Here's a pop quiz for you: Do you know how big your future Social Security check will be?
I recently heard Erzo Luttmer, associate professor of public policy at Harvard's Kennedy School, present his research at the Brookings Institution on just how well people understand their Social Security benefits. (He conducted the research with his colleague Jeffrey Liebman.) He surveyed 2,500 50 to 70-year-olds. Among those who haven't yet received their first check, the average estimate of how much they would receive was $1,300 a month -- very close to the actual amount. Luttmer says that the accuracy of people's predictions can probably be at least partly attributed to the annual statements sent out by the Social Security Administration. Over 90 percent of those surveyed said they read the statements and find them useful.
After Luttmer spoke, Michael Astrue, the commissioner of the Social Security Administration, says that he found that including a one-page insert in the annual statements that explained benefits based on the age of recipients worked better than directing people to a government website that promotes financial literacy, www.mymoney.gov. Astrue says that he was surprised to discover that including the website in the mail, which reaches millions of Americans, did little to boost traffic to the website. The message, he says, is that people can easily get overloaded with information to the point that more information, such as a web address, is no longer useful.
I've always enjoyed receiving my Social Security mailer each year, largely because it neatly summarizes my employment history and how much I earned each year, starting with my first jobs working in a tennis pro shop and as a softball umpire. The Social Security Administration certainly has a great opportunity with those mailers to get out useful information to future benefits recipients.
Do you find your annual Social Security statement useful? Do you have any suggestions for how the Social Security Administration could improve it?