Report to Congressional Requesters

United States Government Accountability Office

GAO

April 2005 SOCIAL SECURITY 

STATEMENTS 

Social Security 

Administration Should 

Better Evaluate 

Whether Workers 

Understand Their 

Statements 

GAO-05-192 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

www.gao.gov/cgi-bin/getrpt?GAO-05-192.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Barbara 

Bovbjerg at (202) 512-5491 or 

bovbjergb@gao.gov. 

Highlights of GAO-05-192, a report to 

congressional requesters 

April 2005

SOCIAL SECURITY STATEMENTS

Social Security Administration Should 

Better Evaluate Whether Workers 

Understand Their Statements 

Participants in our review identified both strengths and weaknesses in the 

current statement’s understandability. Many respondents to GAO’s national 

survey recalled receiving a statement, but had little recollection of some 

components, for example, the information on Social Security’s future. Focus 

group participants provided more detailed information; they found the 

statement to be comprehensive but less well presented than a comparison 

statement they also reviewed. A firm that evaluates benefits statements had 

similar conclusions. The firm rated the quality of primary content and said 

the general understandability of the statement favorably compared with that 

of other statements, but use of design to help convey information and quality 

of secondary content fared less well. 

The Social Security Statement’s Evaluation Scores Compared with Industry Average Scores

0

10203040

5060708090

100

Quality of primary content

Understandability

Absence of undesirable

design features

Presence of desirable

design features

81

69

70

43

51

76

93

45

Source: GAO presentation of Dalbar’s data.

Percentage of maximum total points achievable

Quality of secondary content

80

0 20 40 60 80 100

89

Social Security Statement

Criteria

Industry average

The Social Security Administration’s current evaluation of the statement’s 

understandability is limited because it does not include focus groups or data 

from the agency’s many public contacts. For feedback, the agency relies 

almost exclusively on an annual survey covering many aspects of the Social 

Security program. Its questions about the statement are general and change 

each year, limiting their effectiveness. The agency also does not routinely 

use data collected from such sources as its telephone call centers, walk-in 

traffic, or Web site to help determine whether the statement is meeting its 

goals. 

Private sector experts and countries GAO studied use several practices the 

Social Security Administration may find helpful, such as regularly gathering 

feedback from statement recipients, customizing messages for different age 

groups, and changing statements every few years to keep readers interested. 

They also tended to design their statements in ways GAO’s focus groups 

preferred—for example, putting the most important information at the start. 

The Social Security Statement is 

the federal government’s main 

document for communicating with 

more than 140 million workers 

about their Social Security benefits. 

By law, the statement must show 

an individual’s annual earnings, 

payments into Social Security and 

Medicare, and projected benefits. 

The Social Security Administration 

also uses the statement to explain 

the various types of Social Security 

benefits and to encourage greater 

financial planning for retirement. 

GAO conducted a review to 

examine (1) how well recipients 

understand the current statement, 

(2) how the Social Security 

Administration is evaluating the 

statement’s understandability, and 

(3) the promising practices used by 

private sector companies and other 

industrial countries. GAO’s 

information was obtained from its 

national survey and focus groups of

statement recipients, a firm that 

evaluates benefit statements, 

officials from three other countries 

(Canada, Sweden, and the United 

Kingdom), and other experts from 

the private sector. 

What GAO Recommends

GAO recommends that the Social 

Security Administration (SSA) 

develop a plan for regularly 

evaluating the statement with data 

from a variety of sources. The 

Social Security Administration 

should use the resulting 

information to determine what 

changes, if any, need to be made in 

the statement’s format and content. 

SSA agreed with our 

recommendations. 
Page i GAO-05-192 Social Security Statements 

Letter 1

Results in Brief 3 

Background 5 

Statement Found to Have Both Strengths and Weaknesses in Its 

Understandability 8 

SSA’s Current Evaluation of the Statement’s Understandability Is 

Limited 22 

Other Countries Studied and Private Sector Benefits Consultants 

Use Several Promising Practices That May Be Helpful to SSA 25 

Conclusion 29 

Recommendations for Executive Action 29 

Agency Comments 30 

Appendix I Court Rulings on Rights to Social Security Benefits 31 

The Precedent-Setting Decision 31 

Other Challenges under the Due Process Clause 33 

Gender-Based Discrimination Decisions 34 

Changes to Benefits as a Result of Social Security Reform 35 

Summary 37 

Appendix II Scope and Methodology 38 

Appendix III 2004 Social Security Statement 42 

Appendix IV Examples of Private Sector Retirement Statements 46 

Appendix V Example of a Statement from Canada 53 

Appendix VI Comments from the Social Security Administration 55 

Contents 
Page ii GAO-05-192 Social Security Statements 

Appendix VII GAO Contacts and Staff Acknowledgments 58 

Contacts 58 

Staff Acknowledgments 58 

Table 

Table 1: Percentage of Survey Respondents Who Remembered 

Elements of the Social Security Statement 10 

Figures 

Figure 1: Examples of Technical Terms That Focus Group 

Participants Found Confusing 11 

Figure 2: Excerpts of Explanations That Focus Group Participants 

Found Confusing 13 

Figure 3: Examples of Explanations That Focus Group Participants 

Found Contradictory 15 

Figure 4: Statement’s Evaluation Scores Compared with Industry 

Average Scores 16 

Figure 5: Example of Related Information Located in Different 

Parts of the Statement 18 

Figure 6: Example of Chart in the Private Sector Statement 19 

Figure 7: Potential Illustration Showing Monthly Social Security 

Retirement Benefit by Age, from 62 to 70 20 

Figure 8: Graphic Used by SSA to Illustrate Demographic Changes 

Affecting Social Security 21 

Figure 9: Example of Supplemental Information Included by 

Canada in an Insert 26 
Page iii GAO-05-192 Social Security Statements 

Abbreviations 

PEBES Personal Earnings and Benefit Estimate Statement 

PUMS Public Understanding Measurement System 

SSA Social Security Administration 

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. However, because this work may contain copyrighted images or 

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reproduce this material separately. 
Page 1 GAO-05-192 Social Security Statements 

April 1, 2005 

The Honorable Tom Delay 

Majority Leader 

House of Representatives 

The Honorable Jim McCrery 

Chair, Subcommittee on Social Security 

Committee on Ways and Means 

House of Representatives 

The Honorable E. Clay Shaw, Jr 

House of Representatives 

Social Security, the nation’s largest federal program, touches the lives of 

virtually all the nation’s citizens. It provides a measure of economic 

security and financial stability by providing retirement, disability, and 

survivorship benefits. The Social Security Administration (SSA) provides 

benefits information as well as other related information on an annual 

statement to virtually all American workers. The Social Security Statement 

(the statement) represents one of the federal government’s largest efforts 

to communicate directly with workers about their Social Security benefits. 

In 2003, SSA mailed statements to more than 140 million people at a cost 

of approximately $45 million. Because the statement is mailed to so many 

homes, the Social Security Advisory Board recommended in 1997 that it 

should be one of the highest priorities of the agency and receive careful 

and high-level attention with respect to content and design.1

 Since then, 

SSA has made some significant revisions, based in part on our work, to 

improve the statement’s clarity and understandability.2

 In 2000, the Social 

Security Commissioner testified that the statement is the most significant 

vehicle that SSA has to increase the public’s understanding of the basic 

 1

The board is independent and bipartisan and advises the Commissioner of Social Security 

on policies related to the Social Security and the Supplemental Security Income programs. 

2

GAO, SSA Benefit Statements: Well Received by the Public but Difficult to Comprehend, 

GAO/HEHS-97-19 (Washington, DC: December 5, 1996), and GAO, Social Security: 

Providing Useful Information to the Public, GAO/T-HEHS-00-101 (Washington, DC: April 

11, 2000). 

United States Government Accountability Office

Washington, DC 20548 
Page 2 GAO-05-192 Social Security Statements 

features of Social Security and enable Americans to prepare for long-term 

financial security. 

The individualized nature of the statement and the diverse population it 

serves make developing a clear and understandable document a complex 

process. Statements must correctly list each individual’s annual earnings 

history as well as future projections of retirement, disability, and 

survivorship benefits. The statement must also be understandable to an 

audience that varies considerably in age, educational level, and cultural 

background. In addition, the production and evaluation of the statement 

involve several SSA offices and contractors. Further, the statement may be 

taking on added importance as a tool for communicating to the public 

potential changes in Social Security. With the baby boom generation’s 

forthcoming retirement, longer life spans, and lower birthrates, Social 

Security’s financing shortfall will grow. The President has identified the 

reform of the Social Security system as a major agenda item for his 

administration, and if reform is enacted, educating the public about any 

program changes and how they will affect benefits will likely be a high 

priority for SSA. 

Given the statement’s importance, you asked us to review SSA’s efforts to 

ensure its understandability and to do so in the context of what 

information private sector employers are providing to their employees and 

what other industrialized countries provide to citizens about their public 

pension plans.3

 Specifically, our objectives were to address (1) how well 

recipients understand the current statement, (2) how SSA is evaluating the 

statement’s understandability, and (3) the promising practices used by 

private sector companies and other industrialized countries that could be 

used by the Social Security Administration. In addition, you asked us to 

review a person’s legal rights to benefits. Appendix I summarizes the 

applicable caselaw regarding an individual’s rights to Social Security 

benefits. 

To answer the above questions, we collected data from a wide variety of 

sources. We assessed the statement’s understandability and usefulness in 

conjunction with a GAO national random telephone survey on financial 

 3

Private sector defined benefit plans (plans that promise to provide a benefit that is 

generally based on an employee’s salary and years of service) are required to furnish plan 

participants, upon request, a statement of their accrued benefits and total nonforfeitable 

pension benefits, if any, which have accrued, or the earliest date on which benefits become 

nonforfeitable. 
Page 3 GAO-05-192 Social Security Statements 

literacy. We also contracted with a private market research firm, 

OneWorld Communications, to conduct six focus groups that reviewed the 

statement’s content and design and compared them with those of a private 

sector benefit statement. These focus groups were held in Seattle, 

Chicago, and Atlanta and were balanced for age, gender, and ethnicity. We 

also contracted with a nationally recognized benefit statement evaluation 

firm, Dalbar Inc., to evaluate and score the statement based on the firm’s 

criteria for private sector benefit statements. We interviewed SSA officials 

to discuss their procedures for evaluating the statement. To gather data 

about private sector benefit statements and statements used by other 

industrialized countries, we interviewed private companies that specialize 

in benefit statement preparation and distribution as well as public pension 

officials in Canada, Sweden, and the United Kingdom. To determine the 

legally required information in both the Social Security Statement and 

private pension benefit statements, we reviewed applicable laws. We also 

analyzed caselaw on legal rights to benefits under the Social Security 

program. Appendix II explains the scope and methodology of our work in 

greater detail. We conducted our work between March 2004 and March 

2005 in accordance with generally accepted government auditing 

standards. 

The respondents to our survey, as well as the focus group participants and 

the benefits consulting firm that we asked to review the statement, 

identified both strengths and weaknesses in its understandability. About 

66 percent of people responding to our survey remembered receiving the 

statement, though some parts—for example, the benefit estimates and 

earnings history—tended to be remembered much more than the 

information about Social Security’s future. Focus group participants 

generally found their earnings history and benefit estimates 

understandable and useful. However, they found some of the other 

information confusing or contradictory—for example, the role credits play 

in determining benefit eligibility and the role earnings play in calculating 

benefits. To be eligible for benefits, workers must have earned enough 

income over their working lifetimes to qualify for at least 40 credits.4

However, once eligible, the worker’s actual benefit is not determined by 

credits but by a measure of lifetime earnings.5

 Many focus group 

 4

A total of 4 credits can be earned in each year. In 2004, 1 credit was awarded for each $900 

of wages or self-employment income. 

5

In calculating retirement benefits, SSA averages an individual’s 35 highest years of 

earnings. 

Results in Brief 
Page 4 GAO-05-192 Social Security Statements 

participants were still confused about these complex concepts after 

reading their statements. They were also confused about the statement’s 

explanation of Social Security’s solvency challenges. When participants 

were asked to compare the Social Security Statement with a private sector 

benefit statement, many found the Social Security Statement more 

comprehensive in scope but lacking in helpful design features, such as the 

use of color and graphics. Some participants also preferred the private 

sector statement’s presentation of the need for supplemental income in 

retirement. The benefits consulting firm that reviewed the statement gave 

it a communication effectiveness score of 65 out of 100, which fell below 

the industry average score of 73. The firm found that the statement was 

strong in its presentation of benefits and use of plain language but could 

be improved through better design, targeted messaging, and more 

information on income needs in retirement. 

SSA’s current methods of evaluating the statement are limited. To date, 

SSA has evaluated the statement primarily through an annual survey of the 

general public. This survey is conducted for many other purposes besides 

evaluating the statement, and the survey’s questions specifically about the 

statement have been general and have changed from year to year. 

Assessing the statement through this limited approach may not provide the 

depth and detail needed to comprehensively assess the statement’s 

understandability. Also, while SSA collects and analyzes a variety of data 

about its services, it is not systematically collecting any data from internal 

sources, such as the customer call centers, walk-in traffic, and its Web site, 

about whether the statement is understandable or meeting its goals. For 

example, although correction of inaccurate earnings records is a goal of 

the statement and SSA officials reported that they corrected 360,000 

earnings records in 2003, no data were collected to determine how many 

corrections resulted from receiving a statement. 

Private sector benefits consultants and other industrialized countries 

utilize several promising practices that may be helpful to SSA, such as 

regularly gathering feedback from statement recipients and utilizing 

customized messages. All of the consultants and officials from other 

countries that we spoke with regularly and systematically collect feedback 

from recipients regarding the usefulness and understandability of their 

statements. For example, officials from Sweden told us that they utilized 

what they called “hot surveys,” which are surveys that are sent out within 

a month of when the statement is sent to specifically assess the usefulness 

and understandability of the statement. This survey technique allows the 

recipients to give feedback about the statement while their impressions 

regarding the statement are relatively current. Benefits consultants and 
Page 5 GAO-05-192 Social Security Statements 

other countries also utilize customized messages that differ depending on 

the age of the recipient. For example, officials in the United Kingdom told 

us that younger workers receive messages emphasizing the importance of 

starting to save for their retirement early in their careers and workers 

closer to retirement receive messages regarding how to maintain their 

current lifestyle, including increasing personal savings and working 

longer. Officials at both the consulting firms and in other countries told us 

that workers are more likely to read and remember information that is 

relevant to them. Finally, consulting firm officials told us that regularly 

modifying the statement’s appearance could help make the statement 

more effective, since recipients would be less likely to assume that they 

are receiving the same old statement year after year. 

This report contains recommendations for executive action. SSA should 

develop a plan for regularly evaluating the statement through the 

collection of data from multiple sources, including information from 

surveys, focus groups, call centers, walk-in traffic, and the Web site. On 

the basis of data it receives and a review of promising practices in the 

private sector and other countries, SSA should consider revising the 

statement to include showing the personalized benefit information first 

and using more graphics. In its response to our draft report, SSA agreed to 

develop a plan for regularly evaluating the statement and will consider 

revising the statement as appropriate and necessary. (SSA’s comments are 

reproduced in app. VI.) 

SSA is required by law to provide annual statements with benefits and 

earnings information to individuals over the age of 25 who have a Social 

Security number and have wages or earnings from self-employment.6

 The 

law requires each statement to contain the following: 

• an estimate of the potential monthly Social Security retirement, disability, 

survivor, and auxiliary benefits and a description of the benefits under 

Medicare;7

• the amount of wages paid to the employee or income from selfemployment; 

 6

42 U.S.C. 1320b-13. 

7

The law requires that only the statements sent to people aged 50 and older contain actual 

benefit estimates, but SSA provides benefit estimates regardless of age. 

Background 
Page 6 GAO-05-192 Social Security Statements 

• an estimate of the individual’s aggregate taxes paid to Social Security; and 

• an estimate of the individual’s aggregate taxes paid to Medicare. 

Appendix III contains an example of the current statement with the legally 

required information highlighted. 

The requirement to mail the statements was phased in beginning in fiscal 

year 1995, when SSA was required to mail the annual statement—then 

named the Personal Earnings and Benefit Estimate Statement (PEBES)—

to all workers age 60 and older. In addition to the informational 

requirements, Congress required SSA to send the annual statement to 

selected age groups of workers not receiving benefits and for whom a 

mailing address can be determined. Starting in fiscal year 2000, SSA was 

required to mail the annual statement, now called the Social Security 

Statement, to workers age 25 and older. However, SSA officials decided to 

mail a larger number of statements earlier than fiscal year 2000 to phase in 

the added workload over several years. The accelerated schedule began in 

fiscal year 1996, when SSA added individuals turning 58 and 59. In 

subsequent years, SSA added increasingly younger people until people as 

young as 25 began receiving the statement in fiscal year 2000.8

 These 

statements are generally mailed about 3 months before the worker’s 

birthday. 

The current Social Security Statement has evolved over several years. The 

initial PEBES was a six-page document and contained information such as 

the worker’s earnings record, benefits estimates and a question-andanswer section about Social Security. However, in a previous report, we 

found that PEBES did not clearly communicate the complex information 

that workers needed to understand about SSA’s programs and benefits.9

 In 

response, SSA made significant changes to the format and presentation of 

the PEBES, tested a four-page Social Security Statement in 1997, and 

began mailing it to the public in October 1999. The newer statement was 

shorter, better organized, and easier to read than the PEBES, but our 

follow-up review in 2000 identified some remaining rough spots. The 

January 2005 statement retains the four-page organization of the 1999 

statement and generally used green underlining to highlight the page 

headings for each page of the statement. Although the statement has 

 8

The Social Security Statement replaced PEBES in fiscal year 2000. 

9

See GAO/HEHS-97-19. 
Page 7 GAO-05-192 Social Security Statements 

evolved over the years, some information in the statement has been 

included since it was first mailed to the public, such as the description of 

Social Security programs and the financial future of Social Security, 

including the long-term financial challenges that the system faces. To 

complement the statement, SSA created a special one-page insert for 

workers age 55 and older that was first mailed in October 2000. This insert 

is mailed with the statement and provides information to assist workers in 

making decisions about when to retire. 

In addition to complying with the legal requirements, SSA has established 

three agency goals for the statement—to educate the public about benefits 

under SSA programs, to aid in financial planning, and to ensure the 

worker’s earnings records are complete and accurate. SSA believes that its 

statement is providing useful information to the general public. The 

following goals have remained constant since 1995, when SSA began 

designing earlier versions of the statement: 

• To educate the public about SSA programs, the statement contains 

information about Social Security benefits. The statement provides 

information about various benefits, including retirement, disability, family, 

and survivor benefits. 

• To aid financial planning, the statement contains information about 

planning for retirement. For example, the statement says that Social 

Security was never intended to be the only source of retirement income 

and that an individual needs other savings, investments, pensions, or 

retirement accounts to ensure having enough money to live comfortably. 

The statement also contains information about working and still receiving 

Social Security retirement benefits and makes reference to an SSA booklet 

to help determine the best time to retire. 

• To verify earnings, the statement asks the worker to review the earnings 

information and make certain that the information is complete because 

Social Security benefits are based on earnings. 
Page 8 GAO-05-192 Social Security Statements 

The respondents to our survey, as well as the focus groups and the 

benefits consulting firm we asked to review the statement, identified both 

strengths and weaknesses in its understandability. Our survey provided 

general information about the statement in terms of how many people 

recalled receiving it and what types of information they remembered. 

Specifically, about 66 percent of survey respondents remembered 

receiving their statement.10 However, more respondents remembered 

seeing the statement’s personalized information, such as benefit estimates 

and earnings history, than remembered seeing the more generic 

information. Feedback from the focus group participants provided 

detailed insight about the areas of the statement they understood and how 

confusing information might be improved. For example, focus group 

participants generally found their earnings records and benefit estimates 

understandable and useful but had difficulty with information about how 

the program operated and what its long-term prospects were. When 

participants were asked to compare the Social Security Statement with a 

private sector benefit statement, many found the Social Security Statement 

more comprehensive, but they preferred many aspects of the private 

sector statement. In particular, participants liked the private sector 

statement’s use of color and graphics. The benefits consulting firm, which 

evaluated the statement against the industry’s best practices, scored it 

lower than the industry average for defined benefit statements. Officials 

from the firm said the statement was strong in its presentation of benefits 

and use of plain language but could be improved through better design, 

targeted messaging, and more information on income needs in retirement. 

A majority of respondents in our national survey indicated a familiarity 

with the statement and could recall the personal information it contained. 

Our national telephone survey asked respondents if they remembered 

receiving a statement, whether they recalled specific sections of the 

statement, and how understandable and useful they found each section. 

Survey results indicated that approximately 66 percent of respondents 

who were eligible to receive a statement remembered receiving it.11 Of the 

 10Percentage estimates for respondents in our survey are based on a sample and are subject 

to sampling error. Unless otherwise noted, estimates from our survey have 95 percent 

confidence intervals of plus or minus 5 percentage points of the estimate. See appendix II 

for more information. 

11Sixty-four percent of respondents remembered receiving their statement. Those who did 

not remember or who did not know or were unsure were prompted with a further 

description of the statement. Fourteen percent of those who were prompted then 

remembered receiving the statement. 

Statement Found to 

Have Both Strengths 

and Weaknesses in Its 

Understandability 

What Works Well in the 

Statement? 
Page 9 GAO-05-192 Social Security Statements 

five sections of the statement—explanation of Social Security benefits, 

estimated monthly benefits upon retirement, earnings per year, general 

facts about Social Security benefits, and the statement on the future of 

Social Security—the section on earnings per year was, we believe, the 

easiest for most people to understand.12

The six focus groups conducted by our focus group moderator generally 

reported that except for several key items that were confusing or hard to 

understand, the information presented in the statement was 

understandable. These groups, composed of people of various ages and 

educational backgrounds, were instructed by the moderator to carefully 

read each page of the statement, which participants admitted is less likely 

to happen when they receive the statement in the mail. Participants found 

the benefit estimates and earnings history understandable and frequently 

commented that it was the information they were most likely to look at 

when they received the statement in the mail.13 Some of the older 

participants found the benefit estimates particularly useful, since their 

estimates were based on a longer earnings history and were likely to be 

more accurate than those for younger participants with fewer work years. 

Participants appreciated the opportunity to review their earnings history, 

and many said they would follow the directions in the statement and call 

SSA’s 800 number if they discovered errors. Many participants found the 

total amount of Social Security and Medicare taxes they paid to be 

understandable. 

Several of these themes were echoed by the benefits consulting firm we 

asked to evaluate the statement. This firm, which specializes in evaluating 

the effectiveness and consistency of written materials from financial 

services institutions to their customers, reviewed and scored the 

statement based on the firm’s standardized criteria. The firm gave the 

statement an overall score of 65 out of 100 based on these criteria. By 

comparison, the average score of private sector statements in the firm’s 

database was 73. The firm identified the statement’s strengths as 

• being written in easy-to-understand language; 

 12This result is statistically significant even after accounting for the multiple comparisons 

that can be made between proportions across the five sections. For more information see 

appendix II. 

13Workers who do not have 40 credits do not receive benefit estimates but are told how 

many credits they have and how many they will need before they become eligible for 

benefits. 
Page 10 GAO-05-192 Social Security Statements 

• providing benefit estimates for different retirement ages as well as for 

disability and survivorship; 

• identifying the statement’s source and purpose; 

• providing the personal data used to calculate benefits, such as date of 

birth and earnings record, so recipients can check information for 

accuracy 

The survey respondents who remembered receiving a statement varied 

considerably in the extent to which they remembered the different types 

of information that SSA was trying to communicate. For example, of the 

people who said they remembered receiving a statement, about one-fifth 

remembered seeing all the major areas of information on the statement. As 

table 1 shows, of all the statement’s information, respondents least 

remembered the information on the future of Social Security. 

Table 1: Percentage of Survey Respondents Who Remembered Elements of the 

Social Security Statement 

Element of the statement 

Percentage of respondents 

who recalled seeing the element

Explanation of Social Security benefits 84

Estimated monthly benefits upon 

retirement 90

Earnings per year 84

General facts about Social Security 

benefits 64

The statement on the future of Social 

Security 29

Source: GAO survey data. 

Many focus group participants identified some of the statement’s 

information about the Social Security program as confusing. In some 

cases, participants did not understand the actual meaning of a word or 

phrase, such as “actuary” and “intermediate assumption” (see fig. 1 for the 

sentence in which the terms appear). Also, the meaning of the phrase 

What Does Not Work Well? 
Page 11 GAO-05-192 Social Security Statements 

“compact between generations,” used to describe the pay-as-you-go nature 

of Social Security, was unclear to many.14

Figure 1: Examples of Technical Terms That Focus Group Participants Found 

Confusing 

Besides not understanding certain terms, participants across the focus 

groups also did not understand explanations of certain concepts discussed 

in the statement. For example, many participants were confused about the 

role of credits in determining their eligibility for retirement benefits versus 

the role of earnings in determining their actual retirement benefit. As 

figure 2 shows, these are very complex issues to explain in brief and 

straightforward language. While SSA has made changes to improve 

explanations of concepts, our focus group results suggest there is a need 

for further refinements. Finally, information that applies only to certain 

groups of workers confused some participants. For example, a couple of 

participants questioned whether they needed to request the free 

publication about the windfall elimination provision because the 

statement’s description of this publication is listed with other publication 

 14Pay-as-you-go means the taxes paid by today’s workers and their employers are used to 

pay the benefits for today’s retirees and other beneficiaries. 

Excerpts from current Social Security 

Statement

These estimates of the future financial 

status of the Social Security program were 

produced by the actuaries at the Social 

Security Administration based on the 

intermediate assumptions from the Social 

Security Trustees’ Annual Report to the 

Congress.

Social Security is a compact between 

generations. For more than 60 years, 

America has kept the promise of security 

for its workers and their families.

Observations by focus group 

participants

Some participants said they did not 

understand what these terms 

meant.

Source: GAO representation of information from the 2004 Social Security Statement and focus group participants.
Page 12 GAO-05-192 Social Security Statements 

titles that pertain to all workers and the statement does not make it clear 

that this provision primarily affects government workers.15

 15The windfall elimination provision affects the calculation of retirement or disability 

benefits if the worker received a pension from work where Social Security taxes were not 

taken out of his or her pay. A modified formula is used to calculate the benefit amount, 

resulting in a lower Social Security benefit. 
Page 13 GAO-05-192 Social Security Statements 

Figure 2: Excerpts of Explanations That Focus Group Participants Found Confusing 

The statement’s information about the financial stability of the Social 

Security system was confusing and a source of concern for most focus 

group participants. Virtually all participants said they were at least 

generally aware that Social Security is facing fiscal challenges. Several 

voiced concerns that their estimated benefits might not be available when 

they are ready to retire, given the statement’s information about the 

exhaustion of the trust funds and other caveats on future benefits, such as 

Excerpts from current Social Security 

Statement

Information from page 2 of statement

Your Estimated Benefits

To qualify for benefits, you earn “credits” 

through your work — up to four each year. This 

year, for example, you earn one credit for each 

$900 of wages or self-employment income. 

When you’ve earned $3,600, you’ve earned 

your four credits for the year. Most people need 

40 credits, earned over their working lifetime, to 

receive retirement benefits. For disability and 

survivors benefits, young people need fewer 

credits to be eligible.

We checked your records to see whether you 

have earned enough credits to qualify for 

benefits. If you haven’t earned enough yet to 

qualify for any type of benefit, we can’t give you 

an estimate now. If you continue to work, we’ll 

give you an estimate when you do qualify.

Information from page 3 of statement

Help Us Keep Your Earnings Record 

Accurate

You, your employer and Social Security share 

responsibility for the accuracy of your earnings 

record. Since you began working, we recorded 

your reported earnings under your name and 

Social Security number. We have updated your 

record each time your employer (or you, if 

you’re self-employed) reported your earnings.

Remember, it’s your earnings, not the amount 

of taxes you paid or the number of credits 

you’ve earned, that determine your benefit 

amount. When we figure that amount, we base 

it on your average earnings over your lifetime. If 

our records are wrong, you may not receive all 

the benefits to which you’re entitled. 

Observations by focus group 

participants

Although SSA provided an 

explanation of “credits” in the first 

paragraph shown here, many 

participants said they were still 

confused about the difference 

between credits and earnings 

when SSA explained, in the last 

paragraph shown here, how 

benefits are computed.

Source: GAO representation of information from the 2004 Social Security Statement and focus group participants.
Page 14 GAO-05-192 Social Security Statements 

being estimated in today’s dollars and based on current law. Many also 

found the reassurances on page 1 about Social Security being available 

upon retirement followed by the information about it facing serious 

financial problems to be contradictory (see fig. 3). The statement’s 

explanation that Social Security will still be able to pay 73 cents for each 

dollar of scheduled retirement benefits even though the trust funds will be 

exhausted in 2042 confused many participants.16 While most participants 

felt it was important to have information in the statement about Social 

Security’s future insolvency, phrases such as “unless action is taken soon” 

and “we will need to resolve these issues soon” did not provide the 

information many felt they needed to understand the problem and what 

personal action, if any, they were expected to take. 

 16Social Security is now taking in more money than it is paying out in benefits. The surplus 

taxes are going into a trust fund, which will begin to be used around 2018 when benefits 

will begin to exceed the amount of Social Security taxes collected. The trust funds will then 

be used to help pay benefits until around 2042, at which time the trust funds will be 

depleted. After that, Social Security taxes will only cover about 73 percent of beneficiaries 

full benefits under the current system. 
Page 15 GAO-05-192 Social Security Statements 

Figure 3: Examples of Explanations That Focus Group Participants Found 

Contradictory 

The benefits consulting firm that evaluated the statement, like the focus 

group participants, found the statement was weak in design and conveying 

financial planning information. The firm designated the statement as good 

and awarded it points in five standardized evaluation categories.17 Figure 4 

shows more specifically how this score was divided among the five. The 

statement scored above or near the industry average in quality of primary 

content and understandability. However, the statement scored below the 

industry average in quality of secondary content and the two categories 

related to design features. 

 17Dalbar designates statements that score 80 to 100 points as excellent, statements that 

score 70 to 79 points as very good, and statements that score 60 to 69 points as good. 

Excerpts from current Social Security 

Statement

[Social Security] is there for you when you 

retire, but it’s more than a retirement 

program.

For more than 60 years, America has kept 

the promise of security for its workers and 

their families. But now, the Social Security 

system is facing serious future financial 

problems, and action is needed soon to 

make sure that the system is sound when 

today’s younger workers are ready for 

retirement.

Unless action is taken soon to strengthen 

Social Security, in just 14 years we will 

begin paying more in benefits than we 

collect in taxes. Without changes, by 2042 

the Social Security Trust Fund will be 

exhausted. By then, the number of 

Americans 65 or older is expected to have 

doubled. There won’t be enough younger 

people working to pay all the benefits 

owed to those who are retiring. At that 

point, there will be enough money to pay 

only about 73 cents for each dollar of 

scheduled benefits.

Observations by focus group 

participants

Some participants found these 

statements contradictory.

Some participants found these 

statements contradictory as well.

Source: GAO representation of information from the 2004 Social Security Statement and focus group participants.
Page 16 GAO-05-192 Social Security Statements 

Figure 4: Statement’s Evaluation Scores Compared with Industry Average Scores 

Specific reasons the statement lost points when compared with industry 

best practices include the following: 

• The statement does not compare the retirement benefit with how much 

income a person may need in retirement or offer suggestions and 

strategies for meeting income goals through other sources of retirement 

income. 

• The design does not clearly identify the most important information or 

easily lead the reader through the document. For example, the retirement 

benefit information is not prominent, and the statement uses multiple 

styles of presentation within a single page. 

• Much of the statement is relevant to only certain groups of recipients, or if 

relevant to all recipients, the information is not customized appropriately 

for differing audiences. Irrelevant content can create confusion and 

reduce readership. 

• The statement has some repetitive content and uses text instead of 

graphics, such as charts and tables. It also contains numerical data, other 

0

10203040

5060708090

100

Quality of primary content

Understandability

Absence of undesirable

design features

Presence of desirable

design features

81

69

70

43

51

76

93

45

Source: GAO presentation of Dalbar’s data.

Percentage of maximum points achievable

Quality of secondary content

80

0 20 40 60 80 100

89

Social Security Statement

Industry average

Criteria
Page 17 GAO-05-192 Social Security Statements 

than a citizen’s actual benefit, that may be confusing or result in a failure 

to communicate critical information. 

The focus group participants had mixed opinions about the amount of 

information the statement should contain. On the one hand, some 

participants felt that the statement contained so much information that it 

reduced their interest in reading it. These people claimed they generally 

reviewed the information on pages 2 and 3—their benefit estimates and 

earnings history—and filed the statement away. On the other hand, some 

participants believed that the statement introduced certain issues but then 

did not provide an adequate explanation. For example, some participants 

wanted more information on survivorship benefits, specifically children’s 

eligibility ages and whether statement estimates were per child or a total 

amount for all children. Many participants wanted retirement benefit 

estimates for additional ages, specifically 63, 64, and 66.18 Also, while 

participants generally understood that the retirement age was rising, they 

felt the information about the full retirement age for people born between 

1938 and 1960 was missing. Finally, many participants had questions about 

information presented early in the statement (for example, disability 

benefits) that information on the statement’s last page answered. When 

SSA redesigned the statement in 1999, it reduced the need for the reader to 

flip to other pages to find related information. However, our focus group 

responses suggest that more could be done in this area (see fig. 5). 

 18The Social Security Statement currently provides retirement benefit estimates for 62, the 

individual’s full retirement age, and 70. 

How Much Information Do 

People Want? 
Page 18 GAO-05-192 Social Security Statements 

Figure 5: Example of Related Information Located in Different Parts of the 

Statement 

To make the statement be most effective, the benefits consulting firm 

recommended keeping the information on the statement brief and highly 

relevant to the individual, with clear directions on how to get more 

information. The firm recommended avoiding information attempting to 

encompass all recipients, since the readers generally ignore such 

information. For example, the message on page 1 that “Social Security is 

for people of all ages” does not provide any specific information for the 

individual. The firm defined the most important content as the benefit 

estimates, factors that may affect benefit amounts, and points of contact 

that can provide more information. 

When asked to compare the Social Security Statement with a private 

sector statement, many focus group participants recognized that the Social 

Security Statement had different and more complex information to 

How Do People Want the 

Information Presented? 

Excerpts from Current Social Security 

Statement

Information from page 2 of statement

Disability 

You have earned enough 

credits to qualify for benefits. 

If you become disabled right 

now, Your monthly benefit 

would be about . . . 

Information from page 4 of statement

Disability—If you become disabled before 

full retirement age, you can receive disability 

benefits after six months if you have:

Observations by focus group 

participants

When participants read information 

about their disability benefits, 

some had immediate questions 

about eligibility, but the information 

they said they needed appeared 

elsewhere. 

Source: GAO representation of information from the 2004 Social Security Statement and focus group participants.

$1,169 month

enough credits from earnings (depending 

on you age, you must have earned six to 

20 of your credits in three to 10 years 

before you become disabled); and

a physical or mental impairment that’s 

expected to prevent you from doing 

“substantial” work for a year or more, or 

result in death. 

·

·
Page 19 GAO-05-192 Social Security Statements 

convey, but they preferred the design of the private sector statement.19 Our 

focus group moderator asked participants to compare the Social Security 

Statement with a private sector statement that had been rated as excellent 

by the benefits consulting firm with which we contracted. The focus group 

moderator asked participants to compare the two statements in terms of 

length and presentation of information. Many participants favored the way 

the private sector statement grouped information and used color and 

graphics. Specifically, many liked the private sector statement’s use of a 

colored pie chart illustrating what percentage Social Security and other 

retirement savings will be required to replace current monthly salary. 

(This chart is shown in fig. 6). Although the focus group participants 

preferred the use of color in the private sector statement, they did not 

discuss the likely higher costs associated with producing such statements. 

Some participants may not have preferred the use of color in the statement 

if the cost of producing such statements was significantly higher than 

statements with little or no color. 

Figure 6: Example of Chart in the Private Sector Statement 

One common theme that emerged in the suggestions made by the focus 

groups and the benefits consulting firm was to use graphics to replace 

text, making some information more quickly and easily understandable. 

Specifically, the benefits consulting firm said that people are more likely 

to scan numerical data than to read large amounts of text. Figure 6 above 

shows a pie chart that is central to one of SSA’s goals for the statement—

aiding in financial planning. This chart was something that focus group 

participants said they liked about the private sector statement, and the 

 19The private sector statement that focus group participants reviewed for comparison is 

contained in appendix IV. 

What Specific Changes 

Were Suggested? 
Page 20 GAO-05-192 Social Security Statements 

benefits consulting firm recommended it as a way to provide more context 

on income needs in retirement. 

Some focus group participants also said they would like to see benefit 

estimates for the ages of 63, 64, and 66 in addition to the ages in the 

statement. Figure 7 shows how this information might be depicted. It helps 

quickly communicate that working longer may result in a higher benefit. 

Figure 7: Potential Illustration Showing Monthly Social Security Retirement Benefit 

by Age, from 62 to 70 

Additionally, SSA is currently using graphics in its other publications to 

illustrate many of the concepts explained with text in the statement. For 

example, in its publication “The Future of Social Security,” SSA uses a 

graphic to illustrate the demographic changes contributing to Social 

Security’s financial insolvency (see fig. 8). 
Page 21 GAO-05-192 Social Security Statements 

Figure 8: Graphic Used by SSA to Illustrate Demographic Changes Affecting Social 

Security 

Source: SSA, “The Future of Social Security” January 2004. 

In addition to suggesting replacing some of the statement’s text with 

graphics, the focus group participants and benefits consulting firm made a 

number of other specific recommendations about how to improve the 

statement. On the basis of the participants’ comments, the focus group 

moderator recommended design improvements to help readers more 

quickly find and absorb information; the suggestions included combining 

the information on pages 1 and 4 and moving the personalized information 

on pages 2 and 3 to earlier in the statement because it is the information 

most useful to participants. The benefits consulting firm recommended 

improvements that focus on meeting recipients’ information needs, 

increasing readership, minimizing unnecessary inquiries at SSA, and 

increasing the savings rate among U.S. citizens. For example: 

• Provide contextual information about income needs in retirement. 

For example, give recipients a retirement goal, such as 80 percent of 

current income. Then show how much of that goal Social Security 

provides and how much must come from other income sources. 
Page 22 GAO-05-192 Social Security Statements 

• Align the order of information with recipients’ priorities. For 

example, move the retirement benefit information from page 2 to page 1 

and add an “Important Changes to Your Benefits” section to the beginning 

of the statement that documents any new changes to the recipient’s 

calculation of benefits. 

• Target messages to keep information highly relevant to the 

individual recipient. Specific messages could be based on whether the 

person is receiving the statement for the first time, his or her age, or 

potential changes to benefit calculations. For example, a 25-year-old 

recipient may need information about how to begin saving instead of 

information on how to apply for Medicare. 

SSA has not identified any significant problems with the statement, but its 

evaluation of the statement’s understandability is limited and may not be 

identifying problems that exist. SSA has relied almost exclusively on 

questions in its annual Public Understanding Measurement System 

(PUMS) survey, which assesses how much adults know about Social 

Security programs, guides SSA’s education and communication activities, 

and gauges the awareness and effectiveness of the statement. Although 

these survey results are generally useful, if they are used as the only 

evaluation, they may not provide the depth and detail needed to assess the 

understandability of each individual section of the statement. Past survey 

questions about the statement have been very general, and the number and 

types of questions have changed from year to year. Since the current 

format was adopted in 1999, SSA has not used focus groups or other 

means to obtain detailed participant views to evaluate the complete 

statement. Additionally, while SSA collects a variety of data about its 

services, it does not systematically collect data about the statement’s 

understandability and how well the statement is achieving its goals from 

internal sources, such as its customer call centers, walk-in traffic, and its 

Web site. 

SSA’s Current 

Evaluation of the 

Statement’s 

Understandability Is 

Limited 
Page 23 GAO-05-192 Social Security Statements 

Although the PUMS survey has been SSA’s primary tool for evaluating the 

statement in 6 of the last 7 years, for several reasons it is difficult to 

evaluate the statement’s understandability from the data SSA receives.20

First, the questions about the statement are very general, making it 

difficult to obtain any detailed information. In its 2000 report, SSA’s 

contractor for the PUMS survey recommended that SSA consider a 

separate project that would address all aspects of the statement and track 

customer satisfaction and use. However, while the 2004 survey asks 

respondents if they remember certain parts of the statement, it does not 

ask them if the information was understandable or useful.21 Second, it is 

difficult to identify trends in the survey responses because the number and 

type of questions specifically about the statement have changed each year. 

For example, from 1999 through 2001, the PUMS survey asked 

respondents to rate the overall understandability of the statement, but 

neither the 2003 nor the 2004 survey asked the same question. Similarly, a 

question was added about satisfaction with the statement in the surveys 

for 2000 and 2001, but this question did not appear in the 2003 or 2004 

survey. SSA officials said they eliminated these questions because there 

was a high percentage of positive responses, and because the statement 

had not been markedly altered in recent years, they did not expect the 

percentages would have changed significantly. Third, since the survey is 

not conducted in conjunction with any particular mailing, respondents 

may have received the statement months before being surveyed about its 

contents and may not recall certain portions of the statement or even 

remember receiving it. In 2003, 35 percent of survey respondents said they 

did not receive a statement even though every eligible worker 25 and older 

should have been mailed an annual statement since 1999. With over onethird of survey respondents not receiving or not remembering they 

received a statement, it is difficult to use survey results to fully assess the 

statement. 

 20The PUMS survey was not conducted in 2002. 

21Results of the 2004 survey were not available at this writing. 

SSA Uses Survey to 

Evaluate Statement, but Its 

Survey Does Not 

Effectively Identify 

Problem Areas 
Page 24 GAO-05-192 Social Security Statements 

Since the statement was first mailed to workers in 1999, SSA has not 

conducted focus groups on the entire statement or its preferred format.22

The current four-page statement was originally developed with the aid of 

focus groups and a national public opinion survey. The focus groups and 

survey respondents were asked to review a (1) one-page prototype, (2) a 

one-page prototype with a pamphlet, (3) a four-page prototype, and (4) a 

self-mailer prototype.23 SSA’s survey report indicates that all four 

prototypes were an overwhelming improvement over the six-page PEBES. 

However, no clear preference for a particular format emerged. The fourpage format was ultimately selected, as it had a higher clarity rating for 

explanations of technical issues and the percentage of respondents with 

questions was somewhat lower than for any other prototype. In addition, 

respondents tended to indicate a preference for the four-page length. Since 

the selection of the four-page format, SSA has not had any focus groups 

reevaluate the entire statement. Additionally, SSA officials said they do not 

have plans to use focus groups unless they are going to make major 

changes to the statement. 

SSA is not systematically examining data from internal sources, such as its 

customer call centers, walk-in traffic, or its Web site, about the statement’s 

understandability or how well the statement is meeting its goals. SSA 

officials said that informal feedback comes from its 800 number, the 

employee suggestion program, and links on its Web site. However, SSA 

does not track specific data about the statement from these sources. For 

example, although correction of inaccurate earnings is one of SSA’s 

primary goals for the statement, the agency does not have any way of 

knowing or reliably estimating how many of the reported 360,000 earnings 

records that were corrected in 2003 were corrected as the result of 

receiving a statement. Additionally, SSA’s 2003 service quality report 

indicated that the third most common reason people called the 800 

number was because of the statement, but no data are available about the 

specific reasons for the calls. Currently, SSA’s 800 number telephone 

menu includes a selection option for people who are calling because they 

recently received their statement. However, if callers choose the selection 

 22SSA has conducted focus groups on other specialized topics relating to the statement, 

such as creating an Internet PEBES (1998), revising the insert to the statement (2000), 

creating age-specific messages for the statement (2001), and revising PUMS questions 

(2004). 

23A self-mailer is a mailing that is self-contained and does not require a separate envelope. 

SSA’s Use of Focus Groups 

for the Statement Has 

Been Limited 

SSA Is Not Examining 

Data from Internal Sources 
Page 25 GAO-05-192 Social Security Statements 

option for questions about their statement and then mention that they 

found a mistake on their earnings history, SSA codes the call in the 

earnings category without any documentation that it was originally 

prompted by receipt of a statement. Similarly, while the SSA Web site 

gives users the option of selecting the statement as the subject of an 

inquiry, SSA does not formally review questions from the Web site about 

the statement for trends. 

Other countries we studied, as well as the private sector benefits 

consultants we spoke with in this country, use several promising practices 

that may be helpful to SSA to ensure that the statement is useful. All of 

them regularly and systematically collect feedback from statement 

recipients regarding the usefulness and understandability of their 

statements. Many of them also utilize customized messages that differ 

depending on the age of the recipient. Finally, many of the benefits 

consultants recommended significantly modifying the statement every few 

years so that recipients would be less likely to assume that it is exactly the 

same statement that they received the prior year. 

Officials of the entities we studied use various systematic methods of 

collecting recipient feedback to assess the understandability and 

effectiveness of their benefit statements. For example, officials from 

Sweden told us they use hot surveys, which are surveys that are sent out 

within a month of when the statement is mailed, and ask questions 

regarding the statement’s understandability and usefulness. They said the 

results of these surveys have resulted in slight changes to their statements 

each year and that before changes are made, they are tested in a focus 

group. Swedish officials told us that this combination of surveys and focus 

groups helps to improve understandability. Sweden also uses design 

consultants from the private sector to make sure that its statements 

conform to industry best practices. 

The benefits consulting firms that we spoke with also attempt to assess 

the understandability of their statements through participant feedback. 

For example, one consulting firm includes a detachable postage-paid 

survey card that asks a few questions regarding the participant’s 

perception of the statement, including whether the participant found it to 

be understandable. Although even good response rates for this type of 

feedback mechanism are often no higher than 7 to 12 percent, the 

feedback received served as an indicator as to whether or not the 

statements were effective in meeting their objectives and provided insight 

Other Countries 

Studied and Private 

Sector Benefits 

Consultants Use 

Several Promising 

Practices That May Be 

Helpful to SSA 

Other Countries We 

Studied and Private Sector 

Benefits Consultants 

Regularly and 

Systematically Gather 

Feedback Regarding Their 

Statements 
Page 26 GAO-05-192 Social Security Statements 

into what changes could be made to improve their understandability and 

usefulness. 

Officials from benefits consulting firms told us that they increase the 

usefulness of their statements by using white space, graphics, and colors, 

as well as by ensuring that their statements are not too text-intensive. The 

consultants told us their focus group participants found that the use of 

white space and graphics made the statement easy to read. Officials from 

Canada also told us about the importance of using white space as a way to 

make the statement more effective, and they told us that one way they 

maintain an ample amount of white space is by placing only the most 

important information, such as earnings history and benefit estimates, on 

the statement itself. Other, more supplemental information, such as 

detailed information on the importance of saving for retirement, is 

presented on inserts that are included with the statement. In addition to 

including inserts, they also limit the amount of text on their statements by 

providing the Web address and phone numbers that the recipient can use 

to obtain additional information instead of trying to put this supplemental 

information on the statement. Figure 9 shows an example of the type of 

supplemental information that Canada includes in an insert to its 

statement. 

Figure 9: Example of Supplemental Information Included by Canada in an Insert 

Benefit consultants also recommended keeping the statement simple and 

providing supplemental information through other means. For example, 

one benefits consultant limits the information on the statement itself only 

to personal information, such as projected benefit amounts and vesting 

status, and provides supplemental information through a Web site, which 

is prominently advertised on each page of the statement. The benefits 

consultants told us that their surveys and focus groups have indicated that 

participants prefer a simple statement over a statement that is textintensive, as long as there are easily accessible resources available for 

Other Countries We 

Studied and Private Sector 

Benefits Consultants Use 

Design Enhancements, 

Customized Messages, and 

Innovative Delivery 

Options 

Taxes and your pension

Your CPP retirement pension is taxable. We will not deduct income tax from your 

monthly payment unless you request it. Once we have approved your pension, we will 

send you a letter stating the amount of your pension. It will give you information on 

how to request tax deductions.

Source: Canada Pension Plan (Social Development Canada).
Page 27 GAO-05-192 Social Security Statements 

further information. For SSA, using these design elements would probably 

mean (1) less text and (2) greater reliance than at present on directing 

recipients to the SSA Web site for additional information. However, SSA 

recognizes that not all workers have regular and consistent access to the 

Internet. 

In addition to keeping the statement as simple as possible, most of the 

benefits consulting firms that we spoke with echoed some of the 

recommendations that our focus groups and contracted benefits 

consulting firm made. For example, many of them said placing all of the 

personal information, such as benefit projections and earnings history, at 

the front of the statement is preferable to spreading it throughout the 

statement. They said recipients are more likely to become interested in the 

statement if the most personalized information is shown on the first page. 

Consultants at one firm acknowledged that some recipients would simply 

read the first page and disregard the rest, but they said they have found 

that more people are likely to keep reading the information beyond the 

first page once the personal information has gotten their interest. 

According to the benefits consultants we spoke with, SSA could increase 

the effectiveness of the statement by putting some, if not all, of the 

personalized information toward the front of the statement and providing 

additional resources for more information. 

Benefits consultants in this country and agencies in other countries also 

use customized messages that tailor their statements for each recipient. 

For example, the United Kingdom provides different messages to workers 

based on their age. Younger workers receive messages emphasizing the 

importance of starting to save for their retirement early in their careers. In 

contrast, workers closer to retirement receive messages regarding how to 

maintain their current lifestyle, including increasing personal savings and 

working longer. Officials in the United Kingdom told us that using these 

customized messages increases the likelihood that the recipients will read 

and understand the information contained on the statement since it is 

more applicable to them. Providing information that is customized for 

each recipient would represent a change for SSA, which currently provides 

all recipients with information, such as the windfall elimination provision, 

that is applicable to only a small number of individuals. The benefits 

consultants that we spoke with told us that including information on a 

statement that is not applicable to certain recipients could confuse the 

recipients and cause them not to finish reading the statement or to wonder 

if something is applicable to them when it is not. The benefits consultants 

also told us that statement recipients are more likely to take action, such 
Page 28 GAO-05-192 Social Security Statements 

as saving more for retirement, if they can easily understand the statement 

they receive. 

Finally, these other producers of retirement benefit statements use various 

innovative delivery methods. One involves customizing the length of time 

between statements. For example, Canadian officials said that they 

formerly provided their statements every year to all recipients but now 

distribute their statements less often through what they call “smart 

mailing” and have made their statement available for viewing at any time 

over the Internet. Canada provides a statement only to individuals who 

meet certain criteria, such as joining the workforce or turning a certain 

age. For example, individuals who have just joined the workforce and have 

made contributions to the public pension system receive a statement 

welcoming them to the public pension system, providing them with limited 

information about the system, and informing them about where to go for 

further information. After this initial statement, workers would not receive 

another one for 3 to 4 years, at which point they would receive a more 

detailed statement that does provide a benefit estimate. Canadian officials 

told us that their approach saved money, since postage is the majority of 

each statement’s cost, and also was more effective in that when a 

statement did arrive, recipients were more likely to read it. 

Another idea for consideration came from several benefits consultants 

that we spoke with, who said that when a statement is distributed 

annually, periodically changing the statement’s appearance could help 

make it more effective. One benefit consultant said annual distribution 

was good in that people think about retirement savings so infrequently 

that at least they would think about it once a year when the statement 

arrived. However, another consultant told us that if the statement is 

provided every year, its appearance should change so that recipients do 

not assume that it is the same old statement and disregard it. Another 

consultant suggested changing the appearance once every 3 years to keep 

the statement looking current, and another consultant said that if the 

statement is to be provided every year, SSA should include a “what’s new” 

section on the first page that highlights any changes or additions to the 

current year’s statement. The use of these practices would represent a 

change for SSA, which has been sending relatively the same statement to 

all eligible workers for the past 6 years. Subtle changes have been made, 

such as the addition of another year of earnings history and slight changes 

to the Commissioner’s message. However, the statement has looked 

virtually the same from the front since 1999. According to the consultants, 

recipients could get in the habit of expecting nothing new or fresh on the 

statement and choose to disregard it. 
Page 29 GAO-05-192 Social Security Statements 

Our work suggests that in using the annual survey as its only evaluation 

method, SSA is limiting its ability to make well-informed and effective 

improvements to the statement. Surveys do have value; our survey, for 

example, did identify the general areas of the statement that were either 

not recalled or were less understandable than other areas. It was people in 

our focus groups, however, who provided a much more detailed 

assessment of what specific information was confusing and how the 

statement might be improved. Likewise, the assessment by an outside 

specialist helped provide information about how the statement is 

succeeding relative to statements from financial services institutions. 

While SSA faces many challenges that private sector benefit firms do not 

face in communicating about their programs, there are some practices in 

both the private sector and other countries that, if adopted by SSA, could 

improve the current statement. SSA has made improvements to the 

statement in the past but has not comprehensively reevaluated it in 

approximately 6 years, and key content areas remain confusing or are not 

presented effectively. If key content areas of the statement confuse 

workers, workers might not fully understand their benefits and the role 

Social Security should play in their retirement planning. For instance, they 

might rely too heavily on their Social Security retirement income and not 

have enough personal savings to maintain their standard of living 

throughout their retirement. Additionally, because the statement does not 

utilize certain design features, such as placing personalized information on 

the first page or presenting information graphically, some recipients may 

not read the statement. 

With the current debate on the long-term fiscal challenges facing Social 

Security and the need to address them, the statement will likely become an 

increasingly important tool for communicating how enacted changes to 

the program will affect benefits. Regularly evaluating the statement 

through multiple methods and making revisions to it will involve several 

SSA offices. Therefore, our work suggests that developing and 

implementing a plan for evaluating the statement and revising it based on 

that plan will require attention from SSA’s senior leadership. 

SSA should develop a plan for regularly evaluating the statement through 

the collection of data from multiple sources, including information from 

surveys, focus groups, call centers, walk-in traffic, and its Web site. On the 

basis of the data it receives and a review of promising practices in the 

private sector and other countries, SSA should consider revising the 

statement. These revisions could include, for example: 

Conclusion 

Recommendations for 

Executive Action 
Page 30 GAO-05-192 Social Security Statements 

• showing the personalized benefit information first, 

• using graphics to aid readers in quickly comprehending information, and 

• providing information to help recipients understand Social Security’s 

contribution to their total retirement income. 

In commenting on a draft of this report, SSA agreed with our conclusions 

and recommendations. By the end of fiscal year 2005, SSA anticipates 

having a draft plan for regularly evaluating the statement. In addition SSA 

will revise the statement when appropriate and necessary, and as a first 

step, will utilize information from this report. We also received technical 

comments from the agency that were incorporated as appropriate. 

Appendix VI shows the agency’s comments. 

We are sending copies of this report to the Commissioner of the Social 

Security Administration, appropriate congressional committees, and other 

interested parties. We will also make copies available to others on request. 

In addition, the report will be available at no charge on GAO’s Web site at 

http://www.gao.gov. 

If you have any questions concerning this report please contact me at 

(202) 512-7215 or George Scott at (202) 512-5932. Other contacts and 

acknowledgments are listed in appendix VII. 

Sincerely yours, 

Barbara D. Bovbjerg 

Director, Education, Workforce, 

 and Income Security Issues 

Agency Comments 
Appendix I: Court Rulings on Rights to Social 

Security Benefits 

Page 31 GAO-05-192 Social Security Statements 

Many people believe that after they have worked a lifetime and paid Social 

Security taxes, they have earned a legal right to Social Security benefits 

and that these benefits cannot be reduced or completely taken away from 

them. They believe that they have a contractual or property right to these 

benefits by virtue of their contributions to the system through the years. 

However, as the cases discussed below show, the courts that have 

examined this issue have ruled that people do not have a legal right to 

these benefits and that Congress may change the rules regarding eligibility. 

The courts have ruled that Congress has broad power to reduce, and even 

terminate, an individual’s right to benefits. 

After the passage of the Social Security Act in 1935, Congress has 

occasionally amended the law to deny or reduce benefits to people who 

had previously qualified for benefits. People adversely affected by these 

laws brought cases in federal court challenging the constitutionality of 

these laws. In deciding these cases, the federal courts have established a 

framework for analyzing the constitutionality of the laws and have 

discussed the extent to which individuals have legal rights to Social 

Security benefits. 

The first time the Supreme Court addressed this issue was in 1960 in the 

case of Flemming v. Nestor, 363 U.S. 603. Nestor, an alien, immigrated to 

the United States in 1913 and after working for a number of years became 

eligible for old age benefits, which he began receiving in 1955. In 1956, he 

was deported for being a member of the Communist Party from 1933 to 

1939. Membership in the Communist Party became grounds for 

deportation in 1940. The Social Security Act was amended in 1954 and 

provided for the termination of old age benefits to an alien who is 

deported after September 1, 1954.1

Nestor challenged the law on two separate constitutional grounds. First, 

he argued that he had an accrued property right to his Social Security 

benefits and that the law violated the due process clause of the Fifth 

Amendment. Second, he argued the termination of the benefits amounts to 

an ex post facto law or a punishment without a judicial trial in violation of 

Article I and Article III and the Sixth Amendment to the Constitution. 

 1

42 U.S.C. § 402(n). 

Appendix I: Court Rulings on Rights to Social 

Security Benefits 

The Precedent-Setting 

Decision 
Appendix I: Court Rulings on Rights to Social 

Security Benefits 

Page 32 GAO-05-192 Social Security Statements 

The Fifth Amendment states that no person shall be deprived of life, 

liberty, or property without due process of law, nor shall private property 

be taken for public use without just compensation. In this case, the 

Supreme Court held that Nestor had not been deprived of an “accrued 

property right” under the due process clause of the Fifth Amendment. The 

Court noted that entitlement to Social Security benefits is based on a 

worker’s earnings record and not on taxes paid. The Court stated that a 

worker’s non-contractual interest in benefits cannot be analogized to the 

interest of the holder of an annuity, where the right to benefits is based on 

contractual payments made. The Court also stated that to give individuals 

an accrued property right would deprive the Social Security Act of its 

flexibility to adjust to ever changing conditions. The Court relied heavily 

on section 1104 of the original Social Security legislation, still in effect 

today, in which Congress expressly reserves the “right to alter, amend, or 

repeal any provision.” See 42 U.S.C. § 1304. 

The Court went on to state that this does not mean that Congress may 

modify the Social Security Act free of all constitutional restraint. The due 

process clause bars the withholding of non-contractual benefits if the 

statute manifests a patently arbitrary classification, utterly lacking in 

rational justification. The Court analyzed the statute that terminated old 

age benefits to deported aliens under this standard and concluded that it 

was rational for Congress to conclude that the public purse should not be 

utilized to contribute to the support of those deported. The Court 

therefore upheld the constitutionality of the statute under the due process 

clause. 

The second issue raised was whether the termination of the benefits 

amounted to an ex post facto law or a punishment without a judicial trial 

in violation of Article I and Article III and the Sixth Amendment to the 

Constitution. An ex post facto law punishes an individual for past conduct 

that was not illegal when the conduct was engaged in. In this case, since 

membership in the Communist Party was not grounds for deportation 

when Nestor was a member, he argued that he could not be punished for 

his membership. The Court held that it did not consider the termination of 

Social Security benefits under these circumstances to have been intended 

as punishment and set the standard that there must be unmistakable 

evidence of punitive purpose before a congressional enactment of this 

kind is struck down. 

It should be noted that the case was decided by a five-four margin. Three 

of the dissenters decided that the statute was unconstitutional because it 

violated the due process clause of the Fifth Amendment by taking away 
Appendix I: Court Rulings on Rights to Social 

Security Benefits 

Page 33 GAO-05-192 Social Security Statements 

earned insurance without just compensation. They stated that Social 

Security benefits are an earned right, and people earning this benefit 

should be able to rely on getting the benefits they paid for and have been 

promised. Four justices concluded that the 1954 amendment was 

unconstitutional because it imposes a punishment in violation of the 

prohibition against ex post facto laws and without a judicial trial. Despite 

this vigorous dissent, the majority decision is still the law today and serves 

as precedent for challenges to changes in the Social Security Act.2

In the 1970s the Supreme Court decided two challenges to provisions in 

the Social Security Act under the due process clause. In Richardson v. 

Belcher, 404 U.S. 78 (1971), Belcher challenged a section of the Social 

Security Act, which requires a reduction, or offset, in Social Security 

disability benefits if the individual is also receiving state worker 

compensation benefits.3

 He claimed that he was denied due process of law 

under the Fifth Amendment because his benefits would not have been 

reduced if he had received private insurance instead of worker 

compensation. Citing the framework established under Nestor, the Court 

held that there was a rational basis for the reduction based on receiving 

worker compensation benefits, and it did not violate the due process 

clause. The Court specifically stated that an expectation of public benefits 

does not confer a contractual right to receive the expected amounts. 

In the second case, Weinberger v. Salfi, 422 U.S. 749 (1975), Mrs. Salfi’s 

husband of less than 6 months died and she filed for widow’s and child’s 

benefits. She was denied benefits on the basis of the duration of marriage 

requirements of the act that define widow and child so as to exclude 

surviving widows and stepchildren who had relationships to the deceased 

wage earner for less than 9 months.4

 Mrs. Salfi argued that since the 

duration of relationship provision was intended to prevent the use of sham 

 2

The Court’s decision was predicated, in large measure, on an examination of the purposes 

underlying the Social Security Act as well as an examination of the way the program was 

structured to achieve these purposes. Thus, a fundamental change to the purpose and the 

structure of the program, such as the creation of individual accounts, could lead the courts 

to revisit the issue of whether individuals have accrued property rights or contractual 

rights. 

3

42 U.S.C. § 424a. 

4

42 U.S.C. § 416(c). 

Other Challenges 

under the Due 

Process Clause 
Appendix I: Court Rulings on Rights to Social 

Security Benefits 

Page 34 GAO-05-192 Social Security Statements 

marriages to secure Social Security benefits, she should be entitled to 

present proof that her marriage was not a sham. 

Using the analysis set forth in Nestor and Belcher, the Court held that 

under the due process clause, as long as the statutory goals are legitimate 

and the classification is rationally related to the achievement of these 

goals, then the action of Congress is not so arbitrary as to violate the due 

process clause. Since the duration-of-relationship requirement operates to 

lessen the likelihood of sham marriages, it is related to insuring the 

integrity of the Social Security system and has a rational basis. The Court 

held that the fact that the duration of relationship provision may exclude 

legitimate claimants did not make it unconstitutional. 

The Supreme Court did overturn several provisions of the Social Security 

Act in the 1970s on the basis of gender-based discrimination. In 

Weinberger v. Wiesenfeld, 420 U.S. 636 (1975), Ms. Wiesenfeld, the 

principal support of her family, died in childbirth survived by her baby and 

husband. Her husband applied for survivor’s benefits for himself and the 

baby. Benefits were granted to the baby but denied the father on the 

grounds that the Social Security Act allowed for “mother benefit’s” only to 

women.5

 The Court found that this provision deprived women of 

protection of their families that men receive as a result of their 

employment. The Court rejected the argument that since Social Security 

benefits are non-contractual, Congress is not required to provide a covered 

female employee with the same benefits as it provides to a man. The Court 

held that the due process clause forbids gender-based differentiation that 

results in the efforts of female workers covered by Social Security to 

receive less protection for their families than men. 

In Califano v. Goldfarb, 430 U.S. 199 (1977), Goldfarb applied for Social 

Security survivor benefits after the death of his wife, but benefits were 

denied on the grounds that he had not been receiving at least one-half 

support from his wife when she died. At that time, survivor benefits based 

on the earnings of a deceased husband covered by the Social Security Act 

were payable to his widow, but survivor benefits based on the earnings of 

 5

42 U.S.C. § 402(g). 

Gender-Based 

Discrimination 

Decisions 
Appendix I: Court Rulings on Rights to Social 

Security Benefits 

Page 35 GAO-05-192 Social Security Statements 

a deceased wife were payable to the widower only if he was receiving at 

least one-half of his support from his deceased wife.6

The Court held that this gender-based distinction violated the due process 

clause of the Fifth Amendment, following the rationale of the Wiesenfeld

case. The Court stated that if a classification by gender is to survive 

constitutional challenge, it must serve important governmental objectives 

and must be substantially related to the achievement of these objectives. 

This test is harder to meet than the rational basis test, and in this case, the 

Court held that this gender-based distinction was not justified but was 

based on an unverified assumption that wives are usually dependent. 

The Supreme Court did uphold a gender-based classification in Califano v. 

Webster, 430 U.S. 313 (1977). The Court upheld a provision of the act that 

allowed women to eliminate more low-earning years than men from the 

calculation of their retirement benefit.7

 The court found that redressing the 

disparity in economic condition between men and women caused by 

discrimination is an important governmental objective. The Court held 

that this provision worked directly to remedy some part of the effect of 

this past discrimination and was therefore constitutional. 

Changes made to the Social Security Act in the early 1980s as a result of 

Social Security reform led to several important challenges and subsequent 

decisions upholding the changes. An important case that involved 

litigation between the federal government and the states was Bowen v. 

Public Agencies Opposed to Social Security Entrapment, 477 U.S. 41 

(1986). Enacted in 1950, Section 418 of Title 42, United States Code, 

authorizes voluntary participation by states in the Social Security system. 

Until 1983, this section allowed states entering into a Section 418 

agreement to provide Social Security coverage to state employees to 

terminate these agreements after giving at least 2 years notice. In 1983, 

Congress repealed the termination provision, even expressly preventing 

termination by a state that had already provided notice, because of 

concerns that an increase in terminations had threatened the integrity of 

the system.8

 The state of California challenged the law, arguing it had a 

 6

42 U.S.C. § 402(f)(1). 

7

42 U.S.C. § 415(b)(3). Prior to the Court’s decision, Congress had amended the law and 

eliminated the gender-based distinction. Pub. L. No. 92-603 § 104(b). 

8

Pub. L. No. 98-21. 

Changes to Benefits 

as a Result of Social 

Security Reform 
Appendix I: Court Rulings on Rights to Social 

Security Benefits 

Page 36 GAO-05-192 Social Security Statements 

contractual right to terminate its Section 418 agreement and that Congress 

had violated the due process clause of the Fifth Amendment by denying 

the state its contractual right without just compensation. 

The Supreme Court rejected California’s argument that the contract had 

established a property right within the meaning of the Fifth Amendment. 

The Court again relied heavily on Section 1104 of the Social Security Act, 

which reserves to Congress the right to alter, amend or repeal any 

provision. The Court stated that this provision was necessary to protect 

future generations of workers by giving Congress the flexibility to meet 

ever-changing conditions. The Court concluded that even though the 

federal government had entered into a contract with the state, Congress 

had reserved the power to amend the contract through legislation. 

Another statutory change made in 1983 was a provision denying Social 

Security benefits to incarcerated felons.9

 Incarcerated felons challenged 

that provision, but decisions of various Appellate Courts in separate cases 

all upheld this provision. 10 The courts rejected due process and ex post 

facto law claims. As to the ex post facto law claim, the courts held that the 

suspension of the benefits was not considered a punishment under the 

strict standard set forth in Nestor. The D.C. Court of Appeals stated that 

Congress came as close to the line of unconstitutionality as possible but 

accepted the government’s contention that the statute was primarily a 

cost-saving measure that eliminates retirement benefits to individuals 

whose basic needs are already provided at public expense. 

One specific change to the Social Security Act pertaining to federal judges 

resulted in a court challenge in Robinson v. Sullivan, 905 F.2d 1199 (8th 

Cir. 1990). Prior to 1984, federal judges were not covered by the Social 

Security Act. Congress amended the law to extend Social Security 

coverage to the judiciary, including senior judges performing judicial 

services but not those senior judges who no longer performed duties.11

Senior judges performing duties and senior judges not performing duties 

both receive their full salary. Under the legislation as enacted in 1984, 

however, senior judges performing duties would have their pay reduced by 

 9

42 U.S.C. § 402(x). 

10See for example, Jones v. Heckler, 774 F.2d 997 (10th Cir. 1985), Peeler v. Heckler, 781 

F.2d 649 (8th Cir. 1986), and Wiley v. Bowen, 824 F.2d 1120 (D.C. Cir. 1987). 

11Pub. L. No. 98-21. 
Appendix I: Court Rulings on Rights to Social 

Security Benefits 

Page 37 GAO-05-192 Social Security Statements 

FICA contributions, but senior judges no longer performing duties would 

not. Congress, realizing the inequity in that distinction, delayed effective 

date of that provision of law so that it could enact corrective legislation to 

exempt senior judges performing judicial duties from Social Security 

coverage. However, Congress did not act before the provision went into 

effect on January 1, 1986. Legislation was not signed into law until April 8, 

1986, which made the exemption for senior judges performing duties 

permanent and retroactive to 1983. 

Judge Robinson was a senior judge who was still performing duties and 

had worked in covered employment prior to becoming a judge. He needed 

one more quarter to qualify for Social Security benefits, and he claimed, 

after working the first quarter of 1986, that quarter. He was determined 

ineligible for Social Security benefits and challenged that determination, 

arguing that the retroactive application of the legislation passed on April 8, 

1986, violated his due process rights. 

The court held that it must give retroactively applied legislation the same 

deference as legislation applied prospectively. Legislation readjusting 

rights and burdens is not unlawful solely because it upsets otherwise 

settled expectations. The court held that the due process clause does not 

prevent Congress from repealing the right to receive Social Security 

benefits at any time, however settled the beneficiary’s expectations might 

be, for any reason that is not arbitrary or utterly lacking in rational 

justification.12

In summary, courts have ruled that the right to Social Security benefits is 

neither contractual nor a vested property right but is based entirely on 

statutory provisions that Congress reserves to itself to alter, amend, or 

repeal. A strong presumption of constitutionality attaches to decisions 

made by Congress in allocating scarce Social Security resources, and 

courts generally have upheld congressional amendments to the Social 

Security Act in pursuit of that goal, even where doing so has resulted in 

some portion of the population being excluded from receiving benefits. 

 12In the early 1990s, the courts rejected challenges to the reduction of benefits under the 

Social Security windfall elimination provision, Das v. Department of HHS, 17 F.3d 1250 

(9th Cir. 1994) and the excess earnings provision, Brown v. Bowen, 905 F.2d 632 (2nd Cir. 

1990). 

Summary 
Appendix II: Scope and Methodology 

Page 38 GAO-05-192 Social Security Statements 

To determine the legal requirements for the statement, we reviewed the 

applicable laws. We determined additional agency goals for the statement 

by interviewing Social Security Administration (SSA) officials. We also 

analyzed caselaw on legal rights to benefits under the Social Security 

program. 

To determine the strengths and weaknesses of the current statement, we 

conducted focus groups to gather qualitative information on recipients’ 

attitudes, beliefs, and perceptions. We contracted with a marketing and 

advertising research firm, OneWorld Communications, to coordinate and 

moderate six focus groups. The focus groups were conducted in Seattle, 

Chicago, and Atlanta to ensure geographic diversity. In each city we 

conducted two focus groups—one for participants with some college 

education and below and one for participants with a college degree or 

higher. Each focus group had between 8 and 10 participants. Participants 

were required to be 25 or older, currently not receiving Social Security 

benefits, and not employed by the Social Security Administration or in the 

private pension or financial services fields. To encourage focus group 

participants to speak freely, we wanted to avoid having participants from 

widely divergent income levels within the same group. However, given the 

sensitivity of directly asking participants to disclose their income, we 

instead divided the focus groups based on education because of 

education’s close correlation with income. To the extent possible, we also 

balanced the groups for ethnicity, gender, and age. Following a GAOdeveloped discussion guide, the moderator asked focus group participants 

to carefully read and then comment on each page of the statement (see 

app. III). Additionally, participants were asked to review a private sector 

statement from the Principal Financial Group (see app. IV). We chose the 

Principal statement as the private sector comparison because it is a 

defined benefit statement that represents a retirement program similar to 

Social Security. The Principal statement was also rated excellent by a 

consulting firm that compares and scores benefit statements based on 

standardized criteria. Only one private sector statement was chosen for 

comparison, given the time constraints of the focus groups. Focus group 

participants were asked to compare the Social Security Statement and the 

Principal statement on length, content, and presentation of information. 

We also contracted for a national random telephone survey on the 

understandability and usefulness of the statement in conjunction with 

another GAO study on financial literacy. We developed our questions by 

reviewing the statement and reviewing reports from SSA’s previous 

surveys and focus groups, as well as by consulting with benefit consultants 

and experts at GAO. We pretested successive drafts of the questionnaire 

Appendix II: Scope and Methodology 
Appendix II: Scope and Methodology 

Page 39 GAO-05-192 Social Security Statements 

with members of various demographic groups and translated the survey 

into Spanish. Overall, a total of 17 pretests were conducted, including 5 in 

Spanish. Additionally, a pilot test of over 20 random calls resulted in final 

modifications to the survey. Analytica Research, in affiliation with Dove 

Consulting Group, obtained and dialed 9,784 randomly generated phone 

numbers between July and October 2004. The survey oversampled for 

African American and Hispanic respondents, and non-minorities with 

family incomes under $25,000. We received a total of 1,578 usable 

responses. The contractor took various steps to increase the response 

rate, including scheduling calls throughout the week, offering cash 

incentives, and the mailing of postcards to non-responding numbers. The 

survey’s response rate was 48 percent with a 59 percent cooperation rate.1

The difference between the response rate and the cooperation rate 

suggests that the difficulty in contacting anyone on the generated phone 

numbers was a significant factor in the low response rate, because 

interviewers were able to convince nearly 60 percent of those they 

contacted to complete the survey. 

Results from sample surveys are subject to error introduced by 

interviewing only a sample of the entire U.S. population, and the practical 

difficulties of conducting any survey may introduce other errors into 

estimates made from surveys. Because we followed a probability 

procedure based on random selections, our sample is only one of a large 

number of samples that we might have drawn, and thus our results are 

subject to sampling error. Since each sample could have provided different 

estimates, we express our confidence in the precision of our particular 

sample’s results as a 95 percent confidence interval around each 

estimate—for example, plus or minus 10 percentage points. That is, we are 

95 percent confident that each of the confidence intervals for estimates in 

this report will include the true value that we would have obtained had the 

entire population been surveyed. All percentage estimates from this survey 

have confidence intervals of plus or minus 5 percentage points or less, 

unless otherwise noted. 

 1

We calculated the response rate as the total number of usable surveys divided by the total 

eligible sample called. This is in accordance with the American Association for Public 

Opinion Research response rate 3. See www.aapor.org for the formula used. The 

cooperation rate measures the success at completing interviews with contacted people 

who are determined to be eligible. It is defined as the number of complete interviews 

divided by the total number of complete and partial interviews, refusals, and callbacks that 

were arranged but not completed. 
Appendix II: Scope and Methodology 

Page 40 GAO-05-192 Social Security Statements 

In addition to the reported sampling errors, the practical difficulties of 

conducting any survey may introduce other types of errors, commonly 

referred to as nonsampling errors. For example, differences in how a 

particular question is interpreted, the sources of information available to 

respondents, or the types of people who do not respond can introduce 

unwanted variability into the survey results. We included steps in both the 

data collection and data analysis stages for the purpose of minimizing such 

nonsampling errors. Some of these steps included pretesting 

questionnaires with members of the population, reviewing answers for 

inconsistencies, and checking computer analyses with a second analyst. 

In assessing whether certain sections of the statement were more easily 

understood than others, we used a statistical test based on the Bonferroni 

inequality that accounted for all comparisons that could be made across 

sections. The use of this multiple comparison test assures us that the 

confidence level for any statistically significant difference between 

sections is more than 95 percent. 

Additionally, we contracted with Dalbar, a consulting firm that evaluates 

written communications from financial service firms to their customers 

and the same company that rated the Principal statement as excellent, to 

review the statement. Dalbar evaluated the statement against its 

standardized rating criteria, which are based on customer needs and 

preferences. Dalbar’s report documented the scores achieved by the 

statement, maximum obtainable scores, explanations for lost points and 

recommendations for improvements, as well as how the statement 

compares with industry averages and benchmarks. 

We determined how SSA is evaluating the statement through interviews 

and review of documents. We interviewed SSA officials about their current 

evaluation processes, including the use of surveys, focus groups, and 

information from internal sources such as their call centers, field offices, 

and Web site. We also reviewed past survey and focus group reports 

including the Public Understanding Measurement System (PUMS) survey 

questionnaires from 1998 to 2004, the contractor’s survey summary reports 

for 1998 to 2003, as well as the survey and focus group reports about 

(1) the initial Personal Earnings and Benefit Estimate Statements 

(PEBES), (2) the four prototypes of the new statement, (3) an Internet 

statement, (4) a revised insert, and (5) the inclusion of age-specific 

messages. We also reviewed a 2002 SSA Inspector General report on the 

reliability of the data used to measure public knowledge of SSA. 
Appendix II: Scope and Methodology 

Page 41 GAO-05-192 Social Security Statements 

To describe how private sector benefits consultants develop and assess 

the understandability of their benefit statements, we visited several 

benefits consultants, conducted interviews, and observed examples of 

their statements. We spoke to these benefits consultants about industry 

best practices for preparing an effective and understandable statement 

and in some cases asked the consultants to assess the strengths and 

weaknesses of the current Social Security Statement. In some cases, we 

obtained sample statements from these benefits consultants, which are 

included in appendix IV. 

To describe how other industrialized countries develop and assess the 

understandability and effectiveness of their public pension system 

statements, we interviewed officials from the respective countries and 

observed examples of their statements. We also gathered information from 

officials in the countries we spoke with regarding their experiences with 

statement distribution, which included discussions on frequency of 

delivery and in some cases the intended recipients of their statements. In 

some cases, we obtained sample statements from these countries, one of 

which is included in appendix V. 

To select the benefits consultants that we interviewed, we first selected 

the top three statement preparers as ranked by Dalbar. We used Dalbar’s 

2003 ranking for defined benefit plan statements, which ranked CIGNA, 

Principal, and MassMutual as the top three preparers of defined benefit 

pension plan statements. We also selected three other benefit consulting 

firms that have practices dedicated to benefit statement design. Finally, we 

discussed industry best practices in statement preparation with officials 

from a nonprofit retirement organization and academia. 

To select the industrialized countries whose officials we interviewed, we 

performed literature searches using the Internet, past GAO reports, and 

public pension-related journals and articles to determine which countries 

provide their citizens with a public pension statement. We determined 

through our search that Canada, Sweden, and the United Kingdom all 

provided statements to their citizens and all of them had been doing so for 

several years, increasing the possibility that they may have developed 

some best practices. We performed our interviews and other 

correspondence with officials in these countries via telephone 

conferences and e-mail. 
Appendix III: 2004 Social Security Statement 

Page 42 GAO-05-192 Social Security Statements 

Note: The highlighting on pages 2 through 4 shows the information legally required to be included in 

the statement. Also, the original statement is a two-color document. 

Appendix III: 2004 Social Security Statement 
Appendix III: 2004 Social Security Statement 

Page 43 GAO-05-192 Social Security Statements 
Appendix III: 2004 Social Security Statement 

Page 44 GAO-05-192 Social Security Statements 

Source: Social Security Administration.
Appendix III: 2004 Social Security Statement 

Page 45 GAO-05-192 Social Security Statements 

Source: Social Security Administration.
Appendix IV: Examples of Private Sector 

Retirement Statements 

Page 46 GAO-05-192 Social Security Statements 

Note: This statement was used in our focus groups and is a multicolor document. 

Appendix IV: Examples of Private Sector 

Retirement Statements 
Appendix IV: Examples of Private Sector 

Retirement Statements 

Page 47 GAO-05-192 Social Security Statements 

Source: Principal Financial Group.
Appendix IV: Examples of Private Sector 

Retirement Statements 

Page 48 GAO-05-192 Social Security Statements 

Note: The original statement is a multicolor document. 
Appendix IV: Examples of Private Sector 

Retirement Statements 

Page 49 GAO-05-192 Social Security Statements 

Source: Prudential Financial.
Appendix IV: Examples of Private Sector 

Retirement Statements 

Page 50 GAO-05-192 Social Security Statements 
Appendix IV: Examples of Private Sector 

Retirement Statements 

Page 51 GAO-05-192 Social Security Statements 

Note: The original statement is a multicolor document. 

Source: Massachusetts Mutual Life Insurance Company.
Appendix IV: Examples of Private Sector 

Retirement Statements 

Page 52 GAO-05-192 Social Security Statements 

Source: Massachusetts Mutual Life Insurance Company.
Appendix V: Example of a Statement from 

Canada 

Page 53 GAO-05-192 Social Security Statements 

Note: The original statement is a tri-fold and a multicolor document. 

Appendix V: Example of a Statement from 

Canada 

Source: Canada Pension Plan (Social Development Canada).
Appendix V: Example of a Statement from 

Canada 

Page 54 GAO-05-192 Social Security Statements 

Source: Canada Pension Plan (Social Development Canada).
Appendix VI: Comments from the Social 

Security Administration 

Page 55 GAO-05-192 Social Security Statements 

Appendix VI: Comments from the Social 

Security Administration 
Appendix VI: Comments from the Social 

Security Administration 

Page 56 GAO-05-192 Social Security Statements 
Appendix VI: Comments from the Social 

Security Administration 

Page 57 GAO-05-192 Social Security Statements 
Page 58 GAO-05-192 Social Security Statements 

George A. Scott, Assistant Director (202) 512-5932 

Richard L. Harada, Analyst-in-Charge (206) 287-4841 

In addition to those named above, Allison Abrams, Amy Anderson, 

Debra Johnson, Michael Morris, Luann Moy, Jennifer Popovic, 

Daniel Schwimer, Andrew Stichman, and Wendy Wierzbicki made 

important contributions to this report. 

Appendix VII: GAO Contacts and Staff 

Acknowledgments 

Contacts 

Staff 

Acknowledgments 

(130361) 
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