The annual statements from the Social Security Administration, which… (Bradley C Bower, Associated…)
"You know you can't count on Social Security."
For years, that's been the scare-tactic pitch of unscrupulous investment brokers, annuities hawkers and their friends in Congress as they tried to peddle retirement deals to people reluctant to part with their money. The phrase has been repeated so often that it's become an article of faith for many who are still years away from collecting their checks.
But it's not true, and for more than a decade a powerful rebuttal has appeared in the mailboxes of some 150 million Americans once a year, in the form of a statement saying how much their monthly check would be when they retire.
For the investment pitchman, the mark's ignorance is bliss. So the whole industry must be feeling pretty euphoric these days.
That's because last March the Social Security Administration suspended the mailing for everyone except near-retirees 60 and older. The agency says it was responding to a "bleak" budget projection, but it looks more as if it turned up its nose at a bargain: The mailings cost $70 million a year. That's 44 cents per recipient, including postage — or a bit more than one half of 1% of the agency's $11.7-billion administrative budget.
The agency says it's working to restore the mailings, which were specifically mandated by Congress in 1989. The money has been requested in the president's 2012-13 budget, but Social Security Commissioner Michael J. Astrue says he thinks it's "unlikely" that the agency will get all it asked for. Meanwhile, the agency promises to replace the paper statements with an online version, but that may yet be several months off in any case.
Could there be a worse time for this informational vacuum to occur? Social Security labors under political attack as never before, and the public's understanding of how it works, what it costs and what it provides has reached a low ebb — not least because of misinformation wholesaled by its enemies and would-be "reformers" on both sides of the political aisle. The change signifies how little effort the federal government puts into communicating what it achieves for Americans, in an era when our public discourse focuses almost exclusively on the cost of government and not at all on its benefits.
Indeed, as the Government Accountability Office observed in 1996 shortly after the mailings began, "public confidence in Social Security has been low for a number of years, in part because the public has lacked an understanding of Social Security programs."
People who deal regularly with the Social Security Administration say the suspension of mailings is only one way its delivery of personalized service, for which it once was renowned, has withered. The agency is closing field offices across the nation "at a rapid rate," Astrue says. It's also cutting the hours of those still open and understaffing its toll-free phone lines.
Advocates for the disadvantaged say that shifting services online is no substitute. "People are not always temperamentally, culturally or psychologically able to go online, especially to get problems resolved," says Kevin McVeigh, who works with clients in rural Greenfield, Mass. — which is facing the shutdown of its Social Security field office. "They're not used to using computers or don't have access."
The lack of an annual statement is "a big issue," says Sharon Lacy, a certified financial planner in Los Altos, Calif., who frequently speaks about retirement planning. "The annual statement was a reminder to people of what their annual benefits would be."
Especially important was the year-by-year earnings record on the statement, which enabled enrollees to catch errors. Lacy says that when she recently tried to get that information for a client on the agency's 800 line, "it took about an hour waiting on hold."
The annual statements were the brainchild of the late Sen. Daniel Patrick Moynihan, who was deeply concerned about the program during his years in politics (not that his reform proposals always pleased Social Security advocates). Moynihan's 1989 bill required the agency to send out annual statements beginning in 1993 to all eligible recipients 60 and older, expanding in 2000 to all recipients.
The idea, recalls Webster Phillips, a former associate Social Security commissioner who worked with Moynihan at the time, was to strengthen the bond between American workers and the Social Security program by attesting that the money they paid in, week in and out, would yield tangible benefits — chiefly a monthly retirement check, which averages about $1,200 today. And if Congress tried to take them away or cut them back, the consequences would show up in black and white in every worker's mailbox.