Cover: Does the Social Security Statement Improve Americans' Knowledge of Their Retirement Benefits?

Does the Social Security Statement Improve Americans' Knowledge of Their Retirement Benefits?

Published Dec 8, 2010

by Andrew G. Biggs

Download Free Electronic Document

FormatFile SizeNotes
PDF file 0.2 MB

Use Adobe Acrobat Reader version 10 or higher for the best experience.

The Social Security statement is sent annually to each working American age 25 and over. The statement includes information regarding the Social Security program, a record of the individual's covered earnings and contributions to the program, and an estimate of the individual's future retirement benefits. Given the complexity of the Social Security benefit formula, the statement represents the best (and, perhaps, only) estimate of the benefits that an American will receive. However, little research has been conducted on how effectively the statement has improved Americans' knowledge of their benefits. Using data from the Health and Retirement Study (HRS), a federally funded survey of older Americans, this brief assesses how well people who are one or two years from claiming benefits are able to predict what they will receive from Social Security. The analysis relies on the fact that HRS respondents are interviewed in biennial waves from 1994 to 2008; the survey contains data for many individuals on both their expected benefits and the actual benefits they received. Because the Social Security Administration began mailing the statements to near-retirees in 1995, investigators could compare errors in predicting benefits for individuals before and after universal distribution of the statement. The study finds that the accuracy with which near-retirees predict future benefits did not improve following the distribution of statements in 1995.

This issue of Insight summarizes research conducted within the Financial Literacy Center.

This report is part of the RAND working paper brief series. RAND working paper briefs are short summaries of reviewed working papers that are aimed at a policy audience. Unless otherwise indicated, working paper briefs can be quoted and cited without permission of the author, provided the source is clearly referred to as a working paper briefs.

This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited; linking directly to this product page is encouraged. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial purposes. For information on reprint and reuse permissions, please visit

RAND is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.