Statement aids financial planning
The annual Social Security statement is helping Americans with their financial planning, according to a survey by the Gallup organization. Many people actually change their retirement plans as a result of the statement they receive from Social Security in the mail, the survey indicated.
As a result of the statement, today’s workers are in a much better position to use their Social Security benefits as they were intended – as only part of their retirement program, which also should include other savings, investments and pensions. People are beginning to recognize the urgency of saving money for retirement and exploring other strategies, rather than relying exclusively on Social Security.
The statement is sent to workers age 25 or older about three months before their birthdays. The statement tells workers how much they have credited to their Social Security record and shows the amount of retirement and disability benefits they may be eligible to receive. It also shows how much the worker’s family would receive if the worker died.
The Gallup survey showed, of the people who recalled receiving the statement:
• 82.7 percent reported the statement to be useful in increasing their knowledge of benefits that may affect them directly.
• 81.5 percent reported the statement to be useful in helping to determine their level of need for additional sources of retirement income.
• 68.7 percent reported the statement to be useful for financial planning.
• 19 percent reported being much more likely to change their retirement plans.
The survey is part of an education campaign conducted by the Social Security Administration to improve public understanding of the way the program works and the need for change. Many people think their Social Security tax contributions are held in interest-bearing accounts earmarked for their own future retirement needs. In fact, your taxes pay the benefits of the people now receiving Social Security benefits.
By the year 2030, the number of workers paying taxes for each retiree will decrease from 3.4 to 2.1. The impact on the Social Security trust funds will be felt as early as 2016 when the total taxes paid in will be less than benefits paid. Unless changes are made, by 2038, Social Security taxes collected will pay only about 73 cents of every $1 in benefits owed.
Social Security statements are issued annually to most workers (25 or older) who have paid into Social Security and are not receiving Social Security benefits based on their own record. If you have not received a Social Security statement, go to www.ssa.gov to complete a request for a statement or print out a request form or call 1-800-772-1213.