Social Security Advisory Board

400 Virginia Avenue, S.W.

Suite 625

Washington, D.C. 20024

Tel: (202) 475-7700

Fax: (202) 475-7715

E-mail: info@ssab.gov

www.ssab.gov
Social Security Advisory Board

Sylvester J. Schieber, Chairman

Dana K. Bilyeu

Dorcas R. Hardy

Marsha Rose Katz

Barbara B. Kennelly

Mark J. Warshawsky

Social Security Advisory Board

An independent, bipartisan Board created by the Congress and appointed by the President and 

the Congress to advise the President, the Congress, and the Commissioner of Social Security on 

matters related to the Social Security and Supplemental Security Income programs. 
The Social Security Statement:

How It Can Be Improved

Social Security Advisory Board

August 2009

Message From The Board

When the Social Security Independence and Program Improvements Act was signed in 1994, one 

of the mandates to this Board was to increase the 

public’s understanding of the Social Security system. In 1997, the Board released a report entitled 

Increasing Public Understanding of Social Security 

that addressed the fact that, despite high public 

support for the programs administered by the Social Security Administration (SSA), numerous studies and surveys showed that public understanding 

of many aspects of Social Security was weak. The 

Board recommended that SSA use new approaches, 

such as the agency’s new Personal Earnings and Benefit Estimate Statement (now called the Social Security Statement) to improve the public’s understanding. The Board also concluded that this statement 

mailed each year to all workers age 25 and older 

would likely become the agency’s most direct and 

important means of communicating with the public and, therefore, it is critical that the information 

provided on it always be accurate and consistent. 

The Board believed then, and still does, that the 

Statement should be one of the highest priorities 

of the agency and that it should receive thoughtful, 

high level attention with respect to its content and 

its design. At that time we recommended that SSA 

conduct testing of the Statement so that improvements could be made where needed, and that the 

agency should thoroughly examine the accuracy of 

the information provided on it.

Indeed, over the past decade, SSA has made a 

number of enhancements to the Social Security 

Statement to make it more understandable and 

easier to read. Much of the increase in public understanding of Social Security since that time can 

be attributed to the Statement and the information 

it provides. Yet survey data show that public understanding of the Social Security programs is still not 

as high as desired and there is still room for making improvements to the Statement. Over the past 

year, the Board has worked closely with SSA to examine areas where further improvements are warranted. Here we present our analysis of the issues 

along with our findings and recommendations.

Our purpose in developing this report is to encourage SSA to continue its efforts to improve the 

accuracy of its benefit projections for all workers, 

to examine continuously all aspects of the Social Security Statement for both accuracy and understandability, and to make needed improvements based 

on the results of careful analysis.

Sylvester J. Schieber, Chairman

Dana K. Bilyeu 

Dorcas R. Hardy 

Marsha Rose Katz

Barbara B. Kennelly

Mark J. Warshawsky

Table of Contents 

Executive Summary 1

Introduction: Why We Looked at This Issue 5

Background 7

The Origins of the Social Security Statement 7

Agency Workload and Resources 8

Not Everyone Who Should Get a Statement is Receiving One 9

The Statement’s Presentation and Content 11

The Social Security Statement as a Communications Vehicle 15

Public Reactions to the Statement 15

Limitations of Current Feedback Approaches 18

Improving the Accuracy of Projected Benefits 19

Advisory Board Conclusions and Recommendations 25

Appendix A—Sample Social Security Statement and Age 55 and Age 25-35 Inserts 29

Appendix B—A Brief History of the Social Security Statement 39

Establishment of the Social Security Advisory Board 43

The Social Security Statement: How It Can Be Improved 1

Over the last two years, the Social Security Advisory Board has spent a considerable amount of time analyzing the Social Security Statement and exploring ways to improve it. The Advisory Board has made a number of specific observations about the current Statement:

n The Statement Attempts to Be All Things to 

All People. Research suggests that public pension 

statements—like the Social Security Statement—

should be as compact and simple as possible. SSA 

includes so much information on the Statement 

that the portions that people most care about—

their earnings history, their projected benefit 

estimate, and their normal retirement age—are 

not presented “front and center.”

n The Statement Provides Information in a 

One-Size-Fits-All Manner. Some countries have 

found it desirable to customize public pension 

statements to provide personalized information 

of special interest to large groups with common 

life circumstances, such as those approaching retirement or new to the workforce. Versions of 

SSA’s Statement are not now sent for any discrete 

groups with personalized information.

n Some Design Features of the Statement

Make It Harder to Read. The Statement is 

printed in black text with simple green adornments and it appears cluttered and crowded. It 

lacks color, white space, and graphics, making it 

difficult to read. Information is presented as a 

laundry list of facts and data, rather than cogent 

summaries of things that people need to know to 

make informed decisions. The Statement’s design 

also does not change over time and this could 

lead to people becoming bored with it and could 

explain an apparent growing tendency for them 

to ignore even the most important information 

it provides.

n The Statement Often Uses Dense, Bureaucratic Language Making it Difficult to Understand. The language used in some sections of the 

Statement, for instance, the section describing 

the Windfall Elimination Provision (WEP) and 

Government Pension Offset (GPO), remains far 

too dense, too bureaucratic, and too confusing 

and, as a result, may not be readily understood by 

the intended audience. In addition, many people 

have a hard time discerning whether or not these 

provisions apply to them.

n The Statement Uses Some Language That 

Could Influence Individual Decisions in Unintended Ways. For example, in the section of the 

Social Security Statement that presents projected 

benefit estimates, SSA frames its message—“if 

you stop working and start receiving benefits ....” 

Some people could infer from this phrasing that 

the decision to stop working and the decision to 

start receiving benefits are inextricably intertwined and could result in some individuals exiting the workforce or claiming benefits earlier 

than they would otherwise, and perhaps not at 

the most advantageous time given their unique 

individual circumstances. It is similarly important how SSA describes the impact that working, 

while receiving retirement benefits, has on benefits levels.

In fiscal year 2008, SSA sent out about 149 million Statements to American workers. But not everyone who should be getting a Statement is receiving one. Individuals who receive Medicare benefits 

but have elected not to take Social Security retirement benefits do not get an automatic Social Security Statement from SSA. There have also been 

Executive Summary
2 The Social Security Statement: How It Can Be Improved

a number of problems related to mail handling 

resulting in many people not receiving their Statements. Delivery problems also occur because of the 

way foreign addresses are coded. Some of these 

undeliverable Statements are eventually returned 

to SSA, but most are simply lost. An unknown 

number of Statements are never received by the intended individual and are never returned to SSA. It 

is conceivable that each year upwards of 28 million 

to 29 million people who should receive an annual 

Statement do not get one.

The Advisory Board believes that it is imperative 

that the Social Security Statement provide the most 

accurate information possible and that information 

be communicated in a clear and objective manner. 

In examining how well the Statement is living up to 

its potential as an effective communications vehicle, 

the Advisory Board, with considerable assistance 

from SSA’s Office of the Retirement Policy and the 

Office of the Chief Actuary, decided to look closely 

at one very important part of the Statement that 

lends itself easily to formal empirical analysis—the 

projection of the future retirement benefit.

The results of this analysis showed that, on average, the benefit estimates provided on the Social 

Security Statement are generally good overall, and 

get better as the worker approaches retirement age. 

However, projections for younger workers are more 

likely to underestimate the actual benefit at age 62. 

The accuracy of projections tends to be considerably lower for women than it is for men, and for 

lower wage workers than it is for higher wage workers. For the most part, the assumption of constant 

real earnings used in the Statement yields fairly accurate results for men and for older workers. It is 

clearly less realistic for younger workers who may 

reasonably expect to see their real earnings grow 

in the future. The assumption that a worker will 

experience no further earnings if he or she has zero 

earnings during both of the past two years may also 

be too extreme. Assuming those workers will not 

work again after only a brief period out of the labor 

force, especially for workers under age 50, seems 

unrealistic. In fact, projections of their benefits are 

the least accurate of any group discussed in this report, and the level of benefits for which they actually become eligible are the most underestimated.

The Advisory Board offers a number of conclusions and recommendations for improving the Social Security Statement.

Regarding the Accuracy of the Benefit Projec

tions:

n The projected benefits provided on the Statement are reasonably accurate on average, although they are far more accurate for older workers than for younger ones. However, projected 

benefits could and should be improved by basing 

them on assumptions that are as accurate as possible about future lifetime earnings. SSA should 

consider experimenting with and evaluating alternative assumptions and projection methods, 

including those used by the Office of the Chief 

Actuary in projecting future benefits for the 

Trustees Report.

n The Advisory Board is encouraged by SSA’s exploration of alternative ways to provide accurate 

and tailored benefit projections to workers and 

their families. The agency has recently begun to 

provide targeted information to younger workers 

and to those nearing retirement age by including 

special generic inserts for the Statement that are 

for these age groups. In addition, the agency is 

considering new ways of displaying benefit projections that focus first on the benefit amount 

that may be received at the full retirement age. 

We encourage SSA to personalize information in 

Statements for older workers to better illustrate 

the impact of different claiming and retirement 

ages. By contrast, showing different retirement 

benefit projections at various retirement and 

claiming ages to young workers may not be necessary.

n The Board would like to encourage SSA to consider providing certain additional information 

to younger workers about their retirement benefit. Specifically, it would give them a calculation 

of the monthly retirement benefit they have already earned based on their actual wages to date 

and assuming they have no future wages. This 

amount would be conceptually similar to the disability benefit amount currently provided on the 

Statement in that it would be based solely on the 

worker’s current earnings record. This would inform the worker what she or he could count on 

receiving from Social Security in the event that 

the worker has no future earnings for reasons 

other than disability. This amount would be recalculated each year to reflect the most recent 

earnings information and it would demonstrate 

for younger workers how their future retirement 

benefit is based on their continued earnings. For 
The Social Security Statement: How It Can Be Improved 3

some workers who drop out of the labor force and 

have no future earnings, this calculation could be 

the most accurate information about their future 

benefit.

n The Board believes that SSA, in determining 

whether and how to implement this additional 

projected benefit, should conduct a careful analysis of the impact that the Social Security benefit 

formula, including its progressivity and averaging period, will have on the proposed benefit projections. SSA should consider whether these social insurance features of Social Security’s benefit 

formula will produce benefit projections which, 

when compared from year to year or the current 

projections, will produce anomalies that might 

be little understood by the public. Determining 

whether or not to include the additional information that we have suggested, how to display 

it, and for which age groups it would be the most 

valuable would require SSA to conduct empirical 

and focus group research on the issue.

n The Statement should direct workers to SSA’s 

online benefit calculator where they can enter 

their own assumptions about how much they will 

earn in the future.

Regarding the Content of the Statement:

n SSA should make the Statement as accurate, 

clear, and concise as possible and should provide only that information that is required or 

necessary for making informed decisions; eliminate extraneous information; and provide more 

references on the Statement to other sources of 

information, such as the online retirement planner. In addition, SSA should consider separating 

out the Commissioner’s message from the factual 

material provided in the Statement, and transmit 

this material in a cover letter or on a separate attachment to the Statement. Likewise, SSA should 

consider separating out from the Statement itself 

the technical descriptions of how SSA’s programs 

work. This information can be provided elsewhere, such as in an information pamphlet. SSA 

should also provide information on the Statement about where to find further information on 

SSA’s website.

n SSA should review the language it uses to describe benefit claiming options to assure that the 

phrasing used is both neutral and accurate.

n SSA should improve the Statement’s message 

and information about the impact that working 

has on retirement benefits.

n SSA should provide a clearer, more succinct, 

and targeted message on the GPO/WEP provisions of law so that it is easier for the public to 

understand.

Regarding Statement Design Features and 

Presentation of Information:

n SSA should seek to improve the overall readability of the Statement and should examine the 

impact of altering some of the Statement’s design 

features, such greater use of color, graphics, or 

enlarged font size, along with more white space.

n SSA should consider consulting with experts 

outside of the agency to assist in designing a 

Social Security Statement that is state-of-the-art, 

and that communicates a clear message that helps 

the American public understand Social Security’s 

role and importance in retirement security.

Regarding Continuous Improvement of the 

Statement:

n The Statement should be viewed as a dynamic 

instrument and SSA should seek to make sure it is 

meaningful to its audience. SSA should consider 

investing more staff time and resources into periodic evaluations of the Statement to strengthen 

its accuracy and understandability. The agency 

should look at improving its survey process and 

developing state-of-art survey and assessment 

tools, and then follow-up with improvements 

based on those survey results. The agency should 

also explore more sophisticated cognitive testing 

techniques and use them wherever there is critical information presented to the public to ascertain if the people who are reading the Statement 

understand the messages that SSA is relaying in 

the manner that the agency intended.

n SSA should reexamine its process for mailing 

Statements to better ensure that workers are receiving the Statements to which they are entitled. 

In doing so, SSA should take steps to assure that 

Medicare-only beneficiaries receive an annual 

Statement. The agency should also improve its 

process for handling “undeliverable” or returned 

Statements.
4 The Social Security Statement: How It Can Be Improved
The Social Security Statement: How It Can Be Improved 5

The Social Security Administration (SSA) has a 

responsibility to communicate in a clear, accurate, 

and accessible manner with two important groups: 

the 166 million workers who pay taxes needed to 

finance the Social Security system; and the 52 million individuals who currently receive Social Security retirement and disability benefits. The agency 

has a particular obligation to inform workers and 

their families about the benefit protections provided to them by Social Security, the financing of 

benefits, and the operations of the program and 

the trust funds.

SSA recognizes that it plays a significant role in 

educating the American public about the program 

and its benefits and has focused agency attention 

on improving the information it provides. Over 

the years, SSA has made a number of changes and 

improvements to its Social Security Statement—a 

document that the agency mails each year to all 

workers over the age of 25 who are not yet collecting benefits (a sample Statement is provided in Appendix A). The Statement provides personalized 

information about the worker’s earnings history 

and projected benefits. It also provides basic information about the programs administered by SSA 

and describes briefly the current state of the Social 

Security trust funds. The Social Security Statement

has become a key reference source for workers and 

is, perhaps, the most important tool at the agency’s 

disposal for communicating with the public.

In fiscal year 2008, SSA mailed out 149.3 million 

personalized Social Security Statements that carried 

important information about the vital role that Social Security benefits play in providing income security in retirement, for surviving family members, 

or in the event of disability. But how successful has 

the Statement been in communicating with and educating the public? How accurate is the projected 

benefit information provided to each worker? Can 

the content and delivery of the Statement be improved?

One of the Advisory Board’s earliest reports, Increasing Public Understanding of Social Security, focused on the critical issue of how well the public 

understood Social Security. Our findings in 1997 

concluded that the public had an incomplete understanding of how the taxes they paid were used and 

often knew little about the extent of the protection 

that the program provides or the requirements for 

eligibility. The Social Security Statement was designed, in part, to close the public’s knowledge gap 

by including information about:

n the role of Social Security in family financial 

security; 

n projections of future monthly benefits and how 

these benefits are determined;

n the agency’s record of the worker’s earnings; 

n Social Security programs and how and where to 

get more information about them; and

Introduction: Why We Looked at This Issue

The new Personal Earnings and Benefit Estimate Statement (PEBES) [now called the Social Security 

Statement] will likely become SSA’s most direct and important means of communicating with the public. 

This annual communication with all workers will provide a valuable opportunity for increasing program 

knowledge and understanding....

Social Security Advisory Board, 1997
6 The Social Security Statement: How It Can Be Improved

n the financial status of the Social Security trust 

funds.

In the late 1990s and early 2000s, SSA’s public 

survey data indicated that the public was not as 

knowledgeable as it could be about the more technical features of Social Security, including Social 

Security coverage requirements, the maximum 

taxable earnings, the average benefit amount, or 

how work affected benefit levels. Knowledge varied with age, education, and income, with older, 

more educated and high-income individuals showing the highest degree of knowledge. What was 

encouraging, however, was that receipt of a Social 

Security Statement contributed to increases in the 

level of public knowledge on these same aspects of 

the Social Security program—people who received 

a Statement not only showed greater knowledge of 

Social Security than non-recipients, but also exhibited higher levels of confidence in the agency, and 

greater confidence that the program would be there 

for them when they needed it. It is not clear, however, from recent surveys that public understanding of Social Security has improved much more 

since those initial findings were made. Moreover, 

a 2004 survey showed widespread lack of recall or 

use of the Statement. These results signal, perhaps, 

that the Social Security Statement needs further and 

continuous improvement to reach its full potential 

in helping the American public understand how 

Social Security fits into their retirement security 

picture.1

The information provided on the Statement, when 

viewed within the full context of an individual’s 

personal circumstances and other sources of retirement income, should play a significant role in shaping an individual’s plans for insurance coverage and 

retirement. The information provided on the Statement should also help people better understand the 

connection between the payroll tax contributions 

they have made throughout their working life and 

the level of benefits that they will ultimately receive from Social Security. Clearly, the Statement

is one of the chief vehicles that SSA has for communicating with the public, making it imperative 

that this document function as a state-of-the-art 

communications vehicle and that the information 

that it provides is objective and presented clearly, 

1 Social Security Administration, Public Understanding Measurement System Survey, 2004.

accurately, and understandably.

It has been over ten years since the Board has 

looked at measures of public understanding or at 

whether the agency is maximizing its opportunities to educate workers about Social Security. We 

were particularly interested in studying how accurate the benefit projections are on the Statement—a 

subject that the agency had never examined until 

prompted by this Board.
The Social Security Statement: How It Can Be Improved 7

The Origins of the Social Security Statement

Since the Social Security Act became law in 1935, 

workers have had the right to review their earnings 

records on file at SSA to ensure that the agency has 

a correct accounting of their earnings, and to initiate corrections where necessary. If an individual 

wanted to view his or her earnings record in the 

early days of the program, she or he could file a 

Wage Statement Request by visiting a local field office and filling out a small, postcard-sized form (see 

Appendix B). In return, SSA would mail a copy of 

the worker’s earnings history to the address that 

the worker listed on the postcard. If there were any 

discrepancies between the worker’s earnings record 

at SSA and the worker’s own personal records, the 

worker could initiate a corrective action to fix any 

wage postings that were in error.

In 1988, SSA publically broadcast its new capability to provide detailed statements of earnings and 

estimated benefits to Social Security number holders who requested this information from the agency 

via a dedicated 800 telephone number.2

 As a result 

of the program’s success, the late Senator Daniel 

Patrick Moynihan introduced in 1989 amendments 

to the Social Security Act to require SSA to issue 

statements of earnings automatically—without 

people having to request them—to all Social Security number holders age 25 and older, who were not 

yet in benefit status and for whom the agency could 

determine a current mailing address.3

 The law also 

requires that the Statement include: for workers 

age 55 and older an estimate of future monthly 

2 In 1988, as part of SSA’s ongoing public education efforts, 

then Commissioner Dorcas R. Hardy initiated a public outreach 

campaign to inform the public that the agency would begin issuing 

personal earnings and benefit estimate statements (PEBES) to 

individuals who requested them.

3 P.L. 101-239, the Omnibus Budget Reconciliation Act of 1989.

Social Security retirement, disability, survivor and 

auxiliary benefits and a description of the benefits 

under Medicare; the amount of wages paid to the 

worker or income from self-employment; and an 

estimate of the worker’s aggregate taxes paid toward Social Security and Medicare. SSA, however, 

decided that even though projected benefit estimates were required only for those workers age 55 

and older, it would be useful to provide such projections to all eligible workers, as had been done for 

earlier requestors.

SSA began phasing in the mailing of Statements

to all workers age 25 and older in February 1995 by 

sending them to increasingly younger groups of Social Security number holders. By October 1, 1999, 

SSA had fully implemented the change.

In October 2000, SSA began mailing, along with 

the Statement, to individuals age 55 and over a special insert that describes things to consider when 

thinking about retirement. This special insert is 

intended to help older workers and their families 

make important planning decisions before reachBackground

“This is an idea whose time has come. ... We 

pay our taxes to Federal, State, and local 

governments and we hear back from them 

every year—reminding us to tote up how 

much we’ve paid in and how much we still 

owe or are due back. We receive monthly 

statements from our banks and credit card 

companies. Yet every month, in every paycheck, we see money withheld for Social 

Security, but we hear nary a word from the 

Social Security Administration.”

Senator Daniel Patrick Moynihan, 1989
8 The Social Security Statement: How It Can Be Improved

ing retirement age, and it highlights the general 

factors that workers nearing retirement should 

consider, such as the long-term effects of taking a 

reduced benefit or the impact continued employment would have on their benefit (see Appendix A). 

The insert, however, is not personalized.

In 2006, SSA implemented changes to the Statement as a result of newly enacted provisions of law.4

The changes included a description of the Windfall 

Elimination Provision (WEP) and the Government 

Pension Offset (GPO) of the Social Security Act. 

The elimination and offset provisions eliminate 

a windfall that some government workers would 

otherwise receive on the retired worker’s benefit 

amount—or his or her spouse’s/widow’s/widower’s 

benefit amount—if these individuals also receive a 

pension from a federal, state or local government 

based on their work and on which no Social Security taxes were paid. These provisions of law were 

designed to ensure that all workers are treated 

equally under the Social Security system and that 

no one benefits unfairly from work on which no Social Security taxes were paid. But these provisions 

are very complex, easily misunderstood, and apply 

only to about 2.6 percent of Social Security beneficiaries (in 2007, out of more than 49 million Social 

Security beneficiaries, only about 440,000 people 

had their benefits reduced by GPO and just over 

880,000 people had their benefit reduced by WEP). 

It is important, however, that the people who are

affected by these provisions understand the information provided about them by SSA.

The new law also required SSA to develop a new 

one-page Statement From Social Security that is 

sent to individuals with only non-covered earnings 

posted to their record.5

 (See Appendix A.) This new 

statement informs workers that SSA’s records show 

that they have been employed in work on which no 

Social Security taxes were paid, such as some federal, state, or local government work or some nonprofit or foreign employment and that they are, 

therefore, not currently entitled to a Social Security 

benefit. This form also tells them that they could 

become entitled to Social Security in the future if 

they work in a job that is covered by Social Security or if they become eligible as a current or former 

spouse of a worker who paid Social Security taxes. 

If they do become eligible for a retirement benefit 

4 P.L. 108-203, the Social Security Protection Act of 2004. 5 Non-covered earnings are earnings from work in jobs not covered 

by Social Security.

in either of these ways, the statement explains how 

their benefit could be reduced by GPO and WEP.

Last year the agency developed an improved insert that it sends, along with the Social Security 

Statement, to Social Security number holders age 55 

and over. This new insert does a better job than 

its predecessor at describing the important things 

that people need to consider as they approach retirement age and before they make critical life decisions, such as when to begin receiving Social Security retirement benefits or when and if they should 

withdraw, or partially withdraw, from participation 

in the workforce. This insert, however, is still not 

personalized. The agency also recently unveiled a 

new general insert for younger workers, ages 25 to 

35, which highlights the importance of saving over 

their working lives.

In addition, SSA recently launched a new online 

retirement benefit estimator on its website that can 

be used to supplement the information provided on 

the Social Security Statement. It allows individuals 

to use a variety of assumptions about their future 

earnings and their age of retirement so that they 

can see the impact that different earnings levels, 

the timing of benefit election, or continued work 

while receiving benefits would have on their benefit levels. This online benefit estimator is unique 

from other online estimators of its kind in that it 

automatically extracts the individual’s personal 

earnings history data from SSA’s earning databases 

in order to produce more accurate estimates of future benefits, freeing the individual from having to 

personally locate and key in all of this data. (For a 

more complete discussion of the origins of the Social Security Statement, see Appendix B.)

Agency Workload and Resources

In fiscal year 2008, SSA automatically sent out 

148.7 million Statements, approximately 1.2 million 

in Spanish,6

 while another 600,000 were sent out at 

the request of individuals. The gender distribution 

of Social Security Statements in fiscal year 2008 was 

about even, with 74 million Statements sent to men 

and 75.2 million sent to women. About 13 percent 

6 Social Security Statements are currently available in English and in 

Spanish. Statements are automatically mailed in Spanish to those 

individuals who listed Spanish as their language of preference for 

notices and other communications from SSA when they applied for 

a Social Security card or when they filed an application for retirement, disability or Supplemental Security Income benefits from the 

agency.
The Social Security Statement: How It Can Be Improved 9

of these Statements were mailed to workers below 

the age of 30, 67 percent to workers between age 

30 and age 54, and nearly 20 percent to workers 

over the age of 55. Figure 1 shows a more detailed 

age distribution of Statements mailed during fiscal 

year 2008.

Producing and mailing this volume of Statements

represents a substantial workload and cost. SSA 

estimates that it spent about $53 million to process and mail Social Security Statements in fiscal 

year 2008.7

 More than 85 percent of this cost is for 

postage, the rest is for the printing and production 

by an outside contractor, SSA staff time, allocated 

overhead, and IRS administrative costs.8

 While 

processing this workload requires substantial resources, it is not currently a significant workload 

for agency staff. Because the production and mailing of the Statement is done primarily by private 

contractors, only about 11 workyears of staff time 

is charged to Statement-related activities throughout the year.9

7 SSA Office of Budget. 8 SSA uses a Government Printing Office vendor to print and 

mail Statements. Included in the cost estimate is a flat-rate fee of 

$175,000 per year that the IRS charges to SSA for providing mailing addresses for Statement recipients. 9 One workyear is roughly the equivalent of one employee working 

40 hours per week for a full year.

Not Everyone Who Should Get a Statement is 

Receiving One

One area of concern for the Advisory Board is 

that not everyone who is entitled to a Statement is 

receiving one. First, individuals who are receiving 

Medicare benefits but have elected not to take Social 

Security retirement benefits while they are still working do not get an automatic Social Security Statement

from SSA. According to data provided to the Board 

by the Centers for Medicare and Medicaid Services, 

as of October 1, 2008, there were about 1.9 million 

Medicare beneficiaries who were not receiving Social 

Security retirement benefits. It appears that SSA’s 

processes and systems for sending out automatic 

Statements mistakenly assume that these individuals are receiving monthly retirement benefits by 

virtue of the fact that they are entitled to Medicare 

benefits and, therefore, no Statement is mailed. In 

addition, these individuals are also not able to use 

SSA’s new online retirement planner. Not providing 

Statements to Medicare-only beneficiaries is an oversight that SSA should work quickly to correct.

There have also been a number of problems related 

to mail handling that has resulted in many people not 

receiving their Statements. In preparation for mailing automatic Statements in fiscal year 2008, SSA iniSource: Social Security Administration, Office of Budget.

29 & Under

Age Ranges

30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70 & Over

25.0

20.0

10.0

15.0

5.0

0.0

Statements (in millions)

Figure 1: FY 2008 Age Distribution of Social Security Statements
10 The Social Security Statement: How It Can Be Improved

tially identified 170.5 million individuals who were 

entitled to receive an automatic Social Security Statement under the law. 10 Address requests for these individuals were sent by SSA to the IRS. Of these, IRS 

was only able to match 150.3 million (88.2 percent) 

names and Social Security numbers to its records and 

provide SSA with a mailing address. In cases where 

the IRS’ data does not match SSA’s records of name 

and Social Security number, the IRS does not provide an address to SSA, and SSA is unable to mail a 

Social Security Statement to these people. Rather, the 

record is classified as an “unknown address.” In fiscal year 2008, there were about 20 million “unknown 

address” records processed by the IRS. SSA does not 

follow up on these cases and does not search its own 

databases for current information that might help 

the agency to locate these individuals.

In a recent study, SSA’s Office of Inspector General also found that SSA’s current processes for sending Statements does not adequately ensure that all 

wage earners actually receive the Statements that 

are mailed to them by SSA. The OIG uncovered a 

systemic problem with foreign addresses supplied 

to SSA by the IRS. The IRS system does not communicate the full address to SSA because of the way 

foreign addresses are coded.11 Some of these undeliverable Statements are eventually returned to SSA 

but most are simply lost. The largest proportion of 

workers in foreign countries who are entitled to receive a Statement based on work performed in covered jobs in the U.S. reside in Mexico and Canada. 

In fiscal year 2006, the most recent year for which 

data was available, SSA sent nearly 653,000 Statements to addresses in these two countries. The OIG 

estimates the cost for mailing these Statements to 

be about $411,000. Because SSA does not have a 

systematic process for analyzing Statement mailings, the agency was unable to provide a precise, 

detailed cost estimate for Statements mailed to all 

foreign addresses but the OIG reports that higher 

postage rates apply to other foreign nations than 

for Statements sent to Canada and Mexico.12

10 Social Security Administration, Office of Inspector General. The 

Social Security Administration’s Ability to Reach Individuals Using the 

Social Security Statement, A-15-07-17095. January 2008. 11 The IRS system includes two fields for address lines. When one 

is used for a foreign country name, IRS stores what would normally 

be the first address line in one of their two 35-character name 

fields. Because the Internal Revenue Code only authorizes IRS 

to provide SSA with addresses, the IRS sends reports to SSA with 

most fields—including the name fields—left blank.

12 Postage costs to Canada are about 63 cents per Statement envelope. Costs to other nations can be as high as 84 cents per envelope.

SSA also estimates that 5 million Statements delivered in fiscal year 2006 were returned to SSA as 

undeliverable due to incomplete addresses. Additionally, some Statements were improperly inserted 

into the envelope so the address was not visible, 

some envelopes had no Statement enclosed, and a 

large number of returns with complete domestic 

addresses were not delivered for reasons that could 

not be identified. The OIG estimates that costs to 

print and mail these 5 million returned Statements 

were at least $1.5 million at the 2006 domestic bulk 

mail rate of $0.309 per Statement. The OIG questions this estimate, however, and believes it to be 

too low because of inaccurate workload reporting at 

SSA and because using the domestic bulk mail rate 

does not take into account that some Statements

were sent at higher foreign mail postage rates.

What is not counted in any of these numbers is 

the unknown number of Statements mailed to both 

foreign and domestic addresses that are never received by the intended individual and are never 

returned to SSA. SSA automatically mails a Social 

Security Statement to a worker three months before 

that worker’s birthday. The IRS only gets addresses 

once a year—at tax time—and the further away 

one gets each year from tax time, the more unreliable IRS addresses become. SSA never changes the 

addresses it receives from the IRS, even if it has 

better, more recent information about a worker. 

Instead, SSA relies exclusively on the IRS for the 

addresses it uses to mail the Statements and does 

not search its own databases for more current information.

Given the number of Medicare-only beneficiaries, 

the number of unknown addresses, the magnitude 

of the problems with foreign addresses, the number of returns from domestic addresses, and the 

unknown number of undelivered but not returned 

Statements, it is possible that each year upwards of 

28 million to 29 million people who are eligible to 

receive an annual Social Security Statement, about 

20 percent of the total Statement population, do 

not get one.
The Social Security Statement: How It Can Be Improved 11

When compared with similar statements sent 

out by other countries and similar private sector 

organizations, the Social Security Statement is longer and uses more bureaucratic, technical language, 

and does not include a lot of modern design features—such as graphics, white space, greater use of 

color, or use of unique messages that are targeted 

to specific audiences—that are helpful in communicating complex information. Specifically, the format of the Statement is as follows:

n Page 1 presents an introductory message from 

the Commissioner of Social Security that describes the important social insurance value of 

Social Security. This page informs the worker 

that Social Security is not just a retirement program like an individual retirement account or a 

401(k) plan, but rather it is a program for people 

of all ages and situations provides protection in 

the form of benefits if the worker becomes disabled, and it can help support a worker’s family if 

she or he dies. This page goes on to state that Social Security is intended to be only one part of a 

worker’s income security in retirement. Workers 

will also need to rely on personal savings, investments, pensions, or other retirement accounts 

during their retirement years. There is also a section devoted to a discussion of Social Security’s 

future finances and the operation of the trust 

funds.

n Page 2 provides personalized projections of retirement benefits, disability benefits, family and 

survivor benefits, and whether or not the individual has worked long enough to be covered by 

Medicare. This page also provides a brief explanation for how these benefit projections were calculated and the assumptions used. It also gives 

condensed explanations of the GPO and WEP 

provisions of Social Security law.

n Page 3 contains a personalized chart showing 

every year an individual has worked over his or 

her entire working life and the amount of covered 

earnings in that year, for both Social Security and 

Medicare, up to the maximum taxable earnings 

level. This page also provides a summary of the 

total Social Security and Medicare taxes paid by 

the worker and by her or his employer(s) over his 

or her working life.

n Page 4 provides some basic facts about Social 

Security programs and about the extra help with 

Medicare premiums or prescription drug costs 

that is available to people with limited income 

and resources, and how to learn more about or 

apply for this extra assistance. Also, on this last 

page, there is information outlining the fact that 

older individuals can elect to receive retirement 

benefits without exiting the workforce but that 

earnings limits may apply. Lastly, the Statement

includes guidance on where to go to find out 

more information about the available choices regarding when to elect benefits and when to exit 

the workforce.

Two recent studies by researchers in Japan were 

conducted to compare design features of the public 

pension statements in Germany, Sweden, Canada, 

and the U.S. 13 The first study tested different statement formats to see which would most likely encourage people to participate in the Japanese national pension system. Based on what was learned 

from this first study, the researchers developed a 

model statement. The second study examined the 

reactions of employed participants to the model 

statement. Their findings suggest that public pen13 Usuki, Masaharu, Kunio Nakajima, and Tomoki Kitamura (Pension Forum, Financial Research Group, Japan). “Improving the 

Public Pension Statement: Suggestions Based on Survey Results,” 

NLI Research, September 8, 2006.

The Statement’s Presentation and Content
12 The Social Security Statement: How It Can Be Improved

sion statements, like the Social Security Statement, 

should be as compact and as simple as possible. 

Supplemental information such as facts about how 

the pension system works, the definitions of technical terms, or detailed explanations of complex 

program features should be provided separately, 

perhaps with an information pamphlet or referral 

to other sources of information.

Some other countries have found it desirable to 

tailor public pension statements to the workers’ 

unique, individual circumstances or to groups of 

workers, such as younger workers or workers nearing retirement. In Sweden, for instance, the public 

pension statement is produced in 5,000 different 

format and content variations that are tailored to 

the recipient’s age, occupation, presence or absence 

of a spouse or children, and primary language spoken.

Information about when people are eligible to 

receive benefits, what their benefits are projected 

to be at various ages, what they and their employers paid into the system, and what impact continued work would have on their benefit levels are the 

kinds of information that people might find useful 

in order to make important decisions about retirement. It is imperative to present these important 

facts clearly, accurately, and as succinctly as possible 

at the right time so that people can make informed 

choices about those things affecting their financial security, such as determining for themselves, 

within the context of their family circumstances, 

whether to buy additional life or disability insurance, how much to save in retirement plans, when 

to begin taking Social Security retirement benefits, 

if and when to decrease their participation in the 

workforce, and if and when to exit the workforce 

completely. To keep the Statement simple, clear, 

and concise, the public should be directed to other 

sources of information: the agency’s Internet website, information pamphlets, or the online retirement planner for general descriptions of the program, information of a highly technical nature, and 

information that applies only to some small groups 

of people.

During the course of this study, the Advisory 

Board developed a number of specific observations 

about certain portions of the current Social Security 

Statement. These observations include:

n The Statement Attempts to Be All Things to 

All People. Research suggests that public pension statements—like the Social Security Statement—should be as compact and simple as possible. SSA, however, includes so much information 

on the Social Security Statement that the parts 

of the Statement that people most care about—

their earnings history, their projected benefit estimate, and their normal retirement age—are not 

presented “front and center” on the Statement.

n The Current Statement Provides Information in a One-Size-Fits-All Manner. Some 

countries have found it desirable to design personalized public pension statements for many 

different circumstances. SSA, however, does 

not tailor its Statement’s personal estimates and 

types of information to different groups of individuals; it is strictly a one-size-fits-all document, 

regardless of age, income level, or family status. 

Because the agency only collects data on spousal 

and other family relationships at the time that 

an individual files an application for benefits, it 

is currently unable to provide estimates on the 

amount of spousal benefits a worker’s spouse 

can expect based on the worker’s earnings. The 

agency does not maintain its records in a way 

that associates a worker with her or his spouse, 

and hence there is no readily available data about 

dependents, former marriages, or any potential 

widow or widower situations. Nonetheless, age 

is available to the agency and it is easy to imagine that detailed personalized illustrations of the 

consequences of different claiming and retirement ages would be more salient to a 57-year-old 

than to a 27-year-old for whom knowing when 

he or she is eligible for survivor and disability 

benefits may be more immediate and important. 

Moreover, a general explanation of spousal benefits could be given or at least referenced.

n Some Design Features of the Statement

Make It Harder to Read. The current Statement

is printed in black text with simple green adornments and it appears cluttered and crowded. It 

lacks color, white space, and graphics, making it 

difficult to read. Information is presented as a 

laundry list of facts and data, rather than cogent 

summaries of things that people need to know to 

make informed decisions. The Statement’s design 

is also static, has not changed over time, and this 

could lead to people becoming bored with the 

Statement and might explain an apparent growing tendency for them to ignore even the most 

important information that is provided on it.
The Social Security Statement: How It Can Be Improved 13

n The Statement Often Uses Dense, Bureaucratic Language That is Difficult to Understand. The language used in some sections of 

the Statement, for instance, the section describing the WEP and GPO provisions, remains far too 

dense, too bureaucratic, and too confusing and, 

as a result, may not be readily understood by the 

intended audience. This section, as currently presented, is complex and difficult to understand, 

and many people—if they recall reading it—have 

a hard time discerning whether or not these provisions even apply to them.

n The Statement Uses Some Language That 

Could Influence Individual Decisions in Unintended Ways. In some areas, the language used, 

in its attempt to avoid complexity, may actually 

be interpreted in ways that SSA did not intend. 

For example, in the section of the Social Security 

Statement that presents projected benefit estimates, SSA frames its message—“if you stop working and start receiving benefits ....” Some people 

could infer from this phrasing that the decision to 

stop working and the decision to start receiving 

benefits are inextricably intertwined. This misunderstanding could result in some individuals 

exiting the workforce or claiming benefits earlier 

than they would otherwise, and perhaps not at 

the most advantageous time given their unique 

individual circumstances.

It is similarly important how SSA describes the 

impact that working while receiving retirement 

benefits has on benefits levels. Wages earned 

while receiving benefits from work performed between age 62 and the full retirement age are subject to an “earnings limit.” In 2009, for example, 

the earnings limit is $14,160. For any earnings 

above this amount, the monthly Social Security 

benefit is offset by $1 for every $2 of earnings. 

The Social Security Statement describes these 

earnings thresholds as “limits,” perhaps implying 

to some people that having earnings from continued work is somehow detrimental because these 

earnings may temporarily reduce their monthly 

benefits. What is not clear from this language is 

that even though Social Security benefits may be 

temporarily reduced by earnings between age 62 

and full retirement age, the beneficiary may still 

benefit financially from both continued earnings during these years and may benefit in future 

years from the upward adjustments made to the 

benefit amount at the full retirement age to compensate for any benefits withheld during the period of limited earnings.

The messages that the agency delivers to the 

public regarding when to claim benefits need to 

be as objective as possible and should clearly lay 

out the key factors that affect benefit amounts. 

Information should be presented in a way that 

will facilitate an informed decision about when to 

apply for benefits, based on individual and family circumstances. There are many factors that 

should be considered when choosing the date on 

which to start receiving Social Security benefits, 

including health and life expectancy, the presence or absence of a spouse or other dependents, 

pension income, other savings, investments or 

assets, the person’s tax situation, the presence 

of one or more dependents in the household, in 

particular a person with a disability, immediate 

financial need, etc. There is no single “right time” 

to claim Social Security benefits that is suitable 

for everyone. Moreover, the information should 

stress that this is not a “one-size-fits-all” decision nor is it a mechanical decision predicated on 

a “break-even” analysis.

The Advisory Board recognizes that it is not 

easy to provide information to the public that is 

not subject to interpretation, or information that 

does not seem to favor one decision path over another. Making broad statements that would best 

serve the needs of everyone is impossible. It is, 

however, SSA’s job to educate people in a direct 

and clear fashion, including the recognition that 

no single time for claiming a benefit is correct for 

all people and that the decision to claim benefits 

does not imply that a worker must exit the workforce or vice versa.
14 The Social Security Statement: How It Can Be Improved
The Social Security Statement: How It Can Be Improved 15

Public Reactions to the Statement

In 1998, SSA implemented a public survey that 

measured the public’s understanding of the agency’s programs and basic rules. These early results 

showed that just over half of the American public 

was knowledgeable about Social Security programs 

and had an understanding of basic program rules 

and concepts. The survey also indicated that the 

public was not as knowledgeable as it could be 

about the more technical features of Social Security, such as the average benefit amount or how 

work affected benefit levels. A statistical analysis 

of this survey data showed that knowledge varied 

with demographic factors such as age, education, 

and income, with older, more educated and highincome individuals showing the highest degree of 

knowledge.14

In 1999, SSA added for the first time a section to 

its public survey instrument specifically to measure 

the usefulness and ease of understanding of the 

Social Security Statement. In doing so, the agency 

confirmed its general sense that the public, in large 

part, has a favorable reaction to the Statement.

15 A 

later agency survey conducted in 2000 showed an 

increase in the public’s knowledge about those aspects of Social Security that are related to an individual’s own retirement planning.16 For example, 

knowledge that an individual can receive some retirement benefits before full retirement age rose 

from 62 percent to 65 percent, while knowledge 

that there will be an increase in the age for receipt 

of full retirement benefits rose from 65 percent 

14 Social Security Administration, Public Understanding Measurement System Survey, 1998.

15 Social Security Administration, Public Understanding Measurement System Survey, 1999.

16 Social Security Administration, Public Understanding Measurement System Survey, 2000.

to 72 percent. SSA attributes this rise in public 

knowledge, in part, to receipt of a Social Security 

Statement.

In 2004, SSA’s public opinion surveys took a new 

approach to evaluating the Social Security Statement; instead of developing an overall measure 

of satisfaction, the new survey looked separately 

at which parts of the Statement people recalled 

reading and whether or not they have taken—or 

planned to take—any specific actions as a result of 

receiving the Statement.

17 Despite the public’s favorable opinion of the Statement, SSA’s 2004 public 

survey results raise some concerns about the effectiveness of the Statement as a communications 

tool. Only about two-thirds of the people surveyed 

recalled receiving a Social Security Statement sometime within the past year. Additionally, only about 

two-thirds of those people who recalled receiving 

a Statement reported that they read the Statement 

carefully, while the rest reported that they either 

merely glanced at the Statement or did not look at 

it at all. Those people who remembered receiving 

a Social Security Statement remembered some parts 

of the Statement more than others, as illustrated in 

Table 1. In response to a question about whether 

or not people have already taken or are likely to 

take any specific actions as a result of receiving the 

Statement, the responses broke out as illustrated in 

Table 2.

As indicated earlier, SSA’s public survey data has 

shown a link between increasing public confidence 

and receipt of the Statement. People who receive 

a Statement not only experience higher knowledge 

of Social Security than non-recipients, but also 

exhibit higher levels of confidence in the agency, 

17 Social Security Administration, Office of Communications, 

Office of External Affairs, Office of Planning, Evaluation, and 

Measurement. Social Security Statement: Report of Findings, 

March 2006.

The Social Security Statement as a Communications Vehicle
16 The Social Security Statement: How It Can Be Improved

and greater confidence that the program still will 

be there for them when they need it. As measured 

by more recent survey data, however, it is not clear 

that public understanding of Social Security has 

improved much since 2000.

An independent survey conducted in 2008 indicates that, while more than three-quarters (77 percent) of the 61-year-olds surveyed reported knowing when they would personally start taking Social 

Security benefits, many still show a limited knowledge of the basic Social Security facts needed to 

make informed decisions.18 For example, 56 percent of respondents did not know when they will 

18 “Fidelity Investments Reports Nearly Half Of 61 Year-Olds Plan 

To Start Taking Social Security As Soon As Eligible: Financial Needs 

and Health Concerns Cited As Top Factors in Decision to Begin 

Receiving Benefits at Age 61.” October 27, 2008. This survey was 

conducted in August 2008 by JLA Strategic Research, an independent research firm, on behalf of Fidelity Investments. http://personal.fidelity.com/myfidelity/InsideFidelity/index_NewsCenter.

shtml?refhp=cp. 

Action Taken in Response Yes No Do Not Know Refused to 

Answer

Keep the Statement with your 

important papers. 82% 17% 1% 0%

Increase your personal savings. 53% 46% 1% 0%

Change your financial plans for the future. 52% 47% 0% 0%

Contact a financial advisor. 25% 75% 0% 0%

Contact the Social Security Administration. 13% 86% 1% 0%

Reconsider your retirement date. 33% 64% 3% 1%

Section of Statement Remember

Reading

Do Not 

Remember

Reading

Do Not

Know

The message about the future of Social Security (Page 1) 38% 60% 2%

The projected benefit amount (Page 2) 91% 8% 1%

The record of yearly earnings (Page 3) 93% 7% 1%

The amount of Social Security taxes paid by the worker and 

the employer (Page 3) 78% 21% 1%

General information about Social Security (Page 4) 47% 52% 1%

Information about SSA’s website 

(Pages 1, 2, and 4) 41% 58% 1%

Source: SSA’s Public Understanding Measurement Survey, December 16, 2004.

Table 1

Source: SSA’s Public Understanding Measurement Survey, December 16, 2004.

Table 2
The Social Security Statement: How It Can Be Improved 17

be eligible for full Social Security retirement benefits, 72 percent did not know that a non-working 

or less-earning spouse could be eligible for benefits 

based on the higher-earning spouse’s work history 

alone, only 69 percent understood that Social Security benefits were considered taxable income, and 

12 percent were not aware that working in retirement could impact their benefits. At a forum sponsored by the Advisory Board in January of 2008, 

retirement policy expert Alicia Munnell noted that 

approximately 26 percent of people surveyed did 

not know that their future Social Security benefits, 

if claimed at the full retirement age, would be more 

than benefits claimed at the early retirement age. 

These results signal that the Social Security Statement has not yet reached its full potential in helping the American public understand how Social Security fits into their retirement security picture.

SSA has also used focus groups to analyze the 

impact of the Social Security Statement on public 

understanding. Most of the agency’s focus group 

efforts have found that participants find the Statement to be very helpful and believe that it addresses issues that are important to them. The three 

pieces of information that most participants look 

for most often when they receive their Statement

are the benefit projections, their earnings history, 

and their retirement age. Most focus group participants, however, thought the Statement was “too 

wordy.” In particular, they felt that the last page 

which provides basic information about Social Security should be redesigned to have fewer words, 

and more bullets. Further, participants found the 

new language SSA included about the GPO and 

WEP, as directed by statute, difficult to understand 

and many had a hard time discerning whether or 

not these provisions applied to them.

In 2005, the Government Accountability Office (GAO) conducted surveys and focus groups 

to assess the understandability of the Social Security Statement, and also asked a benefits consulting 

group to compare the Statement with similar statements sent out by private sector companies and the 

governments of other nations.19 Like SSA’s survey 

results, only about two-thirds (66 percent) of the 

people responding to GAO’s survey remembered receiving the Statement, though some parts, like the 

benefit projections and the earnings history, were 

19 U.S. Government Accountability Office. Social Security Statements: Social Security Administration Should Better Evaluate Whether 

Workers Understand Their Statements, GAO-05-192, April 2005.

remembered more often than other information 

provided on the Statement—for instance, information about Social Security’s future. Participants 

found some of the information confusing and contradictory, including the role that work credits and 

earnings play in determining eligibility and benefit 

levels. When asked to compare the Social Security 

Statement with a private sector benefit statement, 

participants stated that the Social Security Statement lacked helpful design features such as the use 

of color and graphics. The benefits consulting firm 

that GAO asked to review the Statement gave it a 

communications effectiveness score of 65 out of 

100, below the industry average score of 73.

The GAO concluded that SSA is not doing a good 

job of identifying the strengths and weaknesses 

of the document nor adequately responding to 

user feedback. The GAO also pointed to promising 

practices of private sector firms and other industrialized countries as examples of things that SSA 

should consider when gathering feedback from 

Statement recipients. It cited the public pension 

system of Sweden where within a month of when 

a public pension statement is sent to a worker, 

surveys are taken to assess the understandability 

and usefulness of the statement while the recipient’s impressions are still fresh. GAO also noted 

that some other countries customize the content 

of their statements that differ based on the age of 

the recipient or other factors like marital status. 

Some countries stress the importance to younger 

workers of starting to save early in their careers 

for retirement, and older workers receive messages 

stressing what they can do to maintain their current lifestyle—such as working longer or increasing personal savings. These countries believe that 

customizing the statements for their audience is 

important because people are more likely to read 

and remember information that is relevant to them 

and less likely if they keep receiving the same old 

statement year after year, even with personalized 

information.

GAO noted that the Statement was limited because of its inability to offer “strategies for meeting 

income goals through other sources of retirement 

income;” a design that fails to emphasize retirement benefit information; a lack of customization 

of information for different audiences; and its repetitive nature. It outlined several recommendations for SSA to improve its Statement; recommendations to which SSA agreed but has been slow to 
18 The Social Security Statement: How It Can Be Improved

respond. Of these, the need to establish a mechanism for feedback and assessment of the Statement’s effectiveness was GAO’s primary emphasis. Other recommendations included “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.”

Limitations of Current Feedback Approaches

Historically, SSA has conducted only limited evaluations of the Social Security Statement. Aside from 

the relatively few surveys and focus group analyses that SSA performs, SSA does not have systematic processes in place to rigorously and routinely 

evaluate various aspects of the Statement in a manner befitting its importance as a planning tool for 

millions of Americans. For instance, SSA does not 

maintain reliable information to assist the agency 

in evaluating how well the Statement is meeting its 

intended purpose to ensure the accuracy of workers’ earnings records. SSA only recently began putting into place processes to document the reasons 

for corrections in individual earnings histories so 

that it could measure how effective Social Security 

Statements are in correcting earnings records—one 

of the primary purposes of the Statement.

20 In addition, SSA had never attempted to evaluate the accuracy of the benefit projections provided on the 

Statement until the agency was asked to do so by 

the Advisory Board in 2008.

The agency’s assessment of the Statement should 

be more in line with how other countries and private sector financial institutions conduct research 

on how well their publications are conveying complex, yet critical information. Conventional public 

opinion polling and focus groups may not be particularly well suited to researching the public’s understanding of complex issues like those inherent in 

the Social Security program. Traditional surveying 

and polling methods usually attempt to measure 

the public’s level of understanding through selfreports; respondents are asked how well they understand a particular aspect of an issue or how effective they believe the communications materials 

about it to be. Cognitive science research suggests, 

20 SSA Office of Inspector General. Effectiveness of the Social 

Security Statement in Correcting Earnings Records, A-15-07-17089, 

August 2008.

however, that a better gauge of how well individuals understand an issue is whether or not they can 

accurately explain it, in their own words, to someone else. SSA currently has a highly skilled staff of 

researchers, policy analysts, and communications 

experts that could be called upon to perform regular evaluations of various aspects and design features of the Statement. Utilizing the agency’s existing analytical capacity, SSA could explore ideas for 

improving on the good work that has already been 

done and produce the best, most effective, state-ofthe-art Statement possible. This would, undoubtedly, require more than the 11 workyears of agency 

staff time currently devoted to the Statement, but 

it is, in all likelihood, within the existing capacity 

of the agency, and would result in a more vigorous 

and more modern approach to evaluating the accuracy and effectiveness of each part of the Statement

and, overall, better Statements. Where necessary, 

the agency should also consult with outside experts 

and should employ state-of-the-art communications and evaluation techniques to evaluate each 

part of the Statement to determine whether or not 

the message the public is receiving is, indeed, the 

message that SSA intended to send.

The Statement should present important, basic 

information about Social Security programs as 

clearly, accurately, and succinctly as possible and 

then tell the readers where they can find more information rather than try to be all things to all people. For example, when SSA added language to the 

Statement about GPO and WEP, the agency did so 

because it was required by statute. SSA’s description of these provisions, however, has been confusing to the public and many people say that they 

cannot tell from reading this section whether or 

not it applies to them personally. Given the complexity of these provisions, and the fact that they 

apply to less than 3 percent of beneficiaries, SSA 

should develop a more simplified presentation that 

could be easily understood by the public and then 

refer individuals to more detailed sources of information, such as the agency’s Internet website or an 

information pamphlet.

SSA is also thinking about ways to improve the 

Social Security Statement. Agency officials have 

told the Advisory Board that they have considered 

“mass” customization of the Statement that would 

allow the information presented on it to be tailored 

more closely to each individual’s personal situation. However, they rejected this notion because 
The Social Security Statement: How It Can Be Improved 19

to do this would be “prohibitively expensive and 

administratively infeasible” given the large volume 

of Statements mailed each year (the Advisory Board 

has not been presented with or evaluated hard data 

on how expensive or difficult it would be to do such 

customization). Rather, SSA has established two 

workgroups to look at options for designing special general inserts geared toward larger groups 

of people: (1) workers who are age 55 and older—

focused more on the things these people need to 

know as they approach retirement; and (2) younger 

people, ages 25 to 35—a document that includes a 

stronger message about the importance of savings 

and investment early in their careers. These agetargeted inserts are not personalized in any way. 

In addition, the Board has heard from the agency 

that SSA’s Office of Retirement Policy has formed 

a workgroup that will take a hard look at the presentation of projected benefits and the language 

in the Statement that relates to when an individual 

should claim benefits. The Advisory Board believes 

that these things are a step in the right direction 

but there is much more that the agency could do to 

make the Social Security Statement a more effective 

communications vehicle.

Some limited improvements have been made to 

the Statement’s presentation, content, and understandability in recent years. Most notably, the 

agency has made changes to address the public’s 

concerns that the Statement is “too wordy,” that 

they did not like the font in which it was printed, 

and that more information should be presented in 

bullet format. The agency, however, has been slow 

to make changes to address other needs and concerns raised by GAO and by the intended user, the 

American public, to improve the accuracy, understandability, and utility of the Statement.

Improving the Accuracy of Benefit Projections

In examining how well the Social Security Statement is living up to its potential as an effective communications vehicle, the Advisory Board decided to 

look closely at one important part of the Statement

that lends itself to formal empirical analysis—the 

projection of the future retirement benefit. Among 

the most important functions of the Statement is 

to give covered workers a reasonably accurate projection of what their future Social Security benefits 

will be, assuming benefits scheduled in current law 

are paid. The law requires that SSA provide benefit estimates only for older workers (age 55 and 

above), because they are nearing the time when 

they will have to make decisions about exiting the 

workforce and deciding when to begin receiving retirement benefits. The law recognized that it is far 

more important for this older group to receive such 

detailed information than it is for younger workers 

who still have a long time to work before making 

such decisions. SSA has chosen, however, to provide benefit estimates for eligible individuals at all 

ages. While this information may be most valuable 

to those approaching retirement, workers of all 

ages should be able to use these projections to help 

them plan their finances and to participate in civic 

discussions about the future of the Social Security 

program.

The Advisory Board believes that it is imperative 

that the Social Security Statement provide the most 

accurate information possible and that information 

be communicated in a clear and objective manner. 

The benefit projections provided on the Statement

are considered by the vast majority of the public to 

be one of the most important pieces of information 

relayed to them on the Statement. But how accurate are the projections that SSA provides?

n SSA’s Current Assumptions and Methods.

The Social Security Statement currently provides 

projections of what an individual worker’s retirement benefits would be if he or she chooses to start 

those benefits at age 62, at the full retirement age, 

and at the age of 70. If an individual is not fully insured for Social Security retirement benefits at the 

time the Statement is prepared, no retirement benefit projection is provided.21 Benefit projections are 

also provided to workers who are eligible to receive 

disability benefits. As in the case of a retired worker, if the individual does not meet the criteria for 

disability insured status, then no disability benefit 

21 A worker is considered to be “fully insured” for Social Security 

retirement purposes when he or she has worked for a sufficient 

length of time in a job or jobs covered by Social Security and has 

earned at least the minimum indexed amount of income established by law. To be fully insured, workers need at least one quarter 

of coverage for each calendar year after they turned age 21 and the 

earliest of the following: the year before they attain age 62, the year 

before they die, or the year they became disabled. An individual is 

considered to be “permanently insured” if he or she is fully insured 

and will not lose fully-insured status when he or she stops working 

under covered employment. Generally, sufficient covered employment to gain permanently insured status is defined as 40 quarters 

of covered work, or ten years of employment. The 40 quarters need 

not be worked consecutively.
20 The Social Security Statement: How It Can Be Improved

projection is provided.22 The Statement also notes 

that estimated benefits are based on current law 

and that the law governing benefit amounts may 

change because, by 2041, the payroll taxes collected will be enough to pay only about 78 percent of 

scheduled benefits.

Benefit projections are based on a worker’s actual 

earnings record at the time the Statement is issued 

as well as assumptions about what their future earnings will be between the Statement date and three 

possible ages the worker might choose to start taking benefits. For the purposes of the projection, 

SSA assumes that there will be no growth in future 

real wages, or prices. That is, an individual worker 

is assumed to have the same level of earnings until 

the age at which the benefit is calculated as he or 

she had in the more recent of the last two year’s 

prior to the Statement date. If an individual has 

no earnings in both of the previous two years, SSA 

assumes he or she will have no further earnings 

until the date benefits are claimed. For example, 

if a worker had earnings of $35,000 in 2007, and 

$38,000 in 2008, it would be assumed that his or 

her wages would remain at $38,000 each year until 

the age at which the benefits are calculated. If the 

individual had no earnings in 2008, it would be assumed that he or she has wages of $35,000 each 

year until the age at which the benefits are calculated. If the worker had no earnings in either year, 

it would be assumed that he or she would have no 

future earnings.

SSA further assumes that the current thresholds 

in the benefit formula known as “bend points,” that 

are used to calculate the benefit, (or primary insurance amount, PIA), remain constant into the future 

as well.23 The agency assumes there will be no future growth in the average wages in the national 

economy that are used to index a worker’s wages 

and the benefit formula “bend points.”

22 Generally, an individual is considered insured for disability benefits if he or she has earned at least 20 quarters of coverage during 

the last 10 years, and is fully insured for retirement purposes. 23 The Primary Insurance Amount, or PIA, is derived from a 

formula that SSA uses to define an individual’s retirement benefit 

amount. The PIA is determined by calculating an individual’s average indexed monthly earnings based on the individual’s 35 highest 

years of earnings, adjusted by changes in the average wage index 

(AWI). Bend points are the dollar amounts that define PIA earnings brackets in the benefit formulas to make the formula progressive, i.e., the formula replaces a larger portion of pre-retirement 

earnings for lower income individuals than it does for higher 

income individuals. For a more detailed explanation see: http://

www.ssa.gov/OACT/COLA/Benefits.html.

By making these simplifying assumptions, SSA 

believes the benefit projections provided in the 

Statement can be more easily understood, because 

they are expressed in terms of today’s standard of 

living. The agency also stated that it believed that 

these assumptions, although they simplify the task 

of projecting future circumstances, provide reasonably accurate projections.

There are alternative assumptions that could be 

made. In fact, at one time the Statement benefit 

projections did assume that wages would increase 

in real terms by 1 percent each year. That was 

changed to the current practice of assuming no future wage (or price) growth because it was believed 

to be simpler to explain to the public. Another 

set of assumptions is currently used to project future benefit levels for low, medium and high wage 

earners in the annual report of the Social Security 

Trustees.24 The Trustees, after careful consideration of historical evidence and judgments about 

the future economic trends, develop explicit assumptions about long-term trends in future wage 

growth and future inflation rates as part of their 

effort to give the best possible long-term projection 

of the finances of the entire Social Security system. 

They update these assumptions each year. In order 

to calculate average benefits for workers, they also 

assume worker’s wages will follow an age-graded 

trajectory observed in historical data. Averaged 

over all workers, wages typically increase until the 

ages of early 50s and then decline slightly thereafter.25 Whether the current set of assumptions used 

in the Social Security Statement or some alternative 

set result in more accurate projections on average 

and for specific groups of workers is an empirical 

question.

n Comparing Projected Benefits to Actual Benefits. With the substantial assistance of SSA’s Office of Retirement Policy and the Office of the Chief 

Actuary, the Advisory Board evaluated how close 

the projections on the Statement, delivered at various ages over a person’s lifetime, are to the actual 

benefits that a person would be eligible to receive 

24 See 2008 Annual Report of the Board of Trustees of the Federal 

Old-Age and Survivors Insurance and Federal Disability Trust Funds, 

Table V1.F10: “Estimated Annual Scheduled Benefit Amounts for 

Retired Workers With Various Pre-Retirement Earnings Patterns 

Based on Intermediate Assumptions, Calendar Years 2008-85.” 25 For a detailed description of this methodology see: “Scaled Factors for Hypothetical Earnings Examples under the 2008 Trustees 

Report Assumption,” by Michael Clingman and Orlo Nichols, 

Actuarial Note 2008.3, August 2008.
The Social Security Statement: How It Can Be Improved 21

at age 62. Although Statements have only been sent 

to workers over the last decade (unless the worker 

requested one), the analysts at SSA were able to use 

actual wage histories of a sample of the cohort of 

workers born in 1940-1943 to calculate the projections they would have received if Statements, using 

the current benefit formula and the current methods and assumptions that SSA employs, were sent 

to them throughout their working years.26 For a 

worker born in 1940, for example, SSA researchers were able to simulate the retirement-at-age-62 

benefit projection the worker might have received 

at age 40 (if the Statement had existed at that time) 

by using his or her actual wages up until 1980, and 

assumed constant wages from 1980 to 2002. That 

projection could then be compared to the benefit 

the worker was actually eligible to receive in 2002 

based on his or her entire actual wage history 

through 2002, when he or she turned 62.27 The results in Table 3 show the results of similar compari26 For a more complete explanation of the methods and data used, 

see Glenn R. Springstead, David A. Weaver, and Jason J. Fichtner, 

“Estimated Retirement Benefits in the Social Security Statement,” 

Research and Statistics Note No. 2008-05, November 2008. U.S Social 

Security Administration, Office of Policy. [http://www.ssa.gov/

policy/docs/rsnotes/rsn2008-05.pdf] We note that results in 

that paper and this report may differ slightly because the sample 

cohorts used in this report were born from 1940-1943, while the 

published result from the Office of Policy are based on cohorts born 

from 1940-1946. Wage data for 1940-1943 are based strictly on 

actual histories, while some data from 1944-1946 are projected 

using the MINT model.

27 It is not necessary for workers to have actually chosen to receive 

a benefit at age 62; we compare the estimate based on historical 

and projected wages to the potential benefit they are eligible for 

based on their entire history of wages at the time they turned 62, 

the early retirement age.

sons averaged over the whole cohort.

We characterized the accuracy of these simulated 

Statement-like projections by how close those projected dollar amounts are on average to the actual 

dollar amounts the sample workers were eligible to 

receive when they turned age 62. We also report 

what percentage of workers would have received a 

projection that was within a certain percentage of 

the benefit a worker was actually eligible to receive 

at age 62. For example, we report what percent of 

workers in this cohort would have received a projection at age 40 that was within 10 percent of what 

they would have actually been eligible to receive at 

age 62.

n Empirical Results. The results for the entire cohort are reported in Table 3. The first two columns 

report the age at which the Statement projection was 

calculated and the number of workers in the sample. 

Because workers need to have worked 40 quarters 

before a worker is eligible to receive a Social Security 

retirement benefit, the number of the eligible workers in the sample increases at each age. The third and 

fourth columns compare the median benefit projection using the assumptions and methods employed 

in today’s Statements with the median benefits for 

which the workers in the sample were actually eligible at age 62. The dollar amounts are expressed 

in terms of the living standards at the time of the 

projection.28 The central tendency, illustrated by the 

median, masks the full distribution of results. The 

28 Technically, the actual dollar benefit at age 62 is reduced/deflated by the growth of wages (based on the Average Wage Index or 

AWI) between the second year prior to the Statement age and the 

year persons reached age 60.

Expressed in terms of living standards 

at time of projection Percent of projections within:

Age at 

projection

Sample 

size

Median Statement

Projection

Median Actual 

Benefit at 62 5% 10% 15% 20% 25%

25 138 $174 $213 8% 17% 22% 37% 45%

30 3,283 $251 $258 14% 30% 46% 61% 70%

35 4,386 $334 $332 25% 47% 59% 67% 73%

40 5,120 $452 $447 34% 53% 64% 72% 78%

45 5,566 $577 $577 42% 63% 74% 82% 87%

50 5,916 $695 $698 54% 76% 86% 91% 94%

55 6,132 $799 $809 65% 85% 92% 95% 97%

Table 3: Statement projection compared to actual monthly benefit for which eligible 

at age 62, by age at projection, 1940-1943 birth cohorts

Source: Social Security Administration.
22 The Social Security Statement: How It Can Be Improved

last five columns in Table 3 describe what percentage 

of the individual projections in the sample of workers were within 5 percent, 10 percent, 15 percent, 

20 percent or 25 percent of the actual benefits for 

which workers were eligible at age 62.

First, it is clear that the projections are fairly close 

to the actual benefit for which eligible at age 62, in 

dollar terms, as the age the projection is made approaches 62. At age 45, 63 percent of projections 

using an assumption of constant future wages would 

have been within 10 percent of the amount received 

if the worker had chosen to take his retirement benefit at age 62. By age 55, that percentage rises to 

85 percent. At age 30, only 30 percent of projections 

are within 10 percent of the benefit amount eventually earned at age 62.

While not shown in the table, the projections for 

younger workers are more likely to underestimate 

the actual benefit at age 62. For 25-year-olds, projected benefits are lower than actual benefits by 

17 percent at the median; for 30-year-olds, projected benefits were 10 percent lower at the median; 

for 35-year-olds, 4 percent lower; while for 40-, 45-, 

50- and 55-year-olds the median difference between 

projected and actual benefits was zero. This suggests 

that actual wages for the typical youngest workers 

tend to be higher than their projected wages. In other words, the projections for younger workers tend 

to be conservative.

The accuracy of projections tends to be considerably lower for women than for men and for lower 

wage workers than for higher wage workers. Figure 2 illustrates that benefit projections are considerably more accurate for men than women. At each 

age, a larger percentage of projections for men fall 

within 10 percent of the actual benefit available at 

age 62.29 At age 40, for example, 63 percent of men’s 

projections are within 10 percent of the benefit for 

which they will eventually become eligible at age 62. 

For 40-year-old women, only 40 percent will receive 

as accurate an estimate.

Benefit projections for those with lower lifetime 

incomes also tend to be less accurate than those 

with higher incomes. One reason is that because 

of the progressive benefit formula, benefit levels 

are less sensitive to earnings as one moves up the 

earnings scale.30 Another reason may be that low29 A similar pattern persists for every other level of precision. 

Fewer estimates for women are within 15 percent, 20 percent and 

25 percent than for men at all ages. 30 The extreme example is of a worker whose income always 

exceeds the taxable maximum because earnings above the taxable 

maximum are not used in the calculation of benefits. An inaccurate 

projection of those earnings above the maximum, therefore, would 

not change this worker’s eventual benefits at all.

25

Age at estimate

30 35 40 45 50 55

100%

80%

40%

60%

20%

0%

Within 10% of actual

90%

70%

50%

30%

10%

19%

7%

32%

23%

57%

30%

63%

40%

74%

50%

86%

65%

93%

77%

Men

Women

Source: Social Security Administration.

Figure 2: Percent of benefit estimates within 10 percent of actual benefit eligible for 

at age 62, by age at estimate and gender, 1940-43 cohorts
The Social Security Statement: How It Can Be Improved 23

er wage workers may be more likely to have years 

of zero earnings and, therefore, under the projection assumptions may inaccurately be assumed to 

be permanently, rather than transitorily, out of the 

workforce. Figure 3 illustrates that relationship is 

true for both men and women. At age 50, when the 

Statement projection should be quite accurate, only 

61 percent of men and 55 percent of women who are 

in the bottom fifth of lifetime 

earners receive a projection 

that is within 10 percent of 

the benefit they will actually 

be eligible for in 12 years at 

age 62. Among those in the 

highest fifth of lifetime earners, 97 percent of men and 

women will receive a projection that is with 10 percent 

of the benefit for which they 

will actually be eligible in 

12 years at age 62.

The accuracy of the simulated projections depends 

partly on the validity of 

the assumptions about the 

future growth of wages. If 

the assumptions used are 

unrealistic, too strict or outdated they should be 

replaced by better assumptions. It may also be 

true that the assumptions are reasonably accurate 

for the average worker, but are less applicable for 

specific groups of workers. For the most part, the 

assumption of constant real earnings used in the 

Statement yields fairly accurate results for men 

and for older workers. It is clearly less realistic for 

Lowest

Income quintile

Second Third Fourth Highest

100%

80%

40%

60%

20%

0%

Within 10% of actual

90%

70%

50%

30%

10%

61%

55%

Men

Women

76%

65%

76%

69%

88%

81%

97% 97%

Figure 3: Percent of estimates at age 50 within 10 percent of actual benefit eligible for 

at age 62, by income quintile and gender

Source: Social Security Administration.

Age at 

projection

Percent of projections within 

10% of actual benefits at 62

Median percentage difference 

between projection and actual 

benefit at 62

All Zero earners All Zero earners

30 30% 17% -10% -51%

35 47% 25% -4% -35%

40 53% 32% 0% -23%

45 63% 49% 0% -11%

50 76% 68% 0% -3%

55 85% 82% 0% 0%

Table 4: Statement projection compared to actual benefit at age 62 

among all workers and those with zero earnings in both of previous 

two years, by age at projection

Source: Social Security Administration.
24 The Social Security Statement: How It Can Be Improved

younger workers who may reasonably expect to see 

their real earnings grow in the future.

The assumption that workers will experience no 

further earnings if they have zero earnings during both of the past two years may also be overly 

strong. Assuming those workers will not work 

again after only a brief period out of the labor 

force, especially for workers under age 50, seems 

unrealistic. In fact, projections of their benefits are 

the least accurate of any group discussed in this report, and the level of benefits for which they actually become eligible are the most underestimated. 

Table 4 illustrates the degree of inaccuracy and the 

extent of underestimation of benefits that occurs 

by assuming an observation of no earnings in the 

previous two years implies the person will have no 

future earnings.

Among all 30-year-olds the median projected 

benefit underestimates the eventual benefit earned 

by about 10 percent. Among 30-year-olds with no 

earnings in the past two years, median projected 

benefit underestimates the eventual benefit earned 

by 50 percent. The extent of underestimation is apparent through age 45. By age 55, the differences 

disappear.

Workers with two consecutive years of zero earnings in the most recent two years represent about 

8 percent to 11 percent of workers age 50 and under. They tend to be lower lifetime earners, and a 

disproportionate share is women. The fairly large 

underestimation of actual benefits for those who 

at age 30-45 are assumed to have no further earnings may partly explain why benefit estimates for 

women and lower earners are less accurate than for 

men and higher earners and are more likely to be 

underestimates. Work patterns for women have 

changed dramatically in the United States over the 

past 30 years, however, so it is possible that this 

conclusion is less relevant for projections made today for younger cohorts.
The Social Security Statement: How It Can Be Improved 25

Given what was learned during this study, the 

Social Security Advisory Board offers a number of 

conclusions and recommendations for improving 

the Social Security Statement.

Regarding the Accuracy of the Benefit Projec

tions:

n The projected future estimates provided on the 

Social Security Statement are reasonably accurate 

on average, although they are more accurate for 

older workers than for younger ones. Projected 

benefits, however, could and should be improved 

by basing them on as accurate assumptions about 

future lifetime earnings as are possible. SSA 

should consider experimenting with and evaluating alternative assumptions and projection 

methods, including those used by the Office of 

the Chief Actuary in projecting future benefits 

for the Trustees Report. One example of an unrealistic basis for projection involves assuming 

workers whose two most recent years’ earnings 

are zero will have no further earnings over their 

lifetime. It is too strict and can lead to overly 

conservative projections. Because women and 

lower earners may be more likely to have intervals of time when they are out of the labor force, 

their benefit projections are more likely to be affected by the current assumptions. At the very 

least investigating alternatives to this assumption, especially for younger workers, seems warranted. Public confidence in projections, similar 

to those developed over time by the Office of the 

Chief Actuary for use in the annual Trustees report, depends on a belief that SSA has considered 

the alternatives and chosen the best possible 

methods and assumptions taking into account 

both accuracy and transparency.

n SSA has begun to explore alternative ways to 

provide accurate and tailored benefit projections 

Advisory Board Conclusions and Recommendations

to workers and their families. The agency has recently begun an effort to provide targeted information to younger workers and to those nearing 

retirement age by including special inserts for the 

Statement that are specific to these age groups. 

In addition, the agency is considering new ways 

of displaying benefit projections that focus first 

on the benefit amount that may be received at 

the full retirement age. The Advisory Board is 

encouraged by these efforts and believes that 

these changes will improve public understanding 

of how Social Security retirement benefits fit into 

overall retirement planning. We also encourage 

SSA to personalize information in Statements for 

older workers to better illustrate the impact of 

different claiming and retirement ages. By contrast, showing different retirement benefit projections at various retirement and claiming ages 

to young workers may not be necessary.

n Furthermore, the Board would like to encourage SSA to consider providing certain additional 

information to younger workers about their 

retirement benefit. Specifically, it would give 

them a calculation of the monthly retirement 

benefit they have already earned based on their 

actual wages to date and assuming they have no 

future wages. This amount would be conceptually similar to the disability benefit amount currently provided on the Statement in that it would 

be based solely on the worker’s current earnings 

record. This would inform the worker what she 

or he could count on receiving from Social Security in the event that the worker has no future 

earnings for reasons other than disability. This 

amount would be recalculated each year to reflect the most recent earnings information and 

it would demonstrate for younger workers how 

their future retirement benefit is based on their 

continued earnings. For some workers who, in 
fact, drop out of the labor force and have no future earnings, this calculation could be the most 

accurate information about their future benefit.

The Board believes that SSA, in determining 

whether and how to implement this additional 

projected benefit, should conduct a careful analysis of the impact that the Social Security benefit 

formula, including its progressivity and averaging period, will have on the proposed benefit projections. SSA should consider whether these social insurance features of Social Security’s benefit 

formula will produce benefit projections which, 

when compared from year to year or the current 

projections, will produce anomalies that might 

be little understood by the public. Determining 

whether or not to include the additional information that we have suggested, how to display 

it, and for which age groups it would be the most 

valuable would require SSA to conduct empirical 

and focus group research on the issue.

n The Statement should also direct workers to 

SSA’s online benefit calculator where they can enter their own assumptions about how much they 

will earn in the future.

Regarding the Content of the Statement:

n SSA should make the Statement as accurate, 

clear, and concise as possible. SSA should provide only that information that is required or 

necessary for making informed decisions, eliminate extraneous information, and provide more 

references on the Statement to other sources of 

information, such as the online retirement planner. In addition, SSA should consider separating out the Commissioner’s message (the first 

page) from the factual material provided in the 

Statement, and transmit this material in a cover 

letter or on a separate attachment to the Statement. Likewise, SSA should consider separating 

out technical descriptions of how SSA’s program 

work from the Statement itself and provide this 

information elsewhere, such as an information 

pamphlet, and provide information on the Statement as to where to find further information on 

SSA’s Internet website.

n SSA should review the language it uses to describe benefit claiming options to assure that the 

phrasing used is both neutral and accurate.

n SSA should improve the Statement’s message 

and information on the impact that working has 

on retirement benefits.

n SSA should provide a clearer, more succinct, and 

targeted message on the GPO/WEP provisions of 

law that is easier for the public to understand.

Regarding Statement Design Features and the 

Presentation of Information:

n SSA should seek to improve the overall readability of the Statement and should examine the 

impact of altering some of the Statement’s design 

features, such greater use of color, graphics, or 

enlarged font size.

n SSA should consider consulting with experts 

outside of the agency to assist it in designing a 

Social Security Statement that is state-of-the-art 

and that communicates a clear message that helps 

the American public understand Social Security’s 

role and importance in retirement security.

Regarding Continuous Improvement of the 

Statement:

n The Statement should be viewed by SSA as a dynamic instrument and SSA should seek to make 

sure it is meaningful to its audience. SSA should 

consider investing more resources into periodic 

evaluation of the Statement to strengthen its 

evaluation efforts both in terms of accuracy and 

understandability. Development of state-of-art 

survey and assessment tools and improvement 

of its survey process are essential. The agency 

should also explore more sophisticated cognitive testing techniques and use them wherever 

there is critical information presented to the 

public to ascertain if the people who are reading 

the Statement—and other SSA publications as 

well—understand the messages that SSA is relaying in the manner that the agency intended. 

SSA should seek to answer such questions as: Are 

the projections and earnings history data as accurate as possible? Is the information objective 

and presented as clearly as possible? Do people 

understand the information that is being provided to them?

n SSA should improve its processes for mailing 

Statements to ensure that workers are receiving 

the Statements to which they are entitled. In 

doing so, SSA should take steps to assure that 

Medicare-only beneficiaries receive an annual 

Statement, and improve its processes for handling “undeliverable” or returned Statements.

26 The Social Security Statement: How It Can Be Improved
The Social Security Statement: How It Can Be Improved 27

Appendices
28 The Social Security Statement: How It Can Be Improved
The Social Security Statement: How It Can Be Improved 29

Sample Social Security Statement

Appendix A

Prevent identity theft—protect your Social Security number

Your Social Security Statement

Prepared especially for Wanda Worker

April 23, 2007

See inside for your personal information

WANDA WORKER

456 ANYWHERE AVENUE

MAINTOWN, USA 11111-1111

What’s inside...

Your Estimated Benefits................................................................2

Your Earnings Record...................................................................3

Some Facts About Social Security ...............................................4

If You Need More Information.....................................................4

To Request This Statement In Spanish ........................................4

(Para Solicitar Una Declaración en Español)

What Social Security Means To You

www.socialsecurity.gov

This Social Security Statement can help you better plan for your financial future. It gives you estimates 

of your Social Security benefits under current law 

and updates your latest reported earnings.

Please read this Statement carefully. If you see 

a mistake, please let us know. That’s important 

because your benefits will be based on our record of 

your lifetime earnings. We recommend you keep a 

copy of your Statement with your financial records.

Social Security is for people of all ages...

It’s more than a retirement program. Social Security 

also can provide benefits if you become disabled 

and help support your family when you die.

Work to build a secure future...

Social Security is the largest source of income for 

most elderly Americans today, but Social Security 

was never intended to be your only source of 

income when you retire. You also will need other 

savings, investments, pensions or retirement 

accounts to make sure you have enough money to 

live comfortably when you retire.

Saving and investing wisely are important not 

only for you and your family, but for the entire 

country. If you want to learn more about how and 

why to save, you should visit www.mymoney.gov, a 

federal government website dedicated to teaching 

all Americans the basics of financial management.

About Social Security’s future...

Social Security is a compact between generations. 

For decades, America has kept the promise of 

security for its workers and their families. Now, 

however, the Social Security system is facing 

serious financial problems, and action is needed 

soon to make sure the system will be sound when 

today’s younger workers are ready for retirement.

In 2017 we will begin paying more in benefits 

than we collect in taxes. Without changes, by 2041 

the Social Security Trust Fund will be exhausted* 

and there will be enough money to pay only about 

75 cents for each dollar of scheduled benefits. We 

need to resolve these issues soon to make sure 

Social Security continues to provide a foundation 

of protection for future generations.

Social Security on the Net...

Visit www.socialsecurity.gov on the Internet to

learn more about Social Security. You can read 

our publications, use the Social Security Benefit 

Calculators to calculate future benefits or use our

easy online forms to apply for benefits.

Michael J. Astrue

Commissioner

* These estimates are based on the intermediate 

assumptions from the Social Security Trustees’ 

Annual Report to the Congress. Michael J. Astrue

Commissioner

289

white

black
30 The Social Security Statement: How It Can Be Improved

Your Estimated Benefits

*Retirement You have earned enough credits to qualify for benefits. At your current earnings rate, if you 

stop working and start receiving benefits...

At age 62, your payment would be about................................................................................................. $ 975 a month

If you continue working until...

your full retirement age (67 years), your payment would be about ......................................................... $ 1,412 a month

age 70, your payment would be about...................................................................................................... $ 1,761 a month

*Disability You have earned enough credits to qualify for benefits. If you became disabled right now,

your payment would be about .................................................................................................................. $ 1,293 a month

*Family If you get retirement or disability benefits, your spouse and children also may qualify for benefits.

*Survivors You have earned enough credits for your family to receive survivors benefits. If you die this 

year, certain members of your family may qualify for the following benefits:

Your child ................................................................................................................................................. $ 1,008 a month

Your spouse who is caring for your child ................................................................................................ $ 1,008 a month

Your spouse, if benefits start at full retirement age ................................................................................. $ 1,344 a month

Total family benefits cannot be more than............................................................................................... $ 2,473 a month

Your spouse or minor child may be eligible for a special one-time death benefit of $255.

Medicare You have enough credits to qualify for Medicare at age 65. Even if you do not retire at age 65, be sure 

to contact Social Security three months before your 65th birthday to enroll in Medicare. 

* Your estimated benefits are based on current law. Congress has made changes to the law in the 

past and can do so at any time. The law governing benefit amounts may change because, by 2041, 

the payroll taxes collected will be enough to pay only about 75 percent of scheduled benefits.

We based your benefit estimates on these facts:

Your date of birth .............................................................................................................................................July 5, 1966

Your estimated taxable earnings per year after 2006 .............................................................................................$38,626

Your Social Security number (only the last four digits are shown to help prevent identity theft).............XXX-XX-1234

How Your Benefits Are Estimated

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 $1,000 of wages or selfemployment income. When you’ve earned $4,000, 

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 a benefit estimate now. If you continue to 

work, we’ll give you an estimate when you do qualify.

What we assumed — If you have enough work 

credits, we estimated your benefit amounts using 

your average earnings over your working lifetime. 

For 2007 and later (up to retirement age), we assumed 

you’ll continue to work and make about the same as 

you did in 2005 or 2006. We also included credits 

we assumed you earned last year and this year.

Generally, estimates for older workers are more accurate 

than those for younger workers because they’re based 

on a longer earnings history with fewer uncertainties 

such as earnings fluctuations and future law changes.

These estimates are in today’s dollars. After you 

start receiving benefits, they will be adjusted for cost-ofliving increases.

We can’t provide your actual benefit amount until 

you apply for benefits. And that amount may differ 

from the estimates stated above because:

(1) Your earnings may increase or decrease in the future.

(2) Your estimated benefits are based on current law. 

The law governing benefit amounts may change.

(3) Your benefit amount may be affected by military 

service, railroad employment or pensions earned 

through work on which you did not pay Social 

Security tax. Following are two specific instances. 

You can also visit www.socialsecurity.gov/mystatement 

to see whether your Social Security benefit amount 

will be affected. 

Windfall Elimination Provision (WEP) — In the future, 

if you receive a pension from employment in which you do 

not pay Social Security taxes, such as some federal, state 

or local government work, some nonprofit organizations 

or foreign employment, and you also qualify for your 

own Social Security retirement or disability benefit, 

your Social Security benefit may be reduced, but not 

eliminated, by WEP. The amount of the reduction, if any, 

depends on your earnings and number of years in jobs in 

which you paid Social Security taxes, and the year you 

are age 62 or become disabled. For more information, 

please see Windfall Elimination Provision (Publication 

No. 05-10045) at www.socialsecurity.gov/WEP.

Government Pension Offset (GPO) — If you receive a 

pension based on federal, state or local government work 

in which you did not pay Social Security taxes and you 

qualify, now or in the future, for Social Security benefits as a 

current or former spouse, widow or widower, you are likely 

to be affected by GPO. If GPO applies, your Social Security 

benefit will be reduced by an amount equal to two-thirds 

of your government pension, and could be reduced to zero. 

Even if your benefit is reduced to zero, you will be eligible 

for Medicare at age 65 on your spouse’s record. To learn 

more, please see Government Pension Offset (Publication 

No. 05-10007) at www.socialsecurity.gov/GPO.

2
The Social Security Statement: How It Can Be Improved 31

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.

Review this chart carefully using your own records to make 

sure our information is correct and that we’ve recorded each 

year you worked. You’re the only person who can look at the 

earnings chart and know whether it is complete and correct.

Some or all of your earnings from last year may not 

be shown on your Statement. It could be that we still 

were processing last year’s earnings reports when your 

Statement was prepared. Your complete earnings for 

last year will be shown on next year’s Statement. Note:

If you worked for more than one employer during any 

year, or if you had both earnings and self-employment 

income, we combined your earnings for the year.

There’s a limit on the amount of earnings on which you 

pay Social Security taxes each year. The limit increases 

yearly. Earnings above the limit will not appear on your 

earnings chart as Social Security earnings. (For Medicare 

taxes, the maximum earnings amount began rising in 1991. 

Since 1994, all of your earnings are taxed for Medicare.)

Call us right away at 1-800-772-1213 (7 a.m.–7 p.m. your 

local time) if any earnings for years before last year are 

shown incorrectly. If possible, please have your W-2 or tax 

return for those years available. (If you live outside the U.S., 

follow the directions at the bottom of page 4.)

3

Help Us Keep Your Earnings Record Accurate

You and your family may be eligible for valuable 

benefits:

When you die, your family may be eligible to receive 

survivors benefits.

Social Security may help you if you become disabled—

even at a young age.

A young person who has worked and paid Social 

Security taxes in as few as two years can be eligible 

for disability benefits.

Social Security credits you earn move with you from 

job to job throughout your career.

Your Earnings Record Your Taxed Your Taxed

Years You Social Security Medicare

Worked Earnings Earnings

1982 550 550

1983 1,299 1,299

1984 2,254 2,254

1985 3,704 3,704

1986 4,962 4,962

1987 6,282 6,282

1988 7,827 7,827

1989 10,041 10,041

1990 12,297 12,297

1991 14,278 14,278

1992 16,399 16,399

1993 17,772 17,772

1994 19,346 19,346

1995 21,057 21,057

1996 22,946 22,946

1997 25,031 25,031

1998 26,991 26,991

1999 29,072 29,072

2000 31,251 31,251

2001 32,542 32,542

2002 33,380 33,380

2003 34,720 34,720

2004 36,756 36,756

2005 38,626 38,626

2006 Not yet recorded Not yet recorded

Total Social Security and Medicare taxes paid over your working career through the last year reported on the chart above:

Estimated taxes paid for Social Security: Estimated taxes paid for Medicare:

You paid: $27,730 You paid: $6,506

Your employers paid: $27,730 Your employers paid: $6,506

Note: You currently pay 6.2 percent of your salary, up to $97,500, in Social Security taxes and 1.45 percent in 

Medicare taxes on your entire salary. Your employer also pays 6.2 percent in Social Security taxes and 1.45 

percent in Medicare taxes for you. If you are self-employed, you pay the combined employee and employer 

amount of 12.4 percent in Social Security taxes and 2.9 percent in Medicare taxes on your net earnings.
32 The Social Security Statement: How It Can Be Improved

Some Facts About Social Security 

About Social Security and Medicare...

Social Security pays retirement, disability, family and 

survivors benefits. Medicare, a separate program run by 

the Centers for Medicare & Medicaid Services, helps 

pay for inpatient hospital care, nursing care, doctors’ 

fees, and other medical services and supplies to people 

age 65 and older, or to people who have been receiving 

Social Security disability benefits for two years or more. 

Your Social Security covered earnings qualify you for 

both programs. For more information about Medicare, 

visit www.medicare.gov or call 1-800-633-4227 (TTY 

1-877-486-2048 if you are deaf or hard of hearing).

Retirement — If you were born before 1938, your full 

retirement age is 65. Because of a 1983 change in the law, 

the full retirement age will increase gradually to 67 for 

people born in 1960 and later.

Some people retire before their full retirement age. You 

can retire as early as 62 and take benefits at a reduced rate. 

If you work after your full retirement age, you can receive 

higher benefits because of additional earnings and credits 

for delayed retirement.

Disability — If you become disabled before full retirement 

age, you can receive disability benefits after six months 

if you have:

— enough credits from earnings (depending on your age, 

you must have earned six to 20 of your credits in the 

three to 10 years before you became 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.

Family — If you’re eligible for disability or retirement 

benefits, your current or divorced spouse, minor children 

or adult children disabled before age 22 also may receive 

benefits. Each may qualify for up to about 50 percent of 

your benefit amount. The total amount depends on how 

many family members qualify.

Survivors — When you die, certain members 

of your family may be eligible for benefits:

— your spouse age 60 or older (50 or older if disabled, 

or any age if caring for your children younger than 

age 16); and

— your children if unmarried and younger than age 

18, still in school and younger than 19 years old, 

or adult children disabled before age 22.

If you are divorced, your ex-spouse could be eligible for a 

widow’s or widower’s benefit on your record when you die.

Extra Help with Medicare — If you know someone who 

is on Medicare and has limited income and resources, extra 

help is available for prescription drug costs. The extra help 

can pay the monthly premiums, annual deductibles and 

prescription co-payments. To learn more or to apply, visit 

www.socialsecurity.gov or call 1-800-772-1213 (TTY 

1-800-325-0778).

Receive benefits and still work...

You can work and still get retirement or survivors benefits. 

If you’re younger than your full retirement age, there are 

limits on how much you can earn without affecting your 

benefit amount. When you apply for benefits, we’ll tell you 

what the limits are and whether work would affect your 

monthly benefits. When you reach full retirement age, the 

earnings limits no longer apply.

Before you decide to retire...

Carefully consider the advantages and disadvantages of 

early retirement. If you choose to receive benefits before 

you reach full retirement age, your benefits will be 

permanently reduced. However, you’ll receive benefits 

for a longer period of time.

To help you decide the best time to retire, we offer a free 

booklet, Social Security — Retirement Benefits (Publication 

No. 05-10035), that provides specific information about 

retirement. You can calculate future retirement benefits on 

our website at www.socialsecurity.gov by using the Social 

Security Benefit Calculators.

Other helpful free publications include:

— Understanding The Benefits (No. 05-10024) — Your Retirement Benefit: How It Is Figured

(No. 05-10070)

— Windfall Elimination Provision (No. 05-10045) — Government Pension Offset (No. 05-10007) — Identity Theft And Your Social Security Number

(No. 05-10064)

We also have other leaflets and fact sheets with 

information about specific topics such as military 

service, self-employment or foreign employment. You 

can request Social Security publications at our website, 

www.socialsecurity.gov, or by calling us at 1-800-772-1213. Our website has a list of frequently asked questions that 

may answer questions you have. We have easy-to-use online 

applications for benefits that can save you a telephone call 

or a trip to a field office.

If you need more information—Visit www.socialsecurity.gov/mystatement on the Internet, contact any Social Security office, 

call 1–800-772-1213 or write to Social Security Administration, Office of Earnings Operations, P.O. Box 33026, Baltimore, 

MD 21290-3026. If you’re deaf or hard of hearing, call TTY 1-800-325-0778. If you have questions about your personal 

information, you must provide your complete Social Security number. If your address is incorrect on this Statement, ask the 

Internal Revenue Service to send you a Form 8822. We don’t keep your address if you’re not receiving Social Security benefits.

Para solicitar una Declaración en español, llame al 1-800-772-1213

Form SSA-7005 -SM-SI (4/07) 4
The Social Security Statement: How It Can Be Improved 33

It’s so easy to apply 

online for benefits

The easiest way to apply for 

Social Security retirement 

benefits is to go online at 

www.socialsecurity.gov/

applyforbenefits. If you do 

not have access to the Internet, 

you can call 1-800-772-1213

(TTY number, 1-800-325-0778) 

between 7 a.m. and 7 p.m., 

Monday through Friday, to apply 

by phone. You also can apply at 

any Social Security office. To 

avoid having to wait, call first What is the best option for you? to make an appointment.

Monthly benefit amounts differ based on the

age you decide to start receiving benefits

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Everyone’s situation is different. That is why Social Security has 

created several retirement planners to help you decide what would 

be best for you and your family. Social Security has a new online 

calculator that can provide immediate and accurate retirement 

benefit estimates to help you plan for your retirement.

The online Retirement Estimator is a convenient, secure and 

quick financial planning tool. It uses your own earnings record 

information, thereby eliminating any need to manually key in years 

of earnings information. The estimator also will let you create “what 

if” scenarios. You can, for example, change your “stop work” date or 

expected future earnings to create and compare different retirement 

options. To use the Retirement Estimator, go to our website at 

www.socialsecurity.gov/estimator.

Retirement can have more than 

one meaning these days. It 

can mean that you have applied for 

Social Security retirement benefits 

... or that you are no longer working. Or it can mean that you have 

chosen to receive Social Security 

while still working, either full or 

part-time. All of these choices are 

available to you. And your retirement decisions can have very real 

effects on your ability to maintain 

a comfortable retirement.

If you retire early, you may 

not have enough income to enjoy 

the years ahead of you. Likewise, 

if you retire late, you’ll have a 

larger income, but fewer years to 

enjoy it. Everyone needs to try to 

find the right balance, based on 

his or her own circumstances.

We hope the following information will help you as you plan 

for your future retirement and 

consider your retirement options.

Thinking of retiring?

www.socialsecurity.gov ---------------

Some things to consider

There is one more thing you should 

remember as you crunch the numbers 

for your retirement. You may need your 

income to be sufficient for a long time, 

because people are living longer than 

ever before, and generally, women tend 

to live longer than men. For example:

• The typical 65-year-old today will 

live to age 83;

• One in four 65-year-olds will live 

to age 90; and

• One in 10 65-year-olds will live to 

age 95.

Once you decide on the best age 

for you to actually retire, remember 

to complete your application three 

months before the month in which 

you want retirement benefits to begin. 

Don’t forget Medicare 

Even if you don’t plan to receive 

monthly benefits, you should sign 

up for Medicare three months before

reaching age 65. Otherwise, your 

Medicare medical insurance, as 

well as prescription drug coverage, 

could be delayed and you could be 

charged higher premiums. For more 

information about eligibility and 

costs, visit www.medicare.gov.

Insert for Workers age 55 and older
34 The Social Security Statement: How It Can Be Improved

(8/08 edition) 

Receiving benefits while you work

When you reach your full retirement age, you can work and earn as 

much as you want and still receive 

your full Social Security benefit 

payment. If you are younger than 

full retirement age and if your earnings exceed certain dollar amounts, 

some of your benefit payments 

during the year will be withheld.

This does not mean you must 

try to limit your earnings. If we 

withhold some of your benefits 

because you continue to work, 

we will pay you a higher monthly 

benefit amount when you reach your 

full retirement age. In other words, 

if you would like to work and earn 

more than the exempt amount, you 

should know that it will not, on 

average, reduce the total value of 

lifetime benefits you receive from 

Social Security—and may actually 

increase them.

Retirement age considerations

Here is how this works: after 

you reach full retirement age, 

we will recalculate your benefit 

amount to give you credit for 

any months in which you did not 

receive some benefit because of 

your earnings. In addition, as 

long as you continue to work, 

we will check your record every 

year to see whether the additional 

earnings will increase your 

monthly benefit.

Many people can continue to 

work and still receive retirement 

benefits. If you want more infor- mation on how earnings affect 

your retirement benefits, ask for 

How Work Affects Your Benefits

(Publication No. 05-10069), which 

has current annual and monthly 

earnings limits, and is available 

on our website.

Full retirement age

For persons born during the years 

1943-1954, the full retirement 

age is 66. If you were not born in 

this period, you can find your full 

retirement age on page 2 of your 

Social Security Statement.

Retiring early

If you’ve earned 40 credits (credits 

are explained on page 2 of your 

Statement), you can start receiving 

Social Security benefits at 62 or 

at any month between 62 and full 

retirement age. However, your 

benefits will be reduced based on 

the number of months you receive 

benefits before you reach full 

retirement age.

If your full retirement age is 66, 

benefits will be reduced: 

25 percent at age 62;

20 percent at age 63; 

13 1⁄3 percent at age 64; or

6 2⁄3 percent at age 65. 

Delaying retirement

You may decide to wait beyond 

your full retirement age before 

choosing to receive benefits. If 

so, your benefit will be increased 

by a certain percentage for each 

month you don’t receive benefits 

between your full retirement age 

and age 70. This table shows the 

rate your benefits increase if you 

delay retiring.

Year of birth Yearly increase rate

1937 - 1938 6.5%

1939 - 1940 7.0%

1941 - 1942 7.5%

1943 or later 8.0%

Rules that may affect 

your survivor

If you are married and die before 

your spouse, he or she may be 

eligible for a benefit based on your 

work record. If you start benefits 

before your full retirement age, we 

cannot pay your surviving spouse 

a full benefit from your record. 

Also, if you wait until after your 

full retirement age to begin benefits, 

the surviving spouse benefits based 

on your record will be higher.

Need more 

information?

You can find answers to frequently 

asked questions about Social 

Security, learn about factors that 

could affect your benefits and much 

more by visiting Social Security 

online at www.socialsecurity.gov. 

If you do not have access to the 

Internet, you can get information 

about Social Security by calling 

1-800-772-1213 (1-800-325-0778

for the deaf or hard of hearing) or by 

visiting a local Social Security office.

Other useful websites

www.mymoney.gov

This website contains calculators 

for financial planning and infor- mation on money-related matters, 

such as retirement planning and 

starting a small business.

www.dol.gov/ebsa/pdf/

nearretirement.pdf

Have you determined how much 

money you will need in retirement? There are many tools 

available to help you, such as 

the Taking the Mystery Out of 

Retirement Planning Workbook

available at this link.

www.sec.gov/investor/

seniors.shtml

Are you looking for information 

about the investment options 

available to you as you enter 

retirement? The Securities and 

Exchange Commission has a 

wealth of information on different 

investment products and topics 

available at this website. 

www.usa.gov/topics/

seniors.shtml

This website has a variety of 

resources for seniors on topics 

including retirement planning, 

housing and health.

www.socialsecurity.gov
The Social Security Statement: How It Can Be Improved 35

What young workers should know

about Social Security and saving

www.socialsecurity.gov

Saving for the future is important for multiple 

reasons. Education, buying your own home, taking 

a special vacation and even planning for your 

retirement are all good reasons to start saving early. 

Today’s young workers can expect to spend 20 or more 

years in retirement, so it is important to begin your 

financial planning as early as possible. Here are some 

basic facts about Social Security and saving that can 

help you prepare for the future.

Why this Statement

is important for your 

financial planning

You have probably been paying 

into the nation’s Social Security 

and Medicare systems since you 

first began working. The enclosed 

Statement is a report of what you 

have paid into these programs and 

an estimate of how much you can 

expect to eventually get in benefits.

You will receive a 

Statement each year about 

three months before your 

birthday. As you read through 

your Statement, you should pay 

close attention to a few items.

Check your earnings information. This will be the basis for 

determining how much you will 

receive in Social Security benefit 

payments. 

If you change jobs or marital 

status, make sure your name 

and Social Security number are reported correctly on your employer’s 

records.

Will Social Security 

still be around 

when I retire?

Yes. The Social Security taxes 

you now pay go into the Social 

Security Trust Funds and are 

used to pay benefits to current 

beneficiaries. The Social Security 

Board of Trustees now estimates 

that based on current law, in 2041, 

the Trust Funds will be depleted. 

Because people are living longer 

and the birth rate is low, the ratio 

of workers to beneficiaries is 

falling. Therefore, the taxes that 

are paid by workers will not be 

enough to pay the full benefit 

amounts scheduled.

However, this does not mean 

that Social Security benefit 

payments would disappear. Even 

if modifications to the program 

are not made, there would still 

be enough funds in 2041 from 

taxes paid by workers to pay 

about $780 for every $1,000 in 

benefits scheduled.

Social Security: 

more than retirement 

Social Security reaches almost 

every family, and at some point 

will touch the lives of nearly all 

Americans. This year, more than 

50 million Americans will collect 

nearly $614 billion in Social 

Security benefits. Currently, nine 

out of 10 individuals age 65 and 

over receive benefits, and for 

two-thirds of the elderly, Social 

Security represents at least half 

of their income.

Like most, you probably think of 

Social Security as just a retirement 

program. However, depending on 

your circumstances, you may need 

the protection of Social Security 

well before retirement.

Social Security protects you 

if you become disabled ...

Studies show that a 20-year-old 

worker has a 3-in-10 chance of 

qualifying for disability benefits 

before reaching retirement age.

Social Security protects your 

family in the event of death ...

More than two million children 

and surviving spouses caring for 

children now receive survivor 

benefits from a deceased worker.

Page 2 of your Statement

contains an estimate of your 

monthly disability benefit should 

you become disabled and of 

monthly benefits for your children 

and surviving spouse caring for 

children should you die.

(Over)

Insert for Workers age 25 to 35
36 The Social Security Statement: How It Can Be Improved

Social Security is a 

financial foundation

• Social Security helps replace 

earnings during retirement. 

Financial planners generally 

agree retirees will need about 

70-80 percent of preretirement 

earnings to enjoy a comfortable 

retirement. For an average 

worker, Social Security replaces 

about 40 percent of annual 

preretirement earnings.

But you also should 

save and invest

• Since Social Security will only 

replace part of your lost earnings, 

your savings and investments 

play an important role in ensuring adequate income for you and 

your family.

So start saving today

• The sooner you start, the more 

time you will have to save for 

retirement.

• Even setting aside a small 

portion of each paycheck will 

pay off in big dollars later: just 

$25 a week invested at 5 percent 

interest for 40 years will grow to 

about $165,000.

• Any amount you can save, even 

as little as $5 a week, will add 

up over time.

• The easiest way to save is 

through your job. Ask your employer if you can participate in a 

retirement savings plan at work. 

Your employer might even match 

your contributions to the plan.

• If your employer does not offer a 

savings plan, check with a bank or 

other financial institution for ways 

to save and invest on your own.

To help determine how much you 

should save for retirement, go to 

www.choosetosave.org and click 

on the Ballpark E$timate link. 

You can use the retirement benefit 

information from page 2 of your 

Statement when using this online 

calculator. 

Interested in other 

useful financial 

information?

Visit these websites

www.mymoney.gov

This site contains information 

on getting credit, paying for 

education, buying a home, 

creating a budget and starting 

a small business. It also contains 

calculators for your financial 

planning needs.

www.federalreserve.gov

In the Personal Finance section 

under Consumer Information, 

you can find worksheets that will 

help you establish goals, create 

a budget and find tips on how to 

stick to a budget.

www.sec.gov/investor/oiea_

podcasts.htm

The Securities and Exchange 

Commission offers podcasts that 

cover a broad range of savings 

and investing topics.

www.ncua.gov/publications

At the National Credit Union 

Administration site, you can 

learn how to create an emergency 

financial first aid kit to help 

you maintain financial stability 

in an emergency and serve as 

a reference file for all of your 

financial documents.

www.socialsecurity.gov

(1/09 edition)

Growth in savings when you save $25 or $50 a week

(assuming a 5% annual rate of return)

Years spent saving

$350,000

$300,000

$250,000

$200,000

$150,000

$100,000

$50,000

$0

 10 20 30 40

Amount in savings

Amount in Savings When You Save $50 a Week

(assuming a 5% annual rate of return)

$350,000

$300,000

$250,000

$200,000

 Savings

 $25  $50
The Social Security Statement: How It Can Be Improved 37

WEP/GPO Insert
38 The Social Security Statement: How It Can Be Improved
The Social Security Statement: How It Can Be Improved 39

Since the Social Security Act

became law in 1935, workers 

have had the right to review 

their earnings records on 

file at SSA to ensure that the 

agency has a correct accounting of their lifetime earnings, 

and to initiate corrections 

where necessary. If an individual wanted to view his or 

her earnings record in the early days of the program, she or 

he could file a Wage Statement 

Request by visiting a local field 

office and filling out a postcard-sized form. Upon receiving such a request, SSA would 

mail a copy of the worker’s 

earnings history to the address that the worker listed 

on the postcard. If there were 

any discrepancies between 

the worker’s earnings record 

at SSA and the worker’s own 

personal records, the worker 

could initiate a corrective action by visiting her or his local SSA field office and taking 

along with them any proofs or 

additional information—such 

as W-2 forms, old pay stubs, 

or other documentation from 

their employer—that would 

help SSA to correct the wage 

postings that were in error.

In the early 1980s, SSA began to experiment 

with sending out individualized Social Security “account” statements to people who requested an estimate of their projected future benefits. At that 

time, less than 2 percent of workers paying payroll 

taxes requested such a statement each year.

On August 8, 1988, SSA began providing Personal 

Earnings and Benefit Estimates Statements (PEBES) 

to Social Security number holders who requested 

Appendix B:

A Brief History of the Social Security Statement
40 The Social Security Statement: How It Can Be Improved

this information. In addition to the worker’s earnings history, the PEBES also provided an estimate 

of the benefits the worker could expect to receive 

upon reaching the early retirement age (age 62), 

the full retirement age, and age 70. Six months 

later, Senator Moynihan, impressed by the public’s 

response to SSA’s new Statement, introduced a bill 

on January 25, 1989 to make mandatory the annual provision of PEBES to all individuals age 25 

and older.

Later that same year, the Social Security Act was 

amended by the Omnibus Budget Reconciliation Act 

of 1989 to require SSA to issue such statements 

automatically—without people having to request 

them—to all Social Security number holders age 25 

and older, who are not yet in benefit status and for 

whom the agency can determine a current mailing 

address.31 The Omnibus Budget Reconciliation Act of 

1990 subsequently required the IRS to disclose to 

SSA, upon written request from the Commissioner 

of Social Security, the mailing address of any taxpayer who is entitled to receive an annual Social Security Statement.

32

Specifically, Section 10308 of P.L. 101-239 

(OBRA 89) amended Part A of Title XI of the Social 

Security Act to require SSA to provide to any eligible 

individual a “Social Security Account Statement” 

containing information regarding the individual’s 

wages and self-employment income; an estimate of 

the aggregate of the employee and self-employment 

contributions of the individual for retirement, disability, and survivor benefits and for Medicare; and 

an estimate of the potential monthly retirement, 

disability, survivor and auxiliary benefits payable 

on the individual’s account together with a description of the benefits payable under the Medicare 

program for individuals age 55 and over. The law 

defines an eligible individual as an individual who 

has a Social Security number, is 25 years of age or 

older, and has employee or self-employment earnings. The law also required SSA to take steps to 

assure that individuals are informed of the availability of the statement; mandated SSA to furnish 

statements to eligible individuals who had attained 

the age of 60 and were not receiving benefits from 

fiscal year 1995 through 1999, and biennially by 

fiscal year 2000 to every eligible individual who was 

not receiving OASDI benefits for whom a mailing 

31 P.L. 101-239, the Omnibus Budget Reconciliation Act of 1989. 32 P.L. 101-508, the Omnibus Budget Reconciliation Act of 1990.

address could be found.

SSA began phasing in this new requirement in 

February 1995 by mailing out one-time PEBES to 

eligible individuals age 60 and older. The mailings 

continued through March of 1999 to increasingly 

younger groups of Social Security number holders. 

By October 1, 1999, SSA had fully implemented the 

change.

At about the same time, SSA redesigned the PEBES to make it shorter, easier to read and easier 

to understand, and renamed the form the Social 

Security Statement. Since October 1999, Social Security Statements have been sent to all Americans 

over the age of 25 about three months before their 

birthday, or by special request.33 Like the PEBES 

that preceded it, the Social Security Statement provides a detailed record of each individual’s earnings 

on which he or she has paid Social Security payroll 

taxes during their working years. In addition, the 

Statement provides projections of the benefits that 

the worker and his or her family may receive, as a 

result of those earnings, upon reaching the early 

retirement age (age 62), the full retirement age, or 

age 70, in the event of disability that makes that 

individual unable to work, or to survivors and dependents in the event of the worker’s death. The 

Statement also informs the individual whether or 

not she or he has worked long enough to be entitled to Medicare and it details the amount of Social Security and Medicare payroll taxes the worker 

and his or her employers have paid into the system 

throughout their working life.

In October 2000, SSA began mailing to individuals age 55 and over a special insert along with the 

Social Security Statement. This special insert describes things the worker should consider when 

thinking about retirement. The insert is intended 

to help workers nearing retirement, and their families, make important retirement planning decisions 

before reaching retirement age, and it highlights 

the various factors that workers nearing retirement need to consider, such as the long-term effects of taking a reduced benefit or the impact that 

remaining or re-entering the workforce would have 

on their monthly benefits. A sample of this insert 

33 Workers can still request a copy of their Social Security Statement

at any time by calling SSA’s toll-free telephone number or filing a 

request through the agency’s Internet website. Requesting a Statement will stop the next automatic mailing and the requestor will 

not automatically be mailed another Statement until the following 

year.
The Social Security Statement: How It Can Be Improved 41

is also provided in Appendix A.

Again in 2006, SSA implemented changes to the 

Statement as a result of provisions of the Social Security Protection Act of 2004.

34 The changes mandated 

by Congress in this legislation included the addition 

of paragraphs describing the WEP and GPO provisions of the Social Security Act. In addition, a new 

one-page Statement From Social Security was sent to 

those individuals with only non-covered earnings 

posted to their record.35

34 P.L. 108-203, the Social Security Protection Act of 2004. 35 Non-covered earnings are earnings from work in jobs not covered by Social Security.
42 The Social Security Statement: How It Can Be Improved
The Social Security Statement: How It Can Be Improved 43

In 1994, when Congress passed Public Law 103-

296 establishing the Social Security Administration as an independent agency, it also created an 

independent, bipartisan Advisory Board to advise 

the President, the Congress, and the Commissioner 

of Social Security on matters related to the Social 

Security and Supplemental Security Income programs. Under this legislation, appointments to 

the Board are made by the President, the Speaker 

of the House of Representatives, and the President 

pro tempore of the Senate.

Advisory Board members are appointed to staggered six year terms, made up as follows: three appointed by the President (no more than two from 

the same political party); and two each (no more 

than one from the same political party) by the 

Speaker of the House (in consultation with the 

Chairman and the Ranking Minority Member of 

the Committee on Ways and Means) and by the 

President pro tempore of the Senate (in consultation with the Chairman and Ranking Minority 

Member of the Committee on Finance). Presidential appointments are subject to Senate confirmation. The President designates one member of the 

Board to serve as Chairman for a four year term, 

coincident with the term of the President, or until 

the designation of a successor.

BOARD MEMBERS

Sylvester J. Schieber, Chairman

Sylvester J. Schieber is a private consultant on 

retirement and health issues based in New Market, 

Maryland. He retired from Watson Wyatt Worldwide in September 2006 where he had served as Vice 

President/U.S. Director of Benefit Consulting and 

Director of Research and Information. From 1981-

1983, Dr. Schieber was the Director of Research at 

the Employee Benefit Research Institute. Earlier, 

he worked for the Social Security Administration as 

an economic analyst and as Deputy Director of the 

Office of Policy Analysis. Dr. Schieber is the author 

of numerous journal articles, policy analysis papers, 

and several books including: Retirement Income 

Opportunities in an Aging America: Coverage and 

Benefit Entitlement; Social Security: Perspectives 

on Preserving the System; and The Real Deal: the 

History and Future of Social Security. He served on 

the 1994-1996 Advisory Council on Social Security. 

Dr. Schieber received his Ph.D. from the University 

of Notre Dame. First term of office: January 1998 

to September 2003. Current term of office: October 2003 to September 2009. He was appointed by 

the President in September 2006 to serve as Chairman of the Advisory Board from October 2006 to 

January 2009.

Dana K. Bilyeu

Dana K. Bilyeu is the Executive Officer of the 

Public Employees’ Retirement System of Nevada. 

As the Executive Officer of the $21 billion pension 

trust she is responsible for all aspects of fund management including analysis of plan funding, investment oversight, operational and strategic planning, 

and fiduciary and governance issues. Mrs. Bilyeu 

is principally responsible for the relationship with 

the System’s independent actuary and oversees the 

data reconciliation process for actuarial valuations 

of the System. In her capacity as the Executive Officer, Mrs. Bilyeu provides information and analysis 

to the Nevada Legislature in consideration of pension policy issues affecting state and local government. Prior to her appointment as the Executive 

Officer, Mrs. Bilyeu served for eight years as the 

System’s Operations Officer, overseeing all aspects 

of benefit administration, including survivor, disability, and retirement benefit programs. Mrs. 

Bilyeu also was responsible for cost effectiveness 

Establishment of the Social Security Advisory Board
44 The Social Security Statement: How It Can Be Improved

measurement for all activities of the System. She 

was accountable for technology oversight as well 

as policy issues related to the public safety sector 

of public employment. Prior to her employment 

at the System, Mrs. Bilyeu was the System’s legal 

counsel, representing the System in a variety of aspects from benefits litigation, contracts analysis, to 

Board governance. Mrs. Bilyeu is a member of the 

National Association of State Retirement Administrators, the National Council on Teacher Retirement, the National Conference of Public Employee 

Retirement Systems, and the National Association 

of Public Pension Attorneys. She also serves on the 

Public Employee Advisory Board for the International Foundation of Employee Benefit Plans. She 

received her juris doctor from California Western 

School of Law and her B.A. from the University of 

Arizona. Term of office: December 2006 to September 2010.

Dorcas R. Hardy

Dorcas R. Hardy is President of DRHardy & Associates, a government relations and public policy 

firm serving a diverse portfolio of clients. After 

her appointment by President Ronald Reagan as 

Assistant Secretary of Human Development Services, Ms. Hardy was appointed Commissioner of 

Social Security (1986 to 1989) and was appointed 

by President George W. Bush to chair the Policy 

Committee for the 2005 White House Conference 

on Aging. Ms. Hardy has launched and hosted her 

own primetime, weekly television program, “Financing Your Future,” on Financial News Network 

and UPI Broadcasting, and “The Senior American,” 

an NET political program for older Americans. 

She speaks and writes widely about domestic and 

international retirement financing issues and entitlement program reforms and is the co-author of 

Social Insecurity: the Crisis in America’s Social Security System and How to Plan Now for Your Own 

Financial Survival, Random House, 1992. A former CEO of a rehabilitation technology firm, Ms. 

Hardy promotes redesign and modernization of the 

Social Security, Medicare, and disability insurance 

systems. Additionally, she has chaired a Task Force 

to rebuild vocational rehabilitation services for disabled veterans for the Department of Veterans Affairs. She received her B.A. from Connecticut College, her M.B.A. from Pepperdine University, and 

completed the Executive Program in Health Policy 

and Financial Management at Harvard University. 

Ms. Hardy is a Certified Senior Advisor and serves 

on the Board of Directors of Wright Investors Service Managed Funds, and First Coast Service Options of Florida. First term of office: April 2002 to 

September 2004. Current term of office: October 

2004 to September 2010.

Marsha Rose Katz

Marsha Rose Katz is a Project Director at the 

University of Montana Rural Institute in Missoula, where her work has concentrated on assisting 

persons with disabilities to utilize Social Security 

work incentives to start their own businesses or 

engage in wage employment. Since coming to the 

Rural Institute in 1999, Ms. Katz has focused on 

providing training and technical assistance on both 

employment and SSI/SSDI to rural, frontier and 

tribal communities across the country. Previously, 

she worked for nearly 20 years in a disability rights 

community based organization, the Association for 

Community Advocacy (ACA), a local Arc in Ann Arbor, Michigan. She served as both Vice President 

of ACA, and Director of its Family Resource Center. 

It was at ACA that Ms. Katz began her nearly 30 

years of individual and systems advocacy regarding 

programs administered by SSA, especially the SSI 

and SSDI programs. Ms. Katz has written numerous articles and created many widely distributed 

user-friendly general handouts on SSI and SSDI, 

the majority of which focus on the impact of work 

on benefits, and utilizing work incentives. She is 

the author of Don’t Look for Logic; An Advocate’s 

Manual for Negotiating the SSI and SSDI Programs, 

published by the Rural Institute. Her Bachelor’s 

and Master’s Degrees are from the University of 

Michigan. Ms. Katz’s many years of experience as 

a trainer, technical advisor, and advocate have been 

guided and informed by her partnership with people with disabilities, from her husband, Bob Liston, 

to the people she assisted in her work with ACA 

and the Arc Michigan, her current work at the Rural Institute, and her longstanding participation in 

ADAPT, the nation’s largest cross-disability, grassroots disability rights organization. Term of office: 

November 2006 to September 2012.

Barbara B. Kennelly

Barbara B. Kennelly became President and Chief 

Executive Officer of the National Committee to 

Preserve Social Security and Medicare in April 

2002 after a distinguished 23 year career in elected 
The Social Security Statement: How It Can Be Improved 45

public office. Mrs. Kennelly served 17 years in the 

United States House of Representatives representing the First District of Connecticut. During her 

Congressional career, Mrs. Kennelly was the first 

woman elected to serve as the Vice Chair of the 

House Democratic Caucus. Mrs. Kennelly was also 

the first woman to serve on the House Committee 

on Intelligence and to chair one of its subcommittees. She was the first woman to serve as Chief 

Majority Whip, and the third woman in history to 

serve on the 200 year-old Ways and Means Committee. During the 105th Congress, she was the 

ranking member of the Subcommittee on Social Security. Prior to her election to Congress, Mrs. Kennelly was Secretary of State of Connecticut. After 

serving in Congress, Mrs. Kennelly was appointed 

to the position of Counselor to the Commissioner 

at the Social Security Administration (SSA). As 

Counselor, Mrs. Kennelly worked closely with the 

Commissioner of Social Security, Kenneth S. Apfel, and members of Congress to inform and educate the American people on the choices they face 

to ensure the future solvency of Social Security. 

She served on the Policy Committee for the 2005 

White House Conference on Aging. Mrs. Kennelly 

received a B.A. in Economics from Trinity College, 

Washington, D.C. She earned a certificate from the 

Harvard Business School on completion of the Harvard-Radcliffe Program in Business Administration 

and a Master’s Degree in Government from Trinity 

College, Hartford. Term of office: January 2006 to 

September 2011.

Mark J. Warshawsky

Mark J. Warshawsky is Director of Retirement 

Research at Watson Wyatt Worldwide, a global human capital consulting firm. He conducts and oversees research on employer-sponsored retirement 

programs and policies. A frequent speaker to business and professional groups, Dr. Warshawsky is a 

recognized thought leader on pensions, social security, insurance and health care financing. He has 

written numerous articles published in leading professional journals, books and working papers, and 

has testified before Congress on pensions, annuities and other economic issues. A member of the 

Social Security Advisory Board for a term through 

2012, he is also on the Advisory Board of the Pension Research Council of the Wharton School.

From 2004 to 2006, Dr. Warshawsky served as 

assistant secretary for economic policy at the U.S. 

Treasury Department. During his tenure, he played 

a key role in the development of the Administration’s pension reform proposals, particularly pertaining to single-employer defined benefit plans, 

which were ultimately included in the Pension Protection Act (“PPA”) of 2006. He was also involved 

extensively in the formulation of Social Security 

reform proposals, and oversaw the Department’s 

comprehensive 2005 study of the terror risk insurance program. In addition, Dr. Warshawsky led the 

efforts to update and enhance substantially the 

measures and disclosures in the Social Security and 

Medicare Trustees’ Reports, as well as the setting 

of the macroeconomic forecasts which underlie the 

administration’s budget submissions to Congress.

Dr. Warshawsky’s research has been influential 

in the 2001-2002 regulatory reform of minimum 

distribution requirements for qualified retirement 

plans, the increasing realization of the importance 

of financial protection against outliving one’s financial resources in retirement, and a product innovation to integrate the immediate life annuity 

and long-term care insurance. For the latter research, he won a prize from the British Institute 

of Actuaries in 2001 for a professional article he 

co-authored. Favorable tax treatment for this integrated product was also included in PPA due to 

Dr. Warshawsky’s advocacy. Dr. Warshawsky has 

also held senior-level economic research positions 

at the Internal Revenue Service, the Federal Reserve Board in Washington, D.C. and TIAA-CREF, 

where he established the Paul A. Samuelson Prize 

and organized several research conferences. A native of Chicago, he received a Ph.D. in Economics 

from Harvard University and a B.A. with Highest 

Distinction from Northwestern University. Term 

of office: December 2006 to September 2012.

Members of the Staff

Katherine Thornton, Staff Director

Deborah Sullivan, Deputy Staff Director

Joel Feinleib 

George Schuette

Beverly Sheingorn

Jean Von Ancken

David Warner
Social Security Advisory Board

Sylvester J. Schieber, Chairman

Dana K. Bilyeu

Dorcas R. Hardy

Marsha Rose Katz

Barbara B. Kennelly

Mark J. Warshawsky

Social Security Advisory Board

An independent, bipartisan Board created by the Congress and appointed by the President and 

the Congress to advise the President, the Congress, and the Commissioner of Social Security on 

matters related to the Social Security and Supplemental Security Income programs. 
Social Security Advisory Board

Sylvester J. Schieber, Chairman

Dana K. Bilyeu

Dorcas R. Hardy

Marsha Rose Katz

Barbara B. Kennelly

Mark J. Warshawsky

Social Security Advisory Board

An independent, bipartisan Board created by the Congress and appointed by the President and 

the Congress to advise the President, the Congress, and the Commissioner of Social Security on 

matters related to the Social Security and Supplemental Security Income programs. 
Social Security Advisory Board

400 Virginia Avenue, S.W.

Suite 625

Washington, D.C. 20024

Tel: (202) 475-7700

Fax: (202) 475-7715

E-mail: info@ssab.gov

www.ssab.gov