
Other helpful free publications include:
* Retirement Benefits (No. 05-10035);
* Understanding The Benefits (No. 05-10024);
* Your Retirement Benefit: How It Is Figured (No. 05-10070);
* Windfall Elimination Provision (No. 05-10045);
* Government Pension Offset (No. 05-10007);
* Identity Theft And Your Social Security Number (No. 05-10064).
We also have other leaflets and fact sheets with information about
specific topics such as military service, self-employment or foreign
employment. You can request Social Security publications at our
website, [hyperlink, http://www.socialsecurity.gov], or by calling us
at 1-800-772-1213. Our website has a list of frequently asked
questions that may answer questions you have. We have easy-to-use
online applications for benefits that can save you a telephone call or
a trip to a field office.
You may also qualify for government benefits outside of Social
Security. For more information on these benefits, visit [hyperlink,
http://www.govbenefits.gov].
If you need more information:
Visit [hyperlink, http://www.socialsecurity.gov/mystatement] on the
Internet, contact any Social Security office, call 1-800-772-1213 or
write to Social Security Administration, Office of Earnings
Operations, P.O. Box 33026, Baltimore, MD 21290-3026. If you're deaf
or hard of hearing, call TTY 1-800-325-0778. If you have questions
about your personal information, you must provide your complete Social
Security number. If your address is incorrect on this Statement, ask
the Internal Revenue Service to send you a Form 8822. We don't keep
your address if you're not receiving Social Security benefits.
Para solicitar una Declaracion en espanol, llame al 1-800-772-1213.
[End of section]
Footnotes:
[1] 42 U.S.C. § 1320b-13(c)(2).
[2] These estimates for the combined trust funds are based on results
using intermediate assumptions in the 2011 report of the Social
Security trust funds' Board of Trustees. The trustees provide a
variety of additional information in acknowledgment of the uncertainty
of long-range projections. The Board of Trustees, Federal Old-Age and
Survivors Insurance and Federal Disability Insurance Trust Funds, The
2011 Annual Report of the Board of Trustees of the Federal Old-Age and
Survivors Insurance and Federal Disability Insurance Trust Funds
(Washington, D.C., May 13, 2011).
[3] SSA estimates that over the next several years, and over the long
term, trust fund income, excluding trust fund interest, is projected
to be less than trust fund expenses, absent any changes. The Tax
Relief, Unemployment Insurance Reauthorization, and Job Creation Act
of 2010 temporarily reduced employees' share of the Federal Insurance
Contributions Act tax from 6.2 percent to 4.2 percent of covered wages
for calendar year 2011. However, the act directs that an amount equal
to 2 percent of covered wages be transferred from the Department of
the Treasury to the Federal Old-Age and Survivors Insurance and
Federal Disability Insurance Trust Funds. Pub. L. No. 111-312, § 601,
124 Stat. 3296, 3309-10.
[4] GAO, Social Security: Criteria for Evaluating Social Security
Reform Proposals, [hyperlink,
http://www.gao.gov/products/GAO/T-HEHS-99-94] (Washington, D.C.: Mar.
25, 1999).
[5] 42 U.S.C. § 1320b-13(a)(3) and (c)(2).
[6] The law requires that only the statements sent to people age 50
and older contain actual benefit estimates, but SSA provides benefit
estimates regardless of age.
[7] 42 U.S.C. § 1320b-13(a)(2). Because some public employees do not
pay Social Security taxes on their government earnings but may be
eligible for benefits based on other covered earnings, these two
provisions are in place to take their noncovered employment into
account and reduce their Social Security benefits.
[8] 42 U.S.C. § 1320b-13(c)(1).
[9] 42 U.S.C. § 1320b-13(c)(2).
[10] 42 U.S.C. § 1320b-13(a)(1).
[11] See, for example, GAO, High-Risk Series: An Overview, [hyperlink,
http://www.gao.gov/products/GAO/HR-97-1] (Washington, D.C.: Feb. 1,
1997); GAO, High-Risk Series: Information Management and Technology,
[hyperlink, http://www.gao.gov/products/GAO/HR-97-9] (Washington,
D.C.: Feb. 1, 1997); and, GAO, High-Risk Series: An Update,
[hyperlink, http://www.gao.gov/products/GAO-11-278] (Washington, D.C.:
Feb. 16, 2011).
[12] GAO, SSA Benefit Statements: Well Received by the Public but
Difficult to Comprehend, [hyperlink,
http://www.gao.gov/products/GAO/HEHS-97-19] (Washington, D.C.: Dec. 5,
1996).
[13] GAO, Social Security: Providing Useful Information to the Public,
[hyperlink, http://www.gao.gov/products/GAO/T-HEHS-00-101]
(Washington, D.C.: Apr. 11, 2000).
[14] GAO, Social Security Statements: Social Security Administration
Should Better Evaluate Whether Workers Understand Their Statements,
[hyperlink, http://www.gao.gov/products/GAO-05-192] (Washington, D.C.:
Apr. 1, 2005).
[15] Pub. L. No. 108-203, § 419, 118 Stat. 493, 533-34.
[16] See appendix I for a copy of the current statement.
[17] Realizing SSA's unique position to educate the public about
retirement and encourage savings, SSA's 2008-2013 Strategic Plan
included a new Encourage Saving initiative.
[18] SSA is required to provide annual and requested statements to
eligible workers age 25 and older. Currently, SSA does not provide
statements to younger workers.
[19] Because the statement is generally sent to eligible individuals
about 3 months before their birthdays, workers with birthdays through
June 2011 should have received mailed statements. However, because SSA
does not anticipate resuming provision of the statement until early
calendar year 2012, it is expected that SSA will not provide a large
portion of the population with a statement in 2011.
[20] The Retirement Estimator is available at [hyperlink,
http://www.ssa.gov/estimator/], last accessed July 5, 2011.
[21] Authentication is defined as the process of confirming an
asserted identity with a specified or understood level of confidence.
Electronic authentication (E-authentication) is the process of
establishing confidence in user identities electronically presented to
an information system.
[22] In developing the new electronic authentication system, SSA
officials said they followed guidelines from the Office of Management
and Budget (OMB) and the National Institute of Standards and
Technology. OMB defines four levels of authentication assurance for
electronic transactions and identifies criteria for determining the
level of assurance required for specific applications and
transactions, based on risks and their likelihood of occurrence. The
levels increase from 1 to 4 based on increasing risk level. For
example, OMB guidance states that level 2 is appropriate for a wide-
range of business with the public, and level 4 is appropriate when a
person is gaining access to highly restricted Web resources. Because
it was unclear what SSA information would be made available behind the
system, SSA developed plans for the system that meet criteria for
levels 2 and 3. The agency's recent risk assessment determined that
the online statement is a level 2 application. As part of our
analysis, we did not independently assess the level of authentication
necessary for the statement.
[23] See SSA Inspector General, Top Issues Facing Social Security
Administration Management-Fiscal Year 2011, (Dec. 1, 2010).
[24] Federal law also requires SSA, to the maximum extent practicable,
to notify eligible individuals of the availability of the statement.
42 U.S.C. § 1320b-13(b). In comments, SSA officials said that this
provision requires the agency to inform individuals of the
availability of statements upon request, not statements in general. As
a result, SSA officials said that this provision does not appear to
require the agency to employ a substantial public relations campaign
for the online statement.
[25] Eighty-nine of SSA's approximately 1,300 field offices are sites
for this pilot project.
[26] SSA has recently taken steps to provide retirement benefits
information in Spanish online. For example, in December 2010, SSA
released an online Spanish-language Retirement Estimator for public
use, to "provide a broader audience with important information they
need to plan for a secure retirement." However, as previously noted,
the Retirement Estimator does not provide all of the information that
is available on the statement.
[27] Because of its budget constraints, SSA cut spending on various
activities during fiscal year 2011. However, according to an SSA
budget official, the statement mailings were the only mandatory
function that the agency cut.
[28] According to an SSA budget official, in fiscal year 2010, SSA's
appropriation for its Limitation on Administrative Expenses account
was $11.447 billion, and in fiscal year 2011, the agency's
appropriation was $11.424 billion. However, the President's budget
request for fiscal year 2011 was $12.379 billion.
[29] In our prior work, we found that many industry groups place
emphasis on computer-based formats, partly to lower costs like
printing and mailing. One industry association commented in our work
on 401(k) fees that Internet-based information is easier to maintain
and update so that it tends to be more timely and accurate.
[30] For example, many focus group participants liked a private sector
statement's use of a colored pie chart illustrating what percentage
Social Security and other retirement savings will be required to
replace current monthly salary. The benefits consulting firm
recommended this figure as a way to provide more context on income
needs in retirement.
[31] According to the Commissioner's earlier testimony to the
Congress, as well as our interviews with SSA officials, SSA is
currently considering resuming mailings of the statement to eligible
individuals age 60 and older who are not yet receiving benefits.
[32] Since 2008, SSA has commissioned four surveys of the public about
the statement and how well it is performing the functions of educating
the public about SSA programs, aiding financial planning, and
verifying earnings. The baseline survey was conducted in 2008 with
follow-up surveys in 2009 and 2010. SSA has also conducted focus
groups, in part, to test how well readers understand specific language
and concepts in the statement and inserts.
[33] See [hyperlink, http://www.gao.gov/products/GAO-05-192].
[34] Social Security Advisory Board, The Social Security Statement:
How it Can be Improved, (Washington, D.C.: August 2009).
[35] SSA's insert for younger workers provides some guidance on this
topic. For example, it states, "Financial planners generally agree
retirees will need about 70-80 percent of preretirement earnings to
enjoy a comfortable retirement. For an average worker, Social Security
replaces about 40 percent of annual preretirement earnings."
[36] The consortium consists of three nonpartisan, multidisciplinary
research centers at Boston College, the RAND Corporation, and the
University of Wisconsin, and is intended to develop innovative
materials and programs to help Americans plan for a secure retirement.
Established in 2009, the consortium was funded at $9.2 million in
fiscal year 2010 and will be discontinued at the end of fiscal year
2011 due to budget constraints, according to an agency official.
[37] Jeffrey R. Brown, Olivia S. Mitchell, and Arie Kapteyn, Framing
Effects and Social Security Claiming Behavior, prepared for the Social
Security Administration, WR-793-SSA (October 2010).
[38] The study authors recognize that a limitation of the research is
that it relies on stated intentions about future claiming behavior,
rather than on actual claiming decisions.
[39] Andrew G. Biggs, Exploring Alternative Ways to Present Estimated
Future Social Security Benefits in the Social Security Statement,
prepared for the Social Security Administration, WR-801-SSA (October
2010).
[40] Andrew G. Biggs, Improving the Social Security Statement,
prepared for the Social Security Administration, WR-794-SSA (October
2010).
[41] Mathew Greenwald, Arie Kapteyn, Olivia S. Mitchell, and Lisa
Schneider, What Do People Know About Social Security?, prepared for
the Social Security Administration, WR-792-SSA (October 2010).
[42] Nearly one quarter (23 percent) of respondents incorrectly
believed benefits are based on Social Security taxes they have paid
and interest earned on those taxes, and nearly one in five (19
percent) incorrectly believed they have to claim benefits as soon as
they stop working.
[End of section]
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