John Shoven, director of the Stanford Institute for Economic Policy Research, takes issue with what he views as the conflation of retirement and Social Security claiming on the statement.
"Sometimes they use the word 'retirement' as if that's the same as collecting Social Security," he said. "The first thing the statement should make clear is there are two separate decisions: When do you retire and when do you start claiming Social Security?"
Shoven has studied the optimal time to claim Social Security benefits, and he believes that for almost everyone, it pays to wait as long as possible. As a result, how the Social Security statement frames the pros and cons of different claiming choices "makes a lot of difference," he said.
"If you tell somebody 'if you delay it will take you 12 or 14 years before you break even, they may choose not to delay. If you frame it saying how much higher the monthly benefit would be or what the expected rate of return would be for somebody like you, you get a different answer," Shoven said.
Others argue that by presenting benefits information as just static numbers can lead people to alter their behavior in ways that can harm their retirement finances. Philip Armour, an associate economist and professor at Pardee RAND Graduate School, has compared how people behaved when they received their first Social Security statement to what they did on receipt of their second. The statements include a person's projected benefit, assuming they continue earning at current levels.
On average, people cut their work hours by 119 hours per year after receiving their first statement, apparently assuming their benefit was locked in, Armour found. Reductions were most prevalent among older, educated workers who were working relatively long hours. People not working or working part time were more likely to increase their hours, but work hours declined for recipients overall.
Benefits are not locked in, however, and workers can keep adding to (or reducing them) as long as they continue in the labor force. When workers received their second statement, Armour found that some of the behavior changes reversed.
Armour believes an online tool that would let people try out different scenarios would lead to smarter working and claiming behavior. He said: "At the the very least, if it's going to stay a paper document, have a 'well, if you earn 50 percent more from now forward what will happen to your benefits' and 'if you earn 50 percent less what would your benefits be?'"
Ben Stump, a Social Security Administration spokesman, said "the best age to start retirement benefits is a personal decision for every individual, based on a number of considerations including present and future financial circumstances, current health and life expectancy. There is not a single 'best age' for everyone, so Social Security provides many tools to help people make an informed decision about when to apply for benefits." he said, "We are continually working to improve the services we provide." The Social Security Administration's website provides retirement estimators,calculators and benefit planners along with a section for frequently asked questions.
Researchers have found that the Social Security statement does have a noticeable effect on participants—but only to a point. Giovanni Mastrobuoni, director of research students in the economics department at the University of Essex, studied the effect of receiving Social Security statements and found that they did increase knowledge of benefits. However, he concluded the benefits statement had "no impact" on retirement behavior.