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The Social Security Administration (SSA), in the distant past, mailed every year a full annual report to workers about their Social Security benefits. The report was always easy to recognize because the headers on the top and bottom of the pages had bold green lines.
In the past, this “green line” form was important because it identified the Social Security payment amounts workers should expect if retirement benefits started at age 62, full retirement age, or age 70. In addition, the “green line” form also had a summary of the paid FICA taxes and Medicare taxes credited for the worker’s entire life.
Typically, this “green line” form was just casually read by most people. It was interesting for workers to see some information about monthly retirement benefit amounts, disability benefit amounts, and the survivor benefit amounts. But after a quick review most workers continued dealing with life’s daily challenges. The “green line” form did not draw a lot of attention. Why?
- Maybe, because the form was text intensive, folks did not fully appreciate the valuable information that was presented to them about one of their most valuable retirement assets.
- Maybe, because the retirement income numbers were reported so regularly, the numbers just did not jump off the page and generate a “wow” reaction.
- Maybe, because the FICA taxes that generate Social Security benefits are an automatic deduction from their paycheck, workers tended to forget how much they have paid into the system and how those Social Security contributions create, inflation-protected, non-market dependent, guaranteed income for life in retirement.
However, a few years ago, in a cost saving move, the SSA stopped mailing the “green line” form to workers under age 60. With this switch, younger workers (under age 60) can only get copies of the full statement by creating a “myAccount” on the Social Security web site. At the same time the switch to the web access allowed the SSA to create a new format for the full report. For lack of a better name we call the new report the “blue bar” form.
This switch to the new blue bar format, allows for some major improvements. The “green line” form was not all that internet friendly. It was not interactive and did not actively link to important pages on the SSA.GOV web site. Now all of that has changed. So, the upshot is:
- The “green line” form is history.
- The “blue bar” online form is a step ahead.
In a move to be more informative, the blue bar form, unlike the green line form, provides year by year information about benefits between age 62 and 70. It also includes handy links to the Medicare site. Today, this new blue bar full statement should be a mandatory read for anyone who wants to know more about their Social Security benefits.
The bad news is that even with this new and improved reporting capability and a totally redesigned web site, too many people are still uninformed about their Social Security benefits.
MassMutual has conducted periodically research projects with 1,500 near-retirees to see how well they know some of the details about their Social Security benefits. Even with this new blue bar form now available with just a few clicks of the mouse, each year, more than half of the respondents barely pass or fail the quiz we use in our research projects.
Here some of the points in the studies that give our responders trouble:
- Under current law, benefits could be reduced by 20 percent or more for everyone in 2032 and 2035.
- Spouses can receive benefits even if that spouse had no individual earnings history.
- If a spouse passes away, the surviving spouse will not receive both their full benefits and their deceased spouse’s full benefits.
- Divorced spouses might be able to collect Social Security benefits based on their ex-spouses Social Security earnings history.
- You do not need to be a US citizen to collect Social Security benefits.
The addition of the new “blue bar” form and the ability to access the form via a myAccount on the Social Security web site are great steps forward for workers who want to know more about their benefits. However, as our studies suggest, each person needs to be more proactive in their quest for important information about their benefits.
They need to:
- Review their full blue bar statement.
- Study and understand their choices about taking benefits between ages 62 and 70.
- Study and understand how Social Security and Medicare are related topics and that time sensitive decisions about each one must not be missed. Failure to make these time sensitive decisions can have significant negative financial consequences on income in retirement.
- Verify that their current annual contributions to the Social Security system are credited by the SSA correctly. Failure to have the money correctly accounted for can lead to lower retirement checks in the future.
New technology has made it much easier to get access to the information. Now is a good time to be proactive and improve your knowledge about your benefits. It is easy to sign up for myAccount access.
Hopefully the blue bar form will be is accessed by more and more workers on a regular basis, at least yearly, and used as a key source of information to help with the retirement income planning process.
Discover more from MassMutual …
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