I’ve been waiting for this day to come for a long time (actually, it came a few months ago)! Effective May 1, 2011, applicants filing for Social Security and Supplemental Security Income (SSI) benefit payments must choose either direct deposit or the Direct Express® debit card. There will be no option to receive your Social Security benefits by check.
This means that the Social Security Administration will not have to bear the cost of printing, mailing, and replacing checks for beneficiaries and recipients. Those that were already receiving their benefits by check before May 1, 2011, will have until March 1, 2013 to switch to direct deposit or the Direct Express® debit card.
How To Receive Your Social Security Benefits Through Direct Deposit
Since you no longer have an option to receive your Social Security benefits via a live check, there isn’t much for you to do. If you already have a bank account, you can set up direct deposit of your Supplemental Security Income or Social Security benefit payments through your bank.
You can also call the Social Security at 1-800-772-1213. Just have your bank information and Social Security number available when you call, and they can set things up for you. Since there are more stringent regulations on when a creditor can garnish Social Security benefits, those who avoided direct deposit as a means to ‘hide’ their benefits, should no longer have to do so.
Are There Any Exceptions To Receiving Your Social Security Benefits Electronically?
Those who are 90 years of age or older may still choose to receive paper checks. This also goes for those who are able to document a disability.
In my mind, these are the people who would benefit from electronic payments the most – they may have trouble getting to a bank to cash their checks, and then trying to buy things in person with cash.
What Is The Direct Express MasterCard?
If you are set to receive Social Security benefits, and you do not enter direct deposit information, your benefits will be paid through the Direct Express Debit MasterCard instead of by a paper check. The card is just what it sounds like, a debit card that you can use wherever MasterCard is accepted.
Your monthly benefits will be deposited onto your debit card, instead of deposited into your bank account. You will receive a personal identification number (PIN), that will allow you to withdraw cash from an ATM or merchant who provides cash back.
You are allowed one free cash withdrawal per deposit at ATMs in the Direct Express network. Also, you are able to make free withdrawals at the teller window at any MasterCard member bank (most banks).
You can even sign up for low balance alerts by phone, email, or text message. Unfortunately, if you wish to receive regular monthly statements, you will have to pay $0.75 per month. Although, you are able to view the last 90 days of activity online (which may be enough for most people).
There are other fees associated with the card, which you can find here.
The Bottom Line Regarding Electronic Social Security Benefits
According to the Social Security Administration, 85% of those receiving benefits do so electronically. Therefore, this new regulation will have no effect on the majority of beneficiaries.
I wasn’t able to find an estimate regarding the amount of money that will be saved by moving everyone to electronic payments, but with only 15% of recipients receiving paper checks, the numbers can’t be that great. This isn’t going to be the move that saves Social Security!
As with any of the social welfare programs, there is a real danger of it not being around in it’s current form in the not-to-distant future. Therefore, it is imperative that we take full advantage of the IRA contribution limits, 401k contribution limits, and a 401k employer match, while there is still time.
The decision on how to receive these payments is a major issue for those with no other forms of income. For others who still have time, we need to do everything we can to avoid depending on Social Security benefits to fully support us in retirement! For those who believe that they have run out of time, here are a few late retirement planning tips to help you catch up.
photo by DonkeyHotey
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© 2011, Khaleef Crumbley. All rights reserved.
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{ 12 comments… read them below or add one }
This seems like a great way to save the govt a little $$. I wonder how much printing all those checks cost?
I have heard that some folks (the bad apples) opted for checks, cashed it when it came, then claimed that they never got the check. When SSN sent them another one, they cashed it too! Then, the incident would have to be investigated as check fraud – costing a bunch of money.
This might be easier for elderly as they don’t have to make a trip to the bank to deposit checks. A good progress I must say
Didn’t know this, thanks for the knowledge. Would be interesting to see how much is saved on printing costs. Direct deposit is the way to go. Not sure if there will be anything left to get a deposit from!
Hi Khaleef–a few years back I was on a plane reading an article about this kind of thing. The government was trying to figure out a way to deal with those who don’t have bank relationships (referred to as the “unbanked”). Back then they were looking into the ways they could save money by direct deposit, but the unbanked were an issue. I guess Direct Express is the answer.
What I wonder about though is how ill a retiree pay for rent with a credit card? If a retiree was paying school lunches for their grandkids, schools don’t accept credit cards. It goes without saying they’d be paying ATM fees everytime they need cash. There are number of areas where this would be a problem.
I agree with you fully that it all points to a less generous benefit system and we need to be prepared. Yes to IRA’s, 401k’s and all kinds of savings vehicles, but we also need to concentrate on keeping some sort of income generating career or business going past age 65. You can only save so much money and once you start drawing it down it disappears quickly. Low interest rates aren’t helping with that either.
Kevin,
I was curious about where the Direct Express MC is accepted so I googled the topic and discovered with the Direct Express MC you can get a money order, from US Post Office, transfer funds to your personal checking account for $1.50 fee, or withdraw cash from an ATM.
I think if social security is still around by the time I retire, I will choose direct deposit over the mastercard. That way I can choose which method of payment I use and have my finances in places that I choose. Very good to know.
It seems like this is a good idea. The cost will be much less and the money saved with the baby boomers coming up should be substantial. I am sure that every little bit will help.
I thought by now most everyone would have direct deposit. But I guess there are those that resist change. Maybe because they like to actually “see” their money so to speak. Or, maybe they don’t have a checking account because they again need to “see”their money or have it in hand.
Fall Team # 4 awesome!
I agree with you Khaleef, I would tend to think that if someone had a documented disability then they would benefit even more from having direct deposit. I’m sure many of the elderly people would be destroyed if they had to give up their paper checks since many would probably have trouble adjusting to not having the paper physically in their hands (I used to work in a bank located near a retirement community so I saw first hand how they would run in to have their savings passbook updated since they didn’t believe the money was in the account unless it was printed in the book!)
I only hope SS will be there when I am ready to retire. I think direct deposit is a great idea and should save a substantial amount of money.
Fall Team 4 Rocks!
My Mom had direct deposit for years. It made it easier for her. She did not have to worry about receiving the check or taking it to the bank.
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