Terry Savage

Social Security Says Bye to Paper Checks -- But Do Not Fear
 Q: My elderly mother received a notice that she will no longer get a Social Security check, but that her monthly amount must be deposited into her bank account. She doesn't have a bank account, except the joint account I use to manage her expenses.

What's this all about?

A: This is all part of the Treasury Department's efforts to save money and make delivery of payments more secure. Starting May 1, all new applicants for government benefits such as Social Security, Veterans Affairs or other federal benefits must receive the money electronically.

People who currently receive federal benefits by paper check must switch to direct deposit by March 1, 2013. The move to do away with paper checks is expected to save $1 billion over the next 10 years, as baby boomers start receiving retirement benefits.

According to the Treasury Department, it costs 92 cents more to issue a paper check than to make an electronic deposit.

And think of all the trees we'll be saving!

Already, the great majority of the 80 million receiving federal benefits get them via direct deposit. But the change has certainly created anxiety for many of the 11 million senior citizens still receiving benefits by paper check.

If you know of someone in this position, please show him or her this column -- and help them make the switch, which is easily done following the instructions that come in the envelope with their check -- or by going online to www.GoDirect.org. There is also a helpline at (800) 333-1795.

Actually, there are two alternatives to receiving a paper check. The money can be directly deposited into a new or existing bank account, either checking or savings. It will arrive securely, and once deposited you can write checks or pay bills online from your account. To get the direct deposit started, you'll need the bank's "routing transit number," which is found on the face of the check, as well as the bank account number.

Or the money can be directly deposited onto a "DirectExpress" Debit MasterCard, created especially for this purpose. That card can be used at any merchant that accepts MasterCard, or at ATMs to withdraw cash. You get one free cash withdrawal every month, but you can also get cash back with purchases for no additional fee.

There are no sign-up, monthly account or overdraft fees for this MasterCard. You'll have 24-hour access to your money, seven days a week. And you'll have the complete protection against fraudulent use of your card that is given to all MasterCard users. For 75 cents a month, you can also get a paper statement mailed to you, showing your activity.

So if you know a senior who needs to make the switch, please don't let him or her agonize over this change.


Here's a question I received many times Wednesday afternoon after Fed Chairman Ben Bernanke spoke: What did he say -- and what does it mean to me?

Judging by the number of words it took the Fed chairman to get his message across in his first live press conference after a Fed meeting, it's no wonder you might be a little confused.

Bernanke said the Fed would end its excessive money printing on schedule at the end of the second quarter -- and might even start tightening up a bit over the summer. The Fed expects inflation to be just below 3 percent, as a result of rising oil prices, and "core" inflation -- without food and energy (for those who can live without food or energy) to be only about 1.5 percent. Bernanke was only slightly optimistic about unemployment, which he said would likely stay in a range of 8.4 to 8.7 percent.

But the markets weren't confused. They believe higher inflation is on the way as a result of all the recent money and credit creation. That fear continues to push gold up, to a dramatic new high of $1,527 an ounce, while the dollar fell to a new three-year low.

Why were stocks up? A lot of the money being created has also moved into stocks.

The S&P 500 stock index is up about 30 percent since the Fed started its QE2 move to ease and create credit. There's an old rule in the stock market: Don't fight the Fed.

And that's The Savage Truth.

Terry Savage is a registered investment adviser and is on the board of the Chicago Mercantile Exchange. She appears weekly on WMAQ-Channel 5's 4:30 p.m. newscast, and can be reached at www.terrysavage.com. She is the author of the new book, "The New Savage Number: How Much Money Do You Really Need to Retire?"

To find out more about Terry Savage and read her past columns, visit the Creators Syndicate Web page at www.creators.com.


Terry Savage

Terry Savage is a nationally known expert on personal finance and a regular television commentator on CNN, CNBC, PBS, and NBC on issues related to investing and financial markets.

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