Time to Switch to Electronic Social Security Payments

Is Social Security still requiring everyone to get their monthly benefit by automatic deposit by March 1, 2013? I think my aunt still gets Social Security checks, and I’m wondering what she needs to do to make the change.

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Yes. She has until March 1, 2013, to switch to electronic payments -- by direct deposit either to a bank account or to a prepaid debit card.

The government started to phase out paper checks for federal benefits two years ago. Everyone who applied for Social Security, Veterans Affairs, Railroad Retirement or other federal benefits after May 1, 2011, could receive benefits only through direct deposit to a bank account or a debit card. People who were already in the system and receiving their benefits by paper checks were given until the upcoming deadline to switch to electronic payments. Most people have already made the change -- the government sent out 11 million paper checks in January 2011 and is now sending only 5 million paper checks a month, says Walt Henderson, of the U.S. Treasury Department. The government estimates that switching to electronic payments will save more than $1 billion in the next ten years. /p>

It’s easy to switch to direct deposit. You’ll need your account number and your bank’s routing number. Look for these numbers on your personal checks – the routing number is usually the first set of numbers in the bottom left-hand corner, and the account number is usually on the bottom in the middle; go to the Treasury’s GoDirect.org site for an illustration. You can then plug in the information at the GoDirect.org Web site or call Treasury’s electronic-payment helpline at 800-333-1795. Your bank should be able to help you make the change, too. “We’ve been working with banks and credit unions to help people switch over,” says Henderson, who estimates that it should only take most people about five minutes to make the change.

Another option is to have the money deposited to the Direct Express debit card, but you’re better off going with the direct deposit. The debit card can be used wherever MasterCard debit cards are accepted and charges no fee for purchases, but you’ll pay a 90-cent fee for ATM withdrawals after one free withdrawal per month, plus a $1.50 fee for each transfer made from the debit card to a checking or savings account. See the Direct Express fee schedule for details.

The government won’t discontinue payments for people who miss the March 1 deadline, but it will contact those last people by mail with an offer to help them make the switch, and then may eventually make the payments through the debit card if they don’t make the change themselves. (The Treasury Department will not contact anyone by e-mail or phone, which is a common ploy of scam artists.)

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.