Most Individuals Not Considering Social Security’s Part in Retirement Income

Study findings suggest that communicating about Social Security’s online portal could improve retirement preparedness, especially for low-income employees.

Internet literacy and educational levels are the chief barriers for workers to use the Social Security Administration’s My Social Security online portal, according to research from the University of Michigan Retirement and Disability Research Center.

The paper, “Mixed-methods Study to Understand Use of the My Social Security Online Platform,” examined barriers to use and experiences with MySSA. The paper was authored by Lila Rabinovich and Francisco-Perez-Arce from the University of Southern California.

MySSA is the main method for workers to create an account to review earnings history, check current or future benefits, and to access Social Security services.

The analysis suggests that workers currently learn about MySSA primarily when ready to become beneficiaries, and, as a result, users tend to be older.

The authors explain that because younger groups are typically more internet-literate and better prepared to maximize use of MySSA, they may better be able to take advantage of the platform. However, people tend to begin learning about MySSA primarily when they become beneficiaries. 

“Our quantitative and qualitative evidence point to the fact that individuals start using the platform during or after the benefit-claiming process,” the authors state. “Yet one of the most interesting suggestive implications of our findings is that for younger people especially (who, our quantitative analysis shows, are less likely to have a MySSA account), MySSA could be enhanced to be a potentially useful financial and retirement preparedness resource.”

Greater information and resources from the plan sponsor and recordkeeper on claiming Social Security, how to find benefit information and set up a MySSA account could be particularly useful to help low- and moderate-income participants, because the benefit is expected to replace a larger share of their lifetime earnings.

“Many low-income workers don’t save much outside of Social Security, so that’s another reason why Social Security so important,” says Rich Johnson, senior fellow and director of the Program on Retirement Policy at the Urban Institute, a Washington, D.C.-based think-tank for economic and social policy research.

Report Findings

The authors interviewed 24 individuals about their views and experiences with online transactions and with Social Security for their perceptions of the MySSA platform.

The report’s qualitative analysis found four reasons for not creating a MySSA account: lack of awareness of MySSA; no perceived relevance/need; security and privacy concerns; and low internet/computer literacy.

Participants who did use the website found the information on the platform relevant. This was true for participants who currently receive benefits and those who do not, according to the paper.

Working individuals and non-retirees also found the information useful, the authors state. Non-retirees appreciated the retirement benefit information, with one participant who did not realize that full retirement age was 67. 

 “Our findings suggest that for younger people especially, MySSA could be a potentially useful financial and retirement preparedness tool,” the paper states. “We find that a key challenge to MySSA use is getting people to create an account in the first place and not their retention once they create an account.”

Participant Communications

The findings suggest that plan sponsors and recordkeepers can assist with more resources and information on Social Security generally, and tips for how to maximize an individual’s claim, according to Johnson.

“One of the implications of this study is that employers and plan sponsors could do more to encourage their participants to investigate Social Security and to investigate how much they should be expecting from the program,” he says. 

Plan sponsors could, in participant quarterly statements, provide information that highlights the importance of Social Security, and advise that savings in the retirement plan may not be sufficient for retirement income to alleviate longevity risk, Johnson adds.

Reaffirming the importance of Social Security awareness and knowledge could help retirement plan participants become better prepared by alerting workers to tools available and how to use them, he says.

“They can go on and see how much they can expect. The  tool can also show them how much more people would get if they work[ed] longer … not enough people realize that if they delay claiming – if you work a little bit longer – you could significantly increase your benefits,” he explains. “Most plan sponsors really don’t think much beyond their own plan in helping participants and don’t know how much the participant is going to get, but having the participants just spend a few minutes to do that could be a really important development.”

Steve Vernon, president at Rest-of-Life Communications, a provider of workplace retirement communication and financial education programs and consultant at the Stanford Center on Longevity, Financial Security Division, adds that trusted messengers like famous athletes or celebrities could be used to urge workers to learn about Social Security.

“We need to use … common marketing strategies and techniques like you’re selling soap and get the word out about these tools in a marketing way,” he says. “People have a lot of stuff competing for their attention, and I think MySSA needs to compete for that attention.”

He adds that plan sponsors and recordkeepers can benefit from such a deliberative approach to boost participant outcomes.

“The tools are there, but what’s missing is a helper, a navigator,” he says. “How do you navigate, what do you do first? Also just drawing people’s awareness to it. The tools that are out there for Social Security are great, they just need more awareness, and then maybe a step-by-step approach as to what you do first, what you do second and what you do third.”

Financial advisers should use similar tactics to work with the plan sponsor and plan recordkeeper, as well. 

Financial advisers should encourage their clients to use MySSA because of the trust they have developed with the adviser, Vernon says.  “To me, it’s just part of simple blocking and tackling because you have got to get the word out and use the employer, use 401(k) recordkeepers, use financial advisers, use all the above.”