Retirement 2.0blog

Millions set up online Social Security accounts

But a credit freeze could complicate the sign-up process

Feb 12, 2014 @ 12:13 pm

By Mary Beth Franklin

+ Zoom

More than 10 million Americans have signed up for a personalized account at the Social Security Administration website as of Feb. 1, a two-and-a-half fold increase since this time last year. Still, it's a drop in the bucket considering there are about 165 million American workers who are expected to pay FICA taxes this year that fund the government retirement system.

Are you and your clients among the minority — about 6% of U.S. workers — who has access to their personalized Social Security benefit estimate? If not, it's time to sign up.

However, if you were among the more than 40 million Americans whose credit card information was hacked during the holidays, and you subsequently took steps to freeze your credit report to prevent future identity theft attempts, you may have a problem.

As it states on the Social Security website, “You cannot create a My Social Security account online if you have a security freeze, fraud alert, or both on your Experian credit report.”

Experian, one of the three major credit bureaus, oversees the agency's online verification process. A security freeze is designed to prevent credit, loans and services from being approved in your name without your consent. But it may also delay or prohibit the timely approval of any new credit, loans or services, including establishing an online Social Security account.

If you don't want to remove the freeze or alert for security reasons, you will have to visit your local Social Security office in person and bring a government-issued ID to set up an online account. Don't worry. Even an in-person visit is a fairly quick and painless process.

What does your credit report have to do with your Social Security statement? It's an extra step to protect your personal information.

The SSA began mailing annual estimated benefit statements to workers 25 and older in 1999. The annual paper statements became a critical financial planning tool that provided details about future retirement income and served as a stark reminder of the need for personal savings to supplement those benefits.

But the agency stopped mailing annual benefit statements to workers as a cost-saving measure in mid-2011. The switch from paper to digital delivery saved the government about $70 million annually in printing and postage.

Full-fledged digital statements, which include retirement benefit estimates at various ages and personal earnings history identical to the old paper versions, became available in May 2012. But the only way to access them is by setting up a personal account at www.ssa.gov/mystatement

Anyone who is 18 or older can sign up for a Social Security account. To do so, he or she must provide a Social Security number, mailing address and a valid e-mail address. Individuals also must be able to answer questions that only they are likely to know that matches the information on file with Social Security, as well as their credit report.

For example, when I went through the account set-up process last year, I was asked questions related to the names of former employers and some of my previous addresses. These are called “out of the wallet” questions. At the time, I interviewed Sal Guariano, vice president of government services at Experian, about the procedure.

“Even if your wallet had been stolen and your data compromised in the past, these are questions a fraudster couldn't answer,” Mr. Guariano said.

In addition to estimated retirement benefits, your personalized statement includes estimates of how much you could collect if you became disabled before retirement age or how much your spouse could collect in survivor benefits following your death.

Equally important, the statement provides individuals with a complete earnings history, which is the basis for future Social Security benefits. Clients should review it each year and make corrections if needed by contacting the SSA at (800) 772-1213.

The statement also lists all of the Social Security and Medicare taxes paid on those earnings over the years — which can be a real eye-opener! That alone should be incentive enough to ensure that when it comes time to collect those benefits, you make the right claiming decision for your personal circumstances.

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