The U.S. Department of the Treasury is retiring the paper Social Security check for millions of baby boomers and others applying for federal benefits, a move that will save taxpayers $1 billion over the next 10 years. Effective May 1, anyone applying for Social Security, Veterans Affairs or other federal benefits will need to choose an electronic payment method- paper checks will no longer be an option. And people currently receiving their federal benefits by paper check must switch to direct deposit by March 1, 2013.
“More than 18 million baby boomers are expected to reach retirement age during the next five years, with 10,000 people a day becoming eligible for Social Security benefits,” said US Treasurer Rosie Rios. “It costs 92 cents more to issue a payment by paper check than by direct deposit. We are retiring the Social Security paper check option in favor of electronic payments because it is the right thing to do for benefit recipients and American taxpayers alike.”
The Treasury Department published a final rule in December 2010, to gradually eliminate paper checks for federal benefit payments. In addition to the taxpayer savings, electronic payments are safer and more convenient than paper checks. Last year alone, more than 540,000 Social Security and Supplemental Security Income (SSI) paper checks were reported lost or stolen and had to be replaced.
On January 31, 1940, Ida Mae Fuller received the first monthly Social Security benefit check and, to date, about 165 million people have received Social Security benefits. The movement toward electronic payments has been steadily increasing. According to the 2010 Federal Reserve Payments Study, electronic payments now make up over three-quarters of all noncash payments nationwide. There were 5.7 billion fewer checks written in 2009 than in 2006, a decline of 6.1 percent per year – while electronic payments grew 9.3 percent during that same period. Among federal benefit recipients, approximately eight in 10 receive their Social Security or other federal benefit payment electronically.
The Treasury Department’s Go Direct(r) public education campaign provides information to Americans about the change to how federal benefit payments are being delivered and makes it easy for current check recipients to switch online at www.GoDirect.org or by calling a toll-free helpline.
