Social Security to stop mailing paper statements — again

The Social Security Administration announced it will stop mailing estimated benefit statements to most American workers in a cost-saving move that is expected to save about $11 million this year. Well, “announced” may be too strong a word. A senior agency official posted a blog Monday alerting the public that paper statements will now be sent only to people who are 60 or older who have not established online My Social Security accounts with the agency and who are not yet receiving Social Security benefits. “We know that our cutbacks will affect many of you, but we have no choice,” Doug Walker, deputy commissioner of communications for the Social Security Administration, wrote in a blog posted on the agency's website. “During the past year, we began a hiring freeze that will reduce our staff to the lowest level since FY 2013,” Mr. Walker wrote. After adjusting for inflation, the agency's budget is now 10% lower than it was in 2010, while the number of beneficiaries has gone up by 13%, largely due to the millions of baby boomers reaching retirement age. Because of the staff shortage, more than a million people are waiting for a hearing to determine if they are eligible for disability benefits. “While we can't predict our budget level for the rest of the fiscal year, we think there may be more bumps in our journey together,” Mr. Walker warned. Congress has until April 28, 2017, to pass a spending bill for the full year or pass another continuing resolution for the remainder of the fiscal year that ends Sept. 30. “Congress' refusal to provide an adequate operating budget for the Social Security Administration, an agency which is funded solely through the payroll contributions of American workers, demonstrates a failure to acknowledge the importance and value of the critically important services SSA provides to American workers, retirees, the disabled and their families,” said Max Richtman, president of the National Committee to Preserve Social Security and Medicare, an advocacy group. “As the disability hearing backlog grows, the SSA workforce shrinks and now the latest announcement concerning elimination of the mailing of Social Security statements for individuals younger than 60, the public will surely feel resentment, albeit misdirected, towards SSA,” Mr. Richtman warned. If public confidence in SSA is undermined, he predicted it will be easier to approve other cost-saving changes to Social Security such as benefit cuts and raising the retirement age. Just think. This is even before President-elect Donald Trump takes office. If Mr. Trump makes good on his promise to “drain the swamp” in Washington and impose a government-wide hiring freeze, Social Security's ability to service the needs of more than 60 million retirees, survivors, disabled workers and their families could slow to a crawl. Social Security began mailing annual benefit statements to workers age 25 and older in 1999. Since then, the statements have become an essential part of financial planning, supplying critical information about future retirement income and serving as a stark reminder of the need for personal savings to supplement those benefits. In mid-2011, the agency announced — for the first time — that it would stop mailing annual benefit statements as a cost-saving measure. Personalized digital statements, identical to the old paper versions, first became available in May 2012. So far, more than 27 million people have set up a personal account. In response to critics and congressional pressure, SSA resumed mailing paper statements in September 2014 to workers as they reached ages 25, 30, 35, 40, 45, 50, 55, and 60 and over who are not receiving Social Security benefits and who are not registered for an online account. Now it seems we are back to square one. Social Security Administration spokesman Darren Lutz said the latest cost-saving step of mailing fewer Social Security statements will take effect this month. Approximately 20 million people under age 60 who were born in the month of May will be the first to not receive a paper statement in the mail, Mr. Lutz said. Normally, workers received their benefit statements in the mail three months before their birthday. But why wait for the mail when you can access the same information 24/7 online? If you haven't done so already, create an online Social Security account for yourself and encourage your clients to do so, too. It's a perfect start for a new year financial review. (More: Create and review your Social Security statement online) In addition to benefit estimates, the personalized statements provide individuals with a complete earnings history and the total payroll taxes paid on those earnings throughout their career. After adding up all those taxes, it should provide a clear incentive for maximizing Social Security benefits through a strategic claiming strategy. Everyone should review those reported earnings at least once a year and promptly report any errors.

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(Questions about new Social Security rules? Find the answers in my new ebook.) Mary Beth Franklin is a contributing editor to InvestmentNews and a certified financial planner.