"Retirement Planning and the Internet: Web-based Information and Services at the Social Security Administration"

Kenneth S. Apfel, Commissioner of Social Security

Choose to Save Forum on Retirement Security and Personal Savings

Washington, DC

April 5, 2000

There are few subjects that could be more important at the beginning of this new century than retirement planning. The nation's 76 million baby boomers have been likened to a glacier inching across time and transforming our society's landscape. With 50,000 Americans reaching retirement age, each day and every day, for nearly 20 years, the societal landscape will change, and will change dramatically. And needless to say, we don't want the Boomers-or the Generation X'ers-to come to retirement without understanding what financial planning needs to be done.

As Secretary Summers noted yesterday, this Administration is making a concerted effort to help prepare baby boomers and all other Americans to save and to take more control over their personal financial future. As part of this endeavor, our focus at SSA is retirement planning, and our main contribution to date is our new annual Social Security Statement that is now being mailed for the first time to all 125 million U.S. workers age 25 and over. Last October, we began mailing over 500,000 daily. Over 66 million Social Security Statements are now out and….

They are earning four-star reviews. Financial columnist Jane Bryant Quinn has said that "these Statements will make Social Security very real" to American workers, and Hank Azell of the Atlanta Constitution says the Statement will be "a wake-up call" that lets people know they can depend on Social Security, but that they will also need to save and invest for their own retirement.

Good financial planning needs to include an understanding of the foundation-and that's Social Security. For two-thirds of older Americans, Social Security represents a majority of their retirement income. The Statement helps people better understand that Social Security by itself is often not enough. It also helps people better plan when to retire, since the longer one works, the larger the Social Security benefits.

The Statement can also be expected to have a pronounced effect on the public's knowledge about the Social Security program. Another survey found that over two-thirds of the people who recalled receiving a Statement were knowledgeable about Social Security, compared to about half of persons who did not recall receiving a Statement. The survey also found that individuals who have received a Social Security Statement from SSA have a significantly greater understanding of some important basic features of Social Security: for example, that the amount of Social Security benefits depends on how much they earned, and that Social Security was designed to only provide part of total retirement income.

Workers receive their Statements about three months before their birthday. When the Statements arrive in the mail, there may-understandably-be questions. So we invite recipients to call us or to log on the Internet and visit our web site. There, they can check out the "my Statement" page for explanations, or request more detailed information.

Why not simply offer the Social Security Statement on line?

As many of you may know, just three years ago we did pioneer an online service that allowed individuals to receive a Personal Earnings and Benefit Estimate Statement through the Internet. We planned carefully … consulted widely … tested extensively. The early public reaction was overwhelmingly positive. But….we ended up suspending our online service just one month into operation because of concerns that not enough had been done to protect individual privacy.

While we believed at the time that we had taken adequate precautions, one of our agency's primary missions is to be bull-dog vigilant about protecting the privacy of the sensitive information we maintain on American workers. So, in the end, we concluded that we need a better balance between privacy and access to information.

The privacy issue may well be the issue for the Internet. The New York Times recently wrote in an editorial that, "Unless businesses can protect privacy, the erosion of trust could seriously harm e-commerce, as well as cause the public to become wary about using the Internet for education, research and other important noncommercial functions.

"Before we revisit the issue of providing direct online service, we and the people we serve must be confident that personal information in our records will be disclosed only to the person to whom it pertains, or to a third party who has the customer's consent. In other words, we must be able to confirm identities before initiating a transaction that could result in personal information being disclosed, or changed.

So we're not on the Internet with the Social Security Statement. But I can tell you that the question isn't whether we will or should offer the Social Security Statement online, it is only a question of when. But it's likely not right away.

Which leads me to the heart of our discussion today: What does the advent of an Internet Age mean for a government agency such as the Social Security Administration? Over the next few minutes I want to look a the possibilities the Internet provides us, and look at whether the Internet should or should not change our notions of what really constitutes good service.

First, the possibilities.

Secretary of Commerce William Daly has observed that soon "there won't be Internet companies and non-Internet companies. A company will either be an Internet company or it won't be a company at all."

He is, I believe, right. And in some ways, what he says also applies to government agencies. No, without an Internet presence and service, we would not be forced out of business, but I believe we would be marginalized.

SSA's own experience with another technology is, I think, pertinent. Today, at SSA, teleservice via our national 800 number is the preferred way for our customers to conduct business. We take about 60 million calls each year, compared to about 26 million field office visits. This year we started taking immediate claims for retirement benefits over the 800 number. That's remarkable when you consider that we opened our first teleservice center only 12 years ago. Our customers like the services of our field offices. And they also like our 800 number service.

And what has been true of the telephone will be true of the Internet, only more so. The Internet is growing faster than all other technologies before it. You've heard the stats: radio was around for 38 years before it had 50 million listeners; television took 13 years to attract 50 million viewers; the Internet got there in just four years.

Three-quarters of Americans under the age of 60 have now used the Internet at work or at home, and nearly three-quarters say the Internet has made their lives better. It is a brave new world, and we are only beginning to glimpse the extent of the changes that it will bring. Jim Clark, the founder of Netscape, says that, "As a technology, the Internet is about 50 percent developed. The main growth will occur over the next 10 years."

But I think that, even now, we can see that the reach and nature of the Internet is perfect for key government responsibilities. At SSA, there are three areas that are core to our mission that have major Internet applicability-public information, personal retirement planning and service delivery. I will speak to all three areas.

It's clear that the Internet is rapidly becoming the information source of choice, particularly for younger Americans. Just last month, you may recall that Stephen King published his latest work-a 66-page short story-on the Internet. Was it successful? Beyond any expectations. A half-million people visited the site on the first day. It made headlines…but it shouldn't have been all that surprising.

Information services such as encyclopedias, magazines, newspapers and even television have moved to the Internet. Some hesitantly, some enthusiastically. But all are now there.

As are all Federal government agencies, including my own. One reason is that a primary function of the Social Security Administration is educating the public about the Social Security and SSI programs. As the Social Security Advisory Board has noted, "SSA has a responsibility to communicate in an authoritative, credible, accurate and accessible manner with two important groups: first, the nearly 152 million workers who pay the taxes needed to finance the Social Security system; and second, the 45 million individuals who are currently receiving Social Security benefits." They are all our customers.

Communicating with our large and diverse audience is a major undertaking for us. We publish millions of public information pamphlets and leaflets about various aspects of the Social Security program each year. We produce public service announcements for television each year. And, over the last two years, we have participated in more than 10,000 public forums and media opportunities that have been held to educate the public about the long-range financing issues facing the program.

These are vital and absolutely essential functions.

But they are also labor-intensive, costly and in the final analysis, sometimes inefficient. Our pamphlets may or may not be read…and the information is only updated during pre-determined print production cycles. Our television PSAs, which are intended to reach a large, broad audience, are mostly broadcast during off-peak hours. And even our larger public forums attract an audience of several hundred individuals.

Compare this to the Internet. All of our public information materials-in English and non-English versions -- can be made available without any consideration for shelf-space or storage. There are no publication costs…or printing delays…or distribution channels. Communication can be direct…immediate…and interactive. Also, as some of you may know, the hot new technology for the web is video streaming, in which broadcast quality video can be presented on a web site at low cost. This means that, as a minimum, public service announcements on truly vital issues can be viewed at some time other than 3 a. m. …and that video discussions about Social Security issues can be made available for viewing with the click of the mouse.

We are now moving quickly to take advantage of these communication capabilities. Today, SSA's web site is recognized as among the most innovative and information-rich in government. Our Internet service now provides web site visitors with program information I just cited, and with downloadable versions of the top two dozen forms used by the public. It attracts more than 10 million individuals a year-up from only 22,000 just six years ago. Think about that-currently we annually conduct 26 million office visits, 60 million phone calls, and already 10 million hits on our web site. We're just beginning to scratch the surface on the web.

And we just announced our new e: news, a consumer-oriented electronic newsletter about the Social Security program and Social Security issues. The first issue came out just last month, and we already have over 40,000 subscribers. It is yet another way of informing and linking folks interested in Social Security information. And we are "partnering" with other government agencies and with organizations to link our web site with theirs. For example, SSA was among the sponsoring organizations that, working with AARP, developed the web site known as "Access America for Seniors," a priority of the Vice President. It provides a wealth of information for older Americans, together with links to servicing agencies such as ours.

The second area-and an area where more needs to be done-is the area of retirement planning.

Government studies have consistently shown that Americans financial literacy is low. But the need is high. This is especially true for middle and low income Americans, who do not have their own financial advisors, stock brokers or bankers. We need a way to help walk average folks through the retirement planning process, and a way to conveniently link then to important information on factors that can affect a worker's retirement benefit, such as military service or federal employment. It's an unmet need that we have recognized for some time. I cited our pulling back on our Internet application of the Social Security Statement. We are not yet ready to go down that road again. But we do have more than three million people a year requesting Statements over the Internet and we will then mail them a hard copy of their Statement.

But our customers want more-they want to have an interactive capability to ask questions such as "What if I work a few more years? What if I cut back on my earnings in the future, or increase my earnings? What happens to my future Social Security benefit projections?"

And that is why I am pleased that the President is announcing a new service, an online Social Security "Retirement Planner" which will allow people of any age to compute estimates of their future Social Security retirement benefits on our SSA web site. The "Retirement Planner" provides people with three options for getting an estimate of their Social Security retirement benefits:

There's a Quick Calculator which produces rough estimates of benefits at age 62, at full retirement age, and at age 70;

There's an Online Calculator which produces benefit estimates based on past, present and projected future earnings;

And there's a Detailed Calculator which produces the most precise estimates and allows users to customize their estimates bases on differing scenarios, including retirement, survivors and disability benefits for a worker and his or her family.

Since all benefit calculations and estimates are based strictly on input from users, there are no privacy concerns surrounding this new service. To maintain complete privacy, the retirement planner has no links to SSA's computer records and sensitive earnings data.

We think the "Retirement Planner" will be very popular, especially among baby boomers of my own age. It walks individuals through the retirement planning and application process. It provides links to important information on factors that can affect a worker's retirement benefit, such as military service or federal employment. And it provides links to the web site of the American Savings Education Council, which contains excellent information on the need for pensions and savings in retirement. The ASEC site, which is also interactive, enables individuals to explore personal options for retirement savings to complement Social Security.

We're justifiably proud of this new online service, and I encourage everyone to help us get the word out about it-and to try it for themselves. Now, what about the Internet and actual service delivery?

Over the next 10 years, SSA expects our workloads to increase significantly as baby boomers retire and enter into their disability-prone years. The question of how to deal with these workloads occupies a great deal of our time, and it is here again that I believe the Internet promises potentially big dividends for us. I believe that providing self-help Internet applications for the public and for our business partners is one way of meeting the workload increases-and it will help us to maintain our high standards of public satisfaction with our service delivery.

I think we need to take advantage of this phenomenon and use the Internet to take care of some of our pressing workloads. I really want this to happen, and the public wants this to happen, too. I am committed to deploying a "suite of services" over the Internet as soon as practicable. Our long-term goal is to allow customers to fully transact business electronically.

These Internet services would include customer account status information, online claims taking for benefits and Social Security number applications, and online public inquiries and responses. And all with full authentication and privacy guarantees.

But let me digress just slightly to say that while we need to use state of the art technology, we need to cling to some very old fashioned business principles-principles central to Social Security's 65-year tradition-an orientation to the customer, and a commitment to providing quality service.

The Web is not for everyone or everything today, and it won't be tomorrow. Expansion of the Web has taken place unevenly. For example, more than 70 percent of U.S. households above the $35,000 annual income level have Internet access. And while it's true that the Internet used to be the domain of affluent, non-minority males, that gap is closing rapidly. The director of e-commerce research at Boston Consulting Group believes that "it will become just like any other media." Internet usage is expected to rise to 63 percent of all U.S. households by 2002.

For much of America, I am sure this will prove true. But there are caveats. As examples ...

SSA's claimant and beneficiary population includes millions of SSI recipients, by definition a population of very poor individuals with few assets. And there are millions of disabled individuals applying for benefits. Some are individuals with mental and emotional impairments, who constitute an ever-growing segment of our disability applicants and beneficiaries.

We also need to remember that millions of older Americans have not embraced the Internet as readily, or feel as comfortable with it, as younger Americans. You need only look at our long struggle to convince all of our beneficiaries to use direct deposit of their checks to understand that the pace of change is uneven.

President Clinton has proposed initiatives to help bridge the "digital divide," including tax incentives to encourage private-sector donations of computers and sponsorship of community technology centers in low-income urban and rural areas.

The need for these efforts was again made clear to me just last month, when I participated in a conference on service delivery to American Indian communities.

But even if everyone were hooked up to the Web, the human touch is needed. There are-and will continue to be-Americans in need of more personal service.

The bottom line: SSA, and most other public service organizations and agencies, need to offer a wide choice of service options-face to face, telephone, Internet. The touchstone for our service delivery should simply be this: serve the customers as they want to be served, and serve the customers as they need to be served.

Let me also emphasize that even for those Americans who have and are comfortable with the use of the Internet, we must maintain a sense of perspective. Regardless of the promise that technology offers as a means of delivering information faster and more efficiently than ever, the bottom line must remain the message.

This is absolutely vital to remember. In fact, I recently saw a new dot com ad that said, "the point is information, not delivery." Let me repeat that: "the point is information, not delivery."

The truth is that it doesn't matter whether people get information about Social Security and retirement issues from "old media" or from the Internet. It only matters that they get it. And you and I know that too often this is not now the case. It is, in fact, the reason for this two-day conference.

There are now 76 million members of the "baby boom" generation in middle age, and before we know it the first of these individuals will begin to retire. Too many are just now starting to prepare financial plans for their retirement years. They need information-reliable, unbiased information-about retirement planning, and they need it now. And as the foundational benefit for retirement, Social Security needs to help people understand what it will provide…and what it won't.

The Social Security Statement that we are mailing to workers will move us a way toward increased public knowledge about Social Security and other retirement issues-such as the need for savings. The Internet will give us additional ways to deliver information.

We in government need to do all that we possibly can to educate the public on issues of importance to them, and to provide a service delivery system that is in keeping with increasingly busy lives.

But ...

In closing, I want to leave you with two thoughts that I think are appropriate to the subject I've been discussing. The first is from the 19th century French writer, Victor Hugo-not a high-tech guy. He observed that, "Knowing exactly how much of the future can be introduced into the present is the secret of great government." That's cautionary wisdom that we need to bear in mind as we try to move large government agencies and millions of taxpayers and beneficiaries from a familiar way of doing business into a new age of business.

The second piece of wisdom is from me-and actually I'm not a high-tech guy, either. But it is apropos to those of us who are guiding government agencies into the 21st century. It's simply this: "Fasten your seat belts, we are in for a very exciting ride."