All Social Security Benefits to Go Electronic

Change is Coming

All Social Security Benefits to Go Electronic
By 2013, the checks will not be in the mail.

by: Carole Fleck | from: Bulletin | April 23, 2010
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EnlargeMillions of Social Security recipients who get their monthly checks by mail will instead receive them electronically as of March 1, 2013, the federal government has announced. The change will not affect about 85 percent of Social Security recipients, who already receive their payments electronically.

The switch is expected to save the federal government more than $300 million in mail and paper fees in the first five years. It will also cover veterans as well as railroad and federal civil service retirees.

The change from paper checks to electronic payments will begin earlier, on March 1, 2011, for new recipients who start collecting Social Security or other benefits as of that date.

Recipients who don’t have bank accounts will be able to enroll in the government’s Direct Express Debit MasterCard program. Prepaid debit cards will allow them to access their monthly payments.

AARP Executive Vice President Nancy LeaMond lauded the Obama administration for its efforts to increase efficiency, reduce the potential for fraud and abuse and save money.

“AARP appreciates the efforts initiated by the administration to modernize Social Security and other payment systems that millions of Americans rely on each and every day for their financial and retirement security,” she said.

She said in a statement that AARP will work closely with government officials to make sure that current and future recipients, including about 4 million people who don’t have bank accounts, are able to make the transition to receive their Social Security and other federal benefits electronically.

Carole Fleck is a senior editor at the AARP Bulletin.

Social Security faces a projected $5.3 trillion shortfall over

May 17, 2010 (AP Online delivered by Newstex) -- Social Security faces a projected $5.3 trillion shortfall over the next 75 years. Options for improving the program's finances, with the percentage of the gap that would be eliminated:

--Immediately increase payroll taxes for workers and employers by 1.1 percentage points each, to 7.3 percent: 104 percent.

--Increase payroll taxes for workers and employers by 1 percentage point starting in 2022, and an additional percentage point starting in 2052: 103 percent.

--Increase payroll taxes for workers and employers by 1/20th of 1 percentage point each year for 20 years: 69 percent.

--Tax all wages including those above the current cap of $106,800, without providing additional benefits to high earners: 116 percent.

--Tax all wages including those above the current cap of $106,800, while providing increased benefits to high earners: 95 percent.

--Impose a new 5 percent tax on couples making more than $250,000 and individuals making more than $125,000: 62 percent.

--Reduce the annual cost-of-living increase in Social Security payments by 1 percentage point each year: 78 percent.

--Gradually increase the age when retirees qualify for full benefits from 67 to 68: 23 percent.

--Gradually increase the age when retirees qualify for full benefits from 67 to 70: 31 percent.

--Reduce Social Security payments by 5 percent for new beneficiaries in 2010 and later: 30 percent.

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Source: Senate Special Committee on Aging

Note: Social Security is financed by a 6.2 percent payroll tax on wages below $106,800 a year. Workers and employers each pay a 6.2 percent tax on employees' wages.