This article was last updated on April 16
Before you freak out at the title, know that social security payments will still be made in 2013; it’s just they will no longer be sent via checks in the mail. The US treasury announced that by March 2013 it will phase out paper checks for all benefit programs. This covers social security, veterans benefits, railroad pensions and federal disability payments. Tax refund payments are exempt from this change.
The new directive will require people to get payments electronically, either through direct deposit or a prepaid debit card for those without a bank account. Fortunately the move to paperless payments will only affect a small set of recipients, since about 90 percent of people who receive federal benefits already get their payments electronically.
Walt Henderson, director of the Treasury Department’s electronic funds transfer division, said that electronic payments are safer and more efficient than paper checks; in 2010, more than 540,000 federal benefit checks were reported lost or stolen. The switch will save the government about $120 million a year. Social Security will save $1 billion over the next decade, according to the Treasury Department.
Some senior citizen advocate groups have said that the changes may be prove onerous to recipients who like the surety of a paper check. However there is no avoiding the digital age and by 2013 all benefit recipients should be prepared to receive their funds in the new modes.
With that in mind, here are two quick and important tips for benefit recipients who will or are receiving their payments electronically.
1. Make your benefit payments work for you . Rather than get your funds into a standard, minimal interest, checking account get your direct deposit funds in a high yield savings account. While savings interest rates are not that high currently, a little bit of free money is better than none. So make your money work for you, and enjoy that extra $100 to $200 at the end of the year.
2. Be secure. Just like the offline (physical) world, you need to be secure in the online world. You can read more on online security in this article, but the most important point for electronic payments is to make sure you avoid phishing schemes. These are scams propagated through emails that ask you to follow a link to website and input account details for verification – even if the website looks authentic (e.g IRS or SSA looking site), its probably a fake replica “phishing” for personal financial information. A lot of these are going around lately and scam artists keep changing the institution’s logo on their emails but the basic premise to get your financial information is always the same. Fortunately most of these emails go straight to the junk email folder, but some malicious ones (like recent IRS stimulus email scam) do get through to your inbox