Social Security Statements Increase Knowledge

The Social Security Statement received annually by workers increases the probability that they will be able to estimate their benefit more accurately by 4.5 percentage points, according to a new study.

The Center for Retirement Research at Boston College conducted the Health and Retirement Study (HRS), a longitudinal, biennial, and nationally representative survey of older Americans that began in 1992. It found that before the Statements started circulating, around 50% of households would contact the Social Security Administration by age 62. The CRR found the Statement appears to have improved the estimates for workers who did not contact the SSA, bringing the accuracy of their estimates in line with those of the workers who did contact the SSA. 

However, the analysis found no impact of the Statement on retirement behavior. CRR said this might mean workers are already behaving optimally, or the information in the Statement is not sufficient to improve their retirement behavior.   

CRR contends that the Statement might still improve workers’ retirement planning if they become less likely to be surprised by the amount of their benefits. For example, if workers learned that their Social Security benefits would be less than anticipated, they might not change when they plan to retire, but they could decide to save more ahead of retirement.  

The CRR Issue Brief is available here.