Abstract: Every year, the Social Security Administration mails Social Security Statements to all eligible
workers over the age of 25. These Statements include estimates of monthly retirement and other benefits
that participants are projected to receive under the Social Security Act. The Statements also summarize
Social Security Administration (SSA) records about participants’ earnings history, which determines
benefit levels, and provide various background information about the Social Security program and its
finances. For many Americans, the Social Security Statement is the principal source of information about
Social Security benefits. This paper analyzes the content of the current Social Security Statement. While
the Social Security Statements are useful tools for certain kinds of financial planning and allow
participants to check the accuracy of the Administration’s records of their earnings history, the
Statements may also lead participants to misinterpret the value of their Social Security benefits and may
make it difficult for participants to compare Social Security benefits to other sources of retirement
savings. In addition, the current Social Security Statements obscure the extent to which additional years
of labor market participation increase the value of Social Security benefits. After reviewing the strengths
and weakness of the current structure of Social Security Statements, the chapter then describes how these
statements might be supplemented with estimates of the actuarial value of Social Securities benefits for
individual participants. This supplemental information would make it easier for participants to compare
Social Security benefits to other sources of retirement incomes, and would highlight the manner in which
participants’ Social Security benefits accrue over time thereby mitigating some of the labor market
inefficiencies associated with Social Security payroll taxes. The chapter concludes with a review of
several potential drawbacks of supplementing Social Security Statements with accrued values, including
the possibility that this supplemental information would make it more difficult to change Social Security
benefits in the future, the possibility that disclosing the accrued value of Social Security benefits could
lead some workers to make offsetting reductions in other forms of retirement savings, and the possibility
that this supplemental information might make the redistributive aspects of the Social Security system
more transparent, potentially weakening support for the program among some constituencies.