Retirees will no longer need to check the mail box for their monthly Social Security check. Paper Social Security payments will soon be retired. The U.S. Department of the Treasury announced this week that new Social Security recipients will be required to collect their due by direct deposit into a bank account or a government Direct Express Debit MasterCard beginning on March 1. 2011. Existing Social Security beneficiaries will have until March 1, 2013 to switch to electronic payments.
About 85 percent of federal benefit recipients already receive their payments electronically. Switching all beneficiaries to paperless payments is expected to save $300 million in the first five years. Electronic payments will also be required for Americans receiving Supplemental Security Income, Veterans, Railroad Retirement, and Office of Personnel Management benefits.
The change may be difficult for some seniors. “Four million people in Social Security today do not have a bank account, and for many others with a bank account, receiving a check has been a preferred option,” points out Nancy LeaMond, executive vice president of AARP. “Significantly altering payment methods for millions of current beneficiaries may present additional challenges.”
The option to purchase paper savings bonds through payroll deductions will also be eliminated for federal employees on September 30, 2010 and for the private sector by January 1, 2011. Instead, people who purchase savings bonds through payroll deductions will be directed to Treasury Direct, a website that allows investors to buy and hold electronic savings bonds. This policy only applies to savings bonds purchased through payroll deductions. Individuals will still be able to buy paper savings bonds at financial institutions for themselves and as gifts. Transitioning employees to electronic savings bond purchases is expected to save approximately $50 million over five years.