WASHINGTON -- As the first wave of U.S. baby boomers prepares to retire, the U.S. Treasury is hoping to save millions of dollars by persuading them to receive their Social Security benefits by direct deposit.
The Treasury and the Federal Reserve Banks are launching a year-long campaign to boost direct deposit use, hoping that technology-savvy boomers would make the switch from paper checks.
The Treasury estimates that it costs 80 cents more to process a paper benefit check than a direct deposit payment, including postage, processing costs and claims costs related to fraud and check replacements.
In 2006 alone, more than 57,000 Treasury-issued checks - representing $54 million in estimated value - were forged.
"About 98 percent of payment problems are related to paper checks," said Alvina McHale, public affairs director for the Treasury's Financial Management Service.
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If each of the 154 million benefit checks mailed out in 2006 had been converted to direct deposit, the federal government would have saved around $123 million, McHale said.
And with the first of the 77 million baby boomers born between 1946 and 1964 becoming eligible to receive Social Security benefits in 2008, when they turn 62, the check numbers are expected to rise dramatically in coming years.
In a national survey released on Wednesday, the Treasury found that baby boomers were more than twice as likely as today's senior citizens to bank and pay bills online.
But direct deposit use among today's seniors actually outpaces that of baby boomers. The survey found that 25 percent of baby boomers still get paid by their employers with paper checks, compared to only 13 percent for those aged 61 or older.
And only 18 percent of older baby boomers aged 51-60 said they were likely to enroll in direct deposit in the next year, compared to 30 percent of baby boomers overall. The older boomers also were less likely to bank online, with 36 percent using such facilities compared to 56 percent for those aged 42-50.
While recent indicators show the national savings rate is declining, the poll showed that only 16 percent of baby boomers say all or most of their future retirement income will come from Social Security. In comparison, twice as many (31 percent) of existing retirees say Social Security makes up all or most of their income.
The poll also found boomers more likely to wait to collect their Social Security retirement benefits.
About 16 percent of boomers who are not yet retired plan to start collecting Social Security at age 62, according to the poll, compared with 34 percent of current retirees who started collecting benefits at that age.
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