The Center for Retirement Research at Boston College has issued a report asking "Does the Social Security 'Statement' Add Value"? The Social Security "Statement" they're talking about is what the agency calls the Personal Earnings and Benefit Estimate Statement (PEBES).
Most people say they remember receiving PEBES and found the information helpful. However, there is little evidence that PEBES affects claiming behavior and there's little evidence that people remember the amount they will receive when they retire. See the chart below.
For what it's worth, my clients often ask how much they'll receive a month if their disability claim is approved. I seldom have easy access to this information until close to the hearing. When I'm asked this question, I ask the client if they remember receiving the PEBES -- describing it in a way such that they'll understand what I'm talking about. They generally remember receiving it and say they have saved it. I tell them that the PEBES tells the approximate amount that their disability benefit will be. They're always surprised to hear this.
Breaking news...people are dumb. The statement is so clear and simple, it's quite sad that people can't understand it.
ReplyDeleteWhy not help your clients download it from ssa.gov/myaccount?
ReplyDeleteI look at the statements every year (I download them now since they're not being sent), but I don't generally remember the numbers in them, because there are a lot of them. Just for OA benefits, the value at 62 is about half that at 70, with the value at my NRA in between.
ReplyDeleteYears ago, I downloaded Social Security's "detailed calculator," which isn't that user-friendly but was very helpful in estimating benefits. I now just use a spreadsheet to do so. One thing I learned is that the statement assumes that wages in the future will go up at the rate of inflation, while historically it has gone up almost 1% per year higher, which would make a big difference for younger people. So the estimates are quite conservative relative to the Trustees Report projections of wages, although with the new economy, maybe 0% real wage growth will become the norm. (Average wages the year a person turns 60 is very important in determining benefits.)
The disability benefit estimates might be much more accurate, since I don't think they depend on projecting wages into the future (although I'm not that knowledgeable about DI benefits).
The pebes should be clear that it provides a loose estimate as to what a beneficiary shall receive. There are so many times that individuals are disappointed when they find out that the formula used to calculate the numbers on the PEBES forms assumes work exponentially into the future. Their actual benefit tends to be a bit lower. Claimants would be much better off with a benefit matrix than a PEBES.
ReplyDeletePEBES is so 1980s. It's called the Statement.
ReplyDeleteANON 10:13 Why not help your clients download it from ssa.gov/myaccount?
ReplyDeleteSo, the answer is I do, but with a few caveats.
First you have set the person's account. Setting up the account is not that easy if the person doesn't know the answers to the screening questions, but with some trial and error, it can usually be done.
Next, you can do it in your office using your computer, but here is where my paranoia sets in. Every time you access the online system, to set up an account or otherwise, the IP Address of your computer is noted by the SSA. I suspect, and have been told by SSA IT people, that there is a security feature that will identify an IP address that is entering what the system believes may be part of a fraud. One possibility is that if my IP address shows up as creating an online account numerous times, the OIG will be notified and I will be investigated for possible fraud by trying to access improper information. It would not be true, of course, but I don't really need, or want, the aggravation. Again, perhaps I am being excessively paranoid, but I would rather the client create the account from their own computer, if they have one, or from a public computer at a library for example, if they don't.
Then , you have to do this before you start the application. Once the application is filed, you can still obtain the figures, but not the Green Statement and you then have to run the calculations using ANYPIA.
And, my experience with clients is that they will often remember receiving the statement, most say they glanced at it, and very few remember what the amounts were. Even if they do, they confuse what they would get at age 62 or at retirement age and some even look at the family maximum as what they can expect.Yeah, its simple and I find it incredibly useful, but the reality is that the actual usefulness for most non-professionals does not exceed the cost of producing and mailing it out.