Mary Beth Franklin: Virtual Social Security accounts can be a real pain

Safeguards to prevent identity theft can also prevent users from setting up online accounts

By Mary Beth Franklin

Feb 17, 2013 @ 12:01 am (Updated 12:48 pm) EST

Social Security

Technology can be maddening at times. Just ask Bob Taylor, a financial planner from Chicago who works with clients who are in or nearing retirement. After reading my January 27 column Social Security goes fully paperless (http://www.investmentnews.com/article/20130127/REG/301279999), Mr. Taylor decided to set up his own online account so he could tell his clients how to do it.

That's when the fun began.

Because of budget cutbacks, the Social Security Administration (SSA) stopped mailing estimated benefit statements to workers age 25 and older last year, ending an annual ritual that began in 1999. The switch from paper to digital delivery saves the federal government about $70 million annually in printing and postage.

The digital version is identical to the original paper version, including a personal year-by-year earnings history and estimates for reduced retirement benefits at age 62, full benefits at normal retirement age (currently 66 for those born from 1943 through 1954), and maximum retirement benefits at age 70. The statements also included estimates for disability and survivor benefits.

Now, anyone age 18 or older can sign up for an online Social Security account at www.socialsecurity.gov/mystatement as long as they have a Social Security number, have a valid e-mail address and have a U.S. mailing address. At least, that's how it's supposed to work.

Heightened security

In an effort to thwart identify theft, individuals also must be able to answer questions that only they are likely to know, such as the names of former employers or previous home addresses, to match information on file with Social Security and in their credit report.

“Half way through this process, the system stopped and informed me that I could not be verified and that I would be denied access to the system,” Mr. Taylor wrote to me in an e-mail. “I called the number provided and after going through a maddening phone system and a long wait, I spoke to a person that verified that I had not answered the questions correctly (even though I did) and he 're-set' the system to allow me to try again. I got kicked out again.”

I put Mr. Taylor in touch with someone at SSA and Experian Information Solutions, the private company that oversees the online verification project for SSA. It turned out that because he uses an identity protection service through Equifax that restricts access to his credit records, he can't use the online Social Security service.

“The level of security to access information on line needs to be as secure as possible,” said Salvatore Guariano, vice president of Experian's Public Sector Business. “The credit freeze on the individual's account raised a flag at our end,” he explained. “This proves that the system works.”

To be fair, the SSA website warns that if you have a credit freeze on your credit report, you may be unable to use the online process. The same restrictions apply if you want to use the SSA's online retirement estimator (www.socialsecurity.gov/estimator) which provides retirement benefit estimates, but not a personalized earnings history.

The solution? If you have a credit freeze or fraud alert placed on your credit report, you can contact the credit bureau and request that it lift the restrictions on your credit records temporarily so you can create an online account with SSA. But that might not work in Mr. Taylor's case. After several failed attempts, he may be blocked from using the online system. His only alternative may be to visit his local Social Security office in person to show proper identification and create an online account.

A bigger challenge to the overall online records system may be that only a small percentage of workers and beneficiaries, accustomed to receiving paper statements in the mail, will attempt to access their information on line. So far, 4 million people have created online Social Security accounts since the service debuted in May 2012. Currently, more than 160 million workers are covered by the Social Security system and more than 56 million people receive retirement, survivor and disability benefits.

"We never expected the entire population to attempt to access in the first year and we are very happy with the volume so far," said Keir Breitenfeld, vice president of Fraud and Identify Solutions at Experian. "However, we would be able to handle it if they did."

Mr. Taylor isn't as optimistic. “As more and more people use some kind of identity protection as the years go on, this will create a problem for SSA,” he wrote. “I can't wait until these folks are in charge of my health care.”