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No more Social Security at 62?

By Jennie L. Phipps · Bankrate.com
Sunday, June 2, 2013
Posted: 7 am ET

The Social Security Board of Trustees released its annual report Friday on the financial health of both the retirement and the disability trust funds.

The report projected that the retirement trust fund will be depleted in 2033 -- unchanged from last year's projection. It said that unless Congress acts, at that point the program will be able to pay only 77 percent of promised benefits from ongoing contributions. The disability trust fund will be depleted much sooner -- in 2016 -- when the program will be able to pay only 80 percent of promised benefits.

Other statistics from the report that you might find interesting include:

  • More than 57 million people were receiving Social Security by the end of 2012.
  • In 2012, approximately 161 million people paid payroll taxes on earnings covered by Social Security.
  • The total money held in reserve by the program rose by $54 billion in 2012 to $2.73 trillion.
  • The cost to administer the program in 2012 was 0.8 percent of total expenditures, a total of $6.3 billion.

A few days prior to this announcement, Donald Fuerst, senior pension fellow at the American Academy of Actuaries, testified before the U.S. Congress about Social Security's pending shortfalls. He said that in 1940, when the new Social Security Administration began paying monthly retired-worker benefits, the retirement age was 65. At that time, workers who survived to age 65 had a remaining life expectancy of 12.7 years for men and 14.7 years for women. By 2011, life expectancy at age 65 was 18.7 years for men and 20.7 years for women, an increase of six full years for both.

What you should know about social security benefitsIn 20 more years, life expectancy at age 65 for men is expected to be more than 20 years and more than 22 years for women, Fuerst pointed out.

The bottom line: If something doesn't change, we won't have enough money to pay the Social Security that is promised, a retirement planning disaster.

Fuerst offered Congress several suggestions for fixing this problem. His most controversial idea is probably raising the minimum age for collecting Social Security from 62 to at least 64.

Here's what he'd also do to make an increase in retirement ages less painful for workers:

  • Gradually phase in any change over an extended period of years, even decades, to allow for more time for society to adapt to the new work-life reality. "Give people time to plan and prepare. You wouldn't want to change it for someone who was planning to retire the next year. None of us would consider that fair," Fuerst says.
  • Reduce benefits for higher-paid workers. "Wealthier socioeconomic groups recently show more longevity improvements than poorer socioeconomic groups," Fuerst points out.
  • Revise the Social Security disability program. Make the requirements more lenient for people between ages 62 and full retirement age, so those in occupations that involve physical labor wouldn't have to continue to work at jobs they couldn't physically do.
  • Cut or eliminate the wage tax for both employers and employees for people between ages 62 and full retirement age. It would give an incentive to both groups to keep older workers on the job.

Will a plan this complex and drastic ever wend its way through Congress? Fuerst thinks it should, but he isn't optimistic. "It isn't going to be easy; there are too many competing interests," he says.

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1,722 Comments
Stephen P. DeBoever
July 05, 2013 at 5:00 pm

Excellent statistical report from Donald Fuerst. Very accurate. Age 64 or 65 would be a proper new regulation. As a 20 year advocate of the disabled veterans with Social Security, I think the main focus at this time should be to put the disability benefits program (SSDI)back on track. Strengthen the fund and raise the ALJ's compensation significantly. They work extremely hard, under duress (political), and deal with peoples actual lives directly. The ALJ's and the disability portion of the program must not fail or digress. Until Americans start taking better care of themselves as a whole, the disability factors will rise. America needs a push for creating a healthy America. Social Security is a wonderful program and a TREASURE of the United States. Lets start treating it like one.

Charles
July 05, 2013 at 4:21 pm

Stop paying social security to people living in foreign countries that are supposedly still living many many more than you would like to believe are still receiving soc sec cks that are over 100 yrs old and we cannot prove they are still living,,why ,,because we have no way to know as they are not required to prove reciepiants are still living,,we must start a program that requires these reciepants prove they are alive and eligible to continue to receive benefits//

CARL MARINELLO
July 05, 2013 at 3:50 pm

I burn when I hear a polititan refer to SS as a intitlement. The goverment does't contribuite a dime to SS. The workers and their employers are the ones who contribute to SS. If the goverment would pay back the money they took out of it SS would be solvent. If the polititans feel they have to cut SS start with the people that never put a dime into it. Thanks to prez. Jimmy Carter SS is paying benifits to people that are not citizens of this country. If this is not enough keep Americans money in this country for Americans. Stop forign aid to countrys that consider the USA their enemy. It doesn't make sense that that we have to borrow money to give to other countries.

brenda
July 05, 2013 at 2:30 pm

stop taking the money out. if the government wolud pay back whaqt they took out, quit paying the park ranger out of SS. quite paying people that never worked and people that have some kind of mental problems or disorders of anykind. people that can't work for some reason like drugs and bozze. if the government wants to give all of them money give them money out of their pockets. i worked most of my life i earned that money just like everyone else that worked and payed into the SS program

Chris
July 05, 2013 at 2:27 pm

This is typical. Americans keep paying for our governments inability to control its spending. They keep taxing the american public for more and more money and with economy being what is there will come point where we as americans will no longer be able to pay the tax. The simple truth is the government must curtail its spending in other countries and take of us americans first and formost.

PatinMadison
July 05, 2013 at 2:21 pm

How about the simple solution of taxing more wages of high wage earners? If you raised the wage limit to $200,000 and severly limited what could be considered compensation not subject to SSI taxation, much of our problems would be solved. Limiting the benefit to high wage earners sounds reasonable but that makes SSI a charity, not an insurance and we know what happens after that... the congress begins to whine about paying anything to anyone "needy". The chorus of "They should have prepared better", "Their families should take care of them" etc. will start 15 mintues after they start taking the financial condition of the receipient into consideration.

I do not think that it is too much to expect people after a lifetime of work to be able to retire in dignity and not at someone else's charity. Raise the retirement age by all means, if that makes actuarial sense, but let's not reduce SSI to a handout.

tom faciana
July 05, 2013 at 2:12 pm

Very Concerned doesn't get it. Poor at math or doesn't care about other folks. If younger contributors don't pay in now, the plan won't last but a few more years at best. Most people of means get their monetary success from some sort of gov't subsidy or at least their company does. Remember those words " To promote the general WELFARE ". We live in a consumer based economy and if one can't spend, our economy is affected. And we all now we can't trust the banking institutions with our retirement.

Brenda
July 05, 2013 at 2:02 pm

I will repeat what has been said. Younger workers should be able to get benefits if they pay in along with us older people who have been in all our lives. If the goverment would pay back what it stole we all would be fine. Stop picking on older citizens who paid in their whole lives. We worked for it! Not our fault the goverment spent it.

JBS PA
July 05, 2013 at 1:39 pm

Over the years the government has taken billions of dollars out of the SS fund and as we speak they owe the fund at 4% interest about 14 Trillion dollars. Pay it back and all will be fine. Or take it at of Congress' retirement fund and put them on SS and it will be fixed within a week.

VERY CONCERNED
July 05, 2013 at 1:18 pm

I agree with Ms. Kelli Simpson along with the other posters prior to my post. If the government ALREADY knows that the "retirement trust fund will be depleted in 2033" and that the "disability trust fund will be depleted much sooner -- in 2016," then why is the younger generation (who does not have a chance of even receiving a penny) still required to pay into Social Security???

Also, EVERY time we nickel the higher-paid workers (be it to pay higher taxes, reduce pay, expect higher contribution everywhere, etc.), we are reducing their ability to have a better future. Why even bother to work your way up to a higher level when you'll be punished anyway? We used to be poor, but because we used all these programs for the poor, we were able to do better for ourselves. Why can't everybody else?? If people would use Pell Grant, then maybe they better their situation so they can save for their future.

Which, takes me back to my point. If we already know that the Social Security will be depleted, then we should no longer pay into it. Instead, we should be given the option to save the thousands of dollars taken from out checks and put it under our mattress. No sense in putting in in that bank where the interest rates are so low. The cost of inflation is higher than what the banks are paying nowadays. People, learn how to live within your means. I'm tired of picking up your bills. I have my own kids to worry about. We make "too much" (though this has only been for a couple of years), so unfortunately, my kids who are about to go to college will not qualify for Pell Grant. Again, we're nickeling and diming us because we chose to do better, while everyone else's child gets "free" hot lunch, ACT/SAT/AP testing, college education, phones, homes, healthcare,toys, the list goes on! Us? Reduction in pay along with paying for everybody else's life. We can't afford it. We're becoming poor ourselves. Let us be able to save for our own retirement AT THE VERY LEAST!