2004 Trustees Report

1
Special Initiative on Financial Literacy
American Savings Education Council (ASEC) Fall
Partners Meeting Jason J. Fichtner, Acting
Deputy Commissioner Social Security
Administration October 22, 2008
2
The Need for Financial Literacy

• The Social Security retirement benefit was
  designed to complement other sources of
  retirement income.
• However, because of the increasing lack of
  financial planning and insufficient savings,
  people eventually find themselves relying mostly
  on their Social Security benefit in retirement
• Social Security was the major source of income
  (providing at least 50 of total income) for 54
  of aged beneficiary couples and 74 of aged
  nonmarried beneficiaries.
• Social Security was the only source of income for
  11 of aged beneficiary couples and 29 of aged
  nonmarried beneficiaries.

3
Social Security Administration

• The Social Security Administration is in a unique
  position to help educate the public about the
  need to plan for retirement.
• We have over 1,300 field offices across the
  country, a website that received over 54 million
  visits in 2007, a Social Security Statement that
  is sent to all workers each year, and a
  reputation for providing excellent service.

4
Overview of the Agencys Current Efforts

• The Financial Literacy Advisory Group (FLAG) was
  created in November 2007 and includes about 50
  individuals representing all parts of the agency.
• The FLAG has focused on three issues to date
• Replacing the break-even age with a new message
• Using existing Agency communication vehicles for
  new financial literacy initiatives
• Working with the Center for Retirement Research
  at Boston College to create an easy-to-use
  Retirement Guide similar to The Social Security
  Fix-it Book
• A separate advisory group of outside nonprofit
  stakeholders will also be established

5
Replacing the Break-Even Age

• The When to Start Receiving Retirement Benefits
  publication was released in July 2008 in
  conjunction with the Retirement Estimator.
• The new fact sheet replaces the break-even age,
  which had been used to explain when to start
  benefits in terms of being ahead for a certain
  amount of time, with a new message that instead
  focuses on monthly benefit adequacy.
• It also provides information on working in
  retirement, how your decision can affect your
  family, and the fact that retirement may last a
  long time.

6
Social Security Statement Inserts

• Placing inserts in the annual Social Security
  Statement is inexpensive, has a wide reach, and
  can be targeted by age
• Would cost about 36,000 annually for each year
  of age (or 360,000 for a 10-year-age group)
• About 150 million Statements are mailed each year
  to current and former workers age 25 and older
• Revised insert for workers age 55
• There would be no additional cost because the
  Agency already sends an insert to this group.
• Reflects concepts in the new When to Start
  Receiving Retirement Benefits publication
• Will go out starting October 1, 2008
• New insert for workers aged 25-35
• Will highlight the importance of Social Security
  and
• encourage saving on your own at early ages
• Is currently under development

7
Easy-to-Use Retirement Guide

• Will be similar to The Social Security Fix-it
  Book
• The new guide will discuss the importance of
  determining how much income you will need in
  retirement and explains the basic retirement
  options.
• Will be available online, may be mailed to
  individuals at certain ages, and could be
  distributed through other outlets as well.

8
Potential Future Publications

• Welcome to the Workforce Guidetargets younger
  workers and helps them get the right start in
  terms of financial planning
• Guide to Disability Benefitshelps individuals
  understand the disability process
• Guide to the Ticket to Workhelps individuals
  understand work incentives and assistance for
  disabled individuals who wish to return to work
• Guide to the WEP/GPOto help individuals in
  non-covered employment understand the effects of
  government pensions on Social Security benefits

9
Potential Future Research Development

• Use research funds through the Financial Literacy
  Research Consortium to develop and test new
  financial literacy products.
• Examples from the Center for Retirement Research
  at Boston College
• Create events by mailing the Statement out to
  certain age groups all at the same time
• Create a Social Security Savings Guide and
  Mid-Course Correction Guide
• Examples from AnnaMaria Lusardi and Olivia
  Mitchell
• Design financial education video games similar to
  those developed by Peter Tufano and Doorway to
  Dreams, Inc (D2D)
• Create Understanding Risk A Guide for Women
• Projects that are funded would be evaluated
• for effectiveness.