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Idea for saving Social Security

By Jennie L. Phipps · Bankrate.com
Monday, February 4, 2013
Posted: 3 pm ET

As Congress struggles with ways to manage the rising cost of Social Security without cutting payments that are vital to millions, some people are offering suggestions that sound like they might be worth a second look.

Try this on for size: Would you delay claiming Social Security -- saving the federal government money in the process -- if it meant Uncle Sam would give you a cash bonus? The bonus would be equal to the amount that your Social Security payment would increase by delayed claiming -- about 8 percent of your potential payment for every year you delay.

Economic theorists at the University of Pennsylvania Wharton School of Business, who came up with this idea, calculated that workers given the chance to receive their delayed retirement credit as a lump-sum payment would, on average, delay their retirement for a year and a half to two years. This raises the probability that people younger than 60 would work beyond the normal retirement age from 29 percent to 86 percent, and it ups the likelihood 60-year-olds would work beyond 65 from 4 percent to 49 percent.

The report says this plan is a good deal for Social Security because it continues to collect wage taxes and can delay paying a participant's benefit for however many additional years he chooses to work. It is a good retirement planning deal for recipients because it front-loads payments during the early years of retirement when most people need more money. Participants also could invest this lump sum and potentially build a bigger nest egg for their later years or leave it to their heirs.

What do you think? Would you vote for making a partial lump-sum payment a Social Security option?

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301 Comments
anne
February 09, 2013 at 3:02 pm

I'M SCREAMING THIS AT YOU ALL THIS TIME. YOU ALREADY PAID THE STATE FROM THE FEDERAL COFFERS TO DO THEIR JOBS. THEN WHEN THEY HAVE BEEN SUCCESSFUL, YOU ARE PAYING THEM A SECOND TIME FOR DOING THE SAME JOB. IT'S COSTING SOCIAL SECURITY DOLLARS IN THE TRILLIONS BECAUSE MULTIPLE AGENCIES FROM ALL 50 STATES ARE DOING THIS!!! IT'S CALLED SSA REIMBURSEMENTS...WRITE YOUR CONGRESS AND SENATE AT THE FEDERAL LEVEL AND COMPLAIN. THE MONEY WON'T BE THERE FOR RETIREMENT OR DISABILITY WHEN YOU NEED IT BECAUSE IT'S GETTING DIPPED INTO NOW BY THE STATE GOVERNMENTS...THIS NEEDS TO STOP...NOW...WAKE UP OR LOSE OUT!!!! I AM NOT KIDDING!!!

Barbara
February 09, 2013 at 2:53 pm

All that say congress should pay back the loans to Social Security --please remember where they would have to get the money--yes- us taxpayers --they should stop spending our monies- especially a RAISE for themselves and cut Foreign Aid to countries that support terrorism to pay SS back!

Brenda
February 09, 2013 at 2:41 pm

Not everyone is in good health in their 60s and they cant wait because they wont live long enough to collect or make up the difference, I think it is a shame for someone over 60 to have work, can a tax payer have some rest before they die.

jon
February 09, 2013 at 2:39 pm

I think Anne hit it on the head. "THE US GOVERMENT HAS DIPPED INTO "OUR" INDIVIDUAL TAXPAYER ENTITLRMENT MONEY FOR YEARS". They have not payed a "pennie" back. They are trying to "bankrupt" it. If the "US GOVERMENT PAYED BACK" all the money they have taken out of our "SS FUND" , WE would not be talking about this right now. "PUT OUR MONEY BACK"

This is just one of "ton's" of reasons "I HAVE "NEVER "VORED"
"You" have no vote in what happens any more in the us goverment.
"Welcome to the "NEW WORLD ORDER" "YOUR NEW GOVERMENT' "WAKE UP"

Andrea
February 09, 2013 at 2:08 pm

I don't think people should have to work longer because the government is spending too much of our money. I don't think it will work. I had to stop working earlier due to health issues.
Many people have to stop working and can't work longer.

Hans
February 09, 2013 at 1:54 pm

We should be suspicious of President Obama. In private, he advocates eliminating SS for anybody that has 50K in savings..

Dave B
February 09, 2013 at 1:51 pm

I disagree. The lump sum would be fritted away since people prove (look at the average retirement balance for people at age 55) that they cannot save. I think we need to eliminate the cap for working people and phase in a longer retirement age for early, normal and late retirement dates

elizabethmedeiros
February 09, 2013 at 1:42 pm

Social security is fine. We need to take it out of the general fund and put it back in the lock box. It does!t contribute to the deficit and should not be part of solving that problem. All the money that has been taken from the fund without asking the american people permission needs to be paid back. When we take a loan we are expected to pay it back. They should to. This is a valuable pension fund for young and old alike and should not be stolen from them. There are many people who may have a 401 k plan but no pension. They will need this as they get older. Any politician who wants to cut this program or medicare benefits not costs needs to be voted out of office. Tea party must go in 2014.

Tami
February 09, 2013 at 1:41 pm

To Dee H, re: I'll say it again... your outline makes so much sense! How do we get the govt to listen to us, average American citizen? Not just lip service, but actually get down, in the trenches, and make at least as much effort as they do when they are on the campaign trail, and really listen to us. Open a conversation. Tell us why it won't work. Offer solutions. There's such a disconnect between where we are, normal John Doe citizen, and where they are. It shouldn't be like that. It won't work like that!

Mary
February 09, 2013 at 1:37 pm

How about congress pays back their loans towards social security. If they paid that back, SSI would be set for decades.