The Senate may soon have another retirement savings reform bill to add to the already overcrowded desk of Majority Leader Mitch McConnell.
The House Ways and Means Committee on Wednesday passed Congressman Vern Buchanan’s Know Your Social Security Act, intended to help Americans better plan for retirement by requiring the Social Security Administration to resume mailing annual projected earnings statements to all workers 25 and older with covered earnings who are not receiving Social Security benefits.
U.S. Reps. Vern Buchanan (R-Fla.) and John Larson (D-Conn.) introduced HR 5306 last week. The bill is now ready to be considered by the full House, which is expected for a vote in the near future.
“Too many hardworking Americans enter retirement without enough savings,” Buchanan said. “Because Social Security is the primary source of income for a majority of seniors, it is imperative they have a full understanding of their benefits as they plan for retirement.”
In a cost-saving move, the SSA stopped sending out the annual paper statements back in 2010—despite a law requiring the mailings—and instead urged people to create an online Social Security account if they wanted access to their statements. Shocker: Only a very small percentage of Americans set up an online account. The online portal is only being utilized by 16.7 million people.
While the decision to stop mailings has flip-flopped a few times since 2011, today the SSA is only mailing them to the 14.6 million aged 60 and older not currently receiving benefits, instead of to about 178 million Americans.
If the new bill becomes law, Social Security’s annual mailed statements would include the following information:
- How much a worker has earned in a given year
- A worker’s contributions to both Social Security and Medicare
- An estimate of the worker’s Social Security benefit at full retirement age
- The Social Security benefit a worker’s family receives when they pass away
But not everyone thinks the Know Your Social Security Act would be a big difference-maker. Noted Social Security reform expert Andrew Biggs, resident scholar at the American Enterprise Institute (AEI), tweeted on the topic this week in response to Washington Post personal finance columnist Michelle Singletary’s Dec. 10 piece supporting the bill (Yes, the Social Security Administration should mail out paper statements again. Here’s why.).
“I don’t exactly disagree,” Biggs tweeted. “But the Social Security Statement doesn’t seem to have improved Americans’ knowledge of their benefits. Even many near-retirees have basically no idea what they’ll get from Social Security until the first check arrives.”
He added: “Plus: the Statement systematically understates future benefits for younger workers, by about 20% for someone in their mid-40s. Yes, a benefit statement makes sense. But we could probably do a better job of it.”
AARP endorsed the bill, saying it “would once again place vital, paper Social Security statements in the hands of millions of Americans, to help them more effectively plan for retirement, identify fraud and correct earnings records, and better understand their stake in Social Security.”
According to Pew Research Center, 33 million Americans are still living without internet access and many are concerned about sharing sensitive information, such as their Social Security number online.
Congressman Larson, chairman of the House Ways and Means Social Security Subcommittee said, “Social Security is our nation’s foundation to a solid retirement. Americans who contribute to Social Security should receive an update every year so they know what benefits they are earning and can plan for their retirements. No matter what happens in the stock market, Social Security will always be there for them.”
According to the Coalition for Paper Options, which has also endorsed Buchanan’s bill, these statements are viewed by many as “the single most important financial planning tool that most Americans will ever receive.”
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
