Direct Deposit of Government Checks
Course Section
How will you choose to get your Social Security benefits? Paper check or direct deposit?
The oldest of America’s 77 million baby boomers – those born between 1946 and 1964 – will soon turn 62 and be eligible for Social Security. If current trends hold, many will get their retirement benefits by paper check. One in four boomers still gets paid with paper checks at work, according to a survey sponsored by the U.S. Department of the Treasury and Federal Reserve Banks. Choosing paper checks is particularly popular with those closest to retirement age, 51-60 years old.
Countdown to Retirement
The Treasury and Federal Reserve Banks hopes to increase the number of people using direct deposit for their Social Security with its Go Direct campaign. Why? “Direct deposit is a long-standing priority for Treasury because it’s safe and easier for consumers than paper checks,” says Treasury Fiscal Assistant Secretary Donald Hammond. “With the anticipated surge in baby boomer retirements in the coming years, we must encourage Social Security recipients to sign up for direct deposit. There are significant benefits, in terms of safety and security, for the recipients and considerable cost savings for American taxpayers,” says Hammond.
Boomer Survey
The survey sheds new light on baby boomers’ concerns, attitudes and behaviors regarding direct deposit, checks, retirement, and other related issues.
- Nearly half (47 percent) of all boomers use online banking, nearly double the number of people age 61 or older (24 percent).
- Twenty-five percent of boomers say they received their wages, salary or other regular payments by paper checks.
- Forty percent of baby boomers who are unlikely to start using direct deposit in the next year say they don’t trust or like direct deposit for a variety of reasons.
- While boomers lead all age groups in having a checking or savings account, older boomers (ages 51-60) lag younger ones (ages 42-50) in moving into the electronic age. They fall behind younger baby boomers in use of online banking (36 percent to 56 percent).
- When compared to boomers overall, the older generation is less likely to enroll in direct deposit within the next year (18 percent to 30 percent).
Safety Concerns
Financial crime is a widespread concern among Americans, with four in 10 saying in a new Treasury Department-commissioned survey that they have been victims of identity theft or know someone who has. But the survey also reveals that people often leave themselves open to financial crimes – even in their own households – by using paper checks, rather than direct deposit.
"Millions of Americans are affected by identity theft and other financial crimes, but there are steps people can take to increase their financial safety – such as choosing direct deposit," said Kenneth R. Papaj, Commissioner of Treasury's Financial Management Service. "Last year 57,000 checks issued by Treasury were fraudulently endorsed, while problems with direct deposit payments were negligible."
The survey revealed that nearly one in three respondents (31 percent) said they had had a check, important document or large sum of cash lost or stolen. Of this group, nearly one in five said a family member or member of the household had stolen the cash, check, or document. Furthermore, large numbers of Americans – 40 percent of survey respondents – expressed concern about having a paper check or other important document lost or stolen. Women are more likely to be worried about financial crimes, with nearly half the women polled saying it is likely they will have a paper check lost or stolen, compared to just over a third of men (46 percent vs. 35 percent).
AARP strongly recommends current and pre-retirees to choose direct deposit. “Direct deposit makes good sense any way you look at it,” says John Rother, Group Executive Director of Policy and Strategy at AARP. “We stand behind choices and solutions that provide security, protection and empowerment for our members.”
Take Action
Sign Up for Direct Deposit
Go Direct makes it easy for people currently receiving Social Security and other federal benefits to sign up for direct deposit. Visit the Go Direct web site to sign up online or call the toll-free helpline (800) 333-1795.
Countdown to Retirement Pledge
Baby boomers who are interested in taking the Countdown to Retirement pledge and learning how their attitudes about retirement compare with the national average can visit the Go Direct web site and click on Countdown to Retirement.
AARP Resources
Paper Stock Certificates
Consider converting your paper stock certificates into e-stocks.
Other Resources
Direct Deposit Questions
The Social Security Administration answers common questions about direct deposit.
