# What Retirees Should Know About Direct Deposit

By Cameron Huddleston • January 23, 2023

It’s time to consider making the switch to electronic payments. Why? Direct deposit is faster, more convenient, and safer—yes, safer—than checks sent in the mail.

If you’re not clear on how direct deposit works and what the benefits are, keep reading to learn more about this payment method.

## What is direct deposit?

Direct deposit is a payment made directly into a payee’s bank account. A paper check is not issued. Instead, money is electronically transferred from one account to another.

A good percentage of employees were paid by direct deposit before retiring. Nearly 96% of employees surveyed by the American Payroll Association said they are paid by direct deposit.

## Benefits of direct deposit

It might feel comforting to receive a check, but direct deposit is safer, faster, and more convenient.

‍ **Safe:** Money goes directly into your bank account with less risk of being lost or stolen. You can sign up for alerts when deposits are made.

‍ **Fast:** Funds will be available sooner than a deposited check, and direct deposits are much less likely to be delayed compared to paper checks.

‍ **Convenient:** You won’t have to visit the bank to deposit checks, and payments will be directly deposited into your account wherever you are.

## Who offers direct deposit

Most likely, you can receive any source of retirement income by direct deposit, including:

‍ **Social Security Administration:** Payments must be made electronically, and waivers are rare.

‍ **Department of Veterans Affairs:** VA pension payments and disability compensation can be paid through direct deposit.

‍ **Pension plans:** Most pension plans, including government plans, offer this option.

‍ **Retirement plans:** Companies that administer IRAs and other accounts typically allow electronic deposits.

‍ **IRS:** You can opt to have your tax refund directly deposited into an account.

## How to set up direct deposit

1. Visit the website of the company or agency from which you want to receive direct deposit or call for the necessary form.
2. Provide your bank information, including your bank’s name, account type, routing number, and account number.
3. Confirm the deposit amount, specifying how much will be deposited into each account.
4. Provide a voided check if requested, ensuring it’s marked as void.
5. Submit the form either online or by mailing it in a secure manner.

Once the form has been processed, you should start receiving payments electronically, though it may take one or two pay periods for the switch to occur.

### Cameron Huddleston
_Cameron Huddleston is an editor-at-large at Carefull and the author of_ [_Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances_](https://www.amazon.com/Mom-Dad-Need-Talk-Conversations-dp-111953836X/dp/111953836X/ref=mt_hardcover) _._