Update (May 13, 2014): Social Security will resume sending statements again this September. Here’s the update »
The 2011 Social Security Trustees’ report released last month reported that Social Security spent $49 billion more than it took in during fiscal 2010. They are estimating it will run a deficit this year of $46 billion. That’s the good news. The bad news is that Social Security owes $9.1 trillion more in benefits than it will receive in taxes when calculated in net present value terms. The trustees conclude their report by urging Congress to take action quickly:
“The financial challenges facing Social Security should be addressed soon. If action is taken sooner rather than later, more options and more time will be available to phase in changes so that those affected can adequately prepare.”
The Social Security Administration (SSA) is not waiting for Congress to act. They announced in April that they will stop mailing annual Social Security statements to workers to save $70 million per year. You will no longer get the four page statement that came three months before your birthday estimating what your benefit might be at retirement. SSA refers you to their website to access their retirement estimator to estimate your benefit.
I have a big problem with this decision. The most important information on the statement was not the estimated benefit. It was the record of the payroll taxes they received from workers. Without the statement, there is no way to know whether SSA is crediting your payments correctly. You will need to keep that last benefit statement and one copy of your annual W2 from now on. You don’t want to step up to the payment window when you’re 67 only to find out they recorded only half the money you paid in. The burden of proof will be on you. I’m going to miss my annual statement.