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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
cheryl
July 05, 2013 at 11:34 pm

We have people that illegally on social security to be taken off! Those funds are for american's that have worked all their lives to retire on or to have when they are disabled and can't work. The funds aren't supposed to be for the people that move here from other countries! I know for fact that these people that weren't born here get our benefits and thats why it is depleting so fast! It was meant for the AMERICAN people! I work in an ER and someone came in that had social security that couldn't speak a word of english. When that happens we should be able to take the card from them. These people should be exempt from receiving it because they weren't born here and haven't worked all their lives in this country and paid into it.

Tatonka
July 05, 2013 at 11:28 pm

Ede, How about cutting oil subsidies, farm subsidies, make the rich pay their fair share instead of cutting programs for the poor and disabled.

Ede Levarg
July 05, 2013 at 11:08 pm

The President and VP take a pay cut, as well as ALL members of Congress.
Stop ALL foreign aid, period.
Deport ALL illegal aliens, which would ease our hospitals, welfare, Courts, prisons, and schools.
Have prisons become self-supporting like a certain one in Arizona.
Drug tests required for welfare.
Do away with the EPA. Do away with all the extra czars O. has set up.
It's all so simple.

Kathie
July 05, 2013 at 10:51 pm

The goverment has money put away to cover auto workers that will pay pensions if they go broke. If the auto industry can't pay the the pensions the governent will. Wheres this money?

Dbrojon
July 05, 2013 at 10:02 pm

social security is like the budget that is not happening and all federal workers loose a work day and loose pay if the leaders in our governmet would give up a days pay and work for peanuts like the work force and give part of their pay to the little people we might not have such problems like social security is in and there might not be as many people on the poverty level as we have today

rick d
July 05, 2013 at 9:47 pm

We need to eliminate the payroll earnings cap. But nobody is talking about it. I wonder why.

Wayne
July 05, 2013 at 6:15 pm

If they had saved the excess that was put into SS instead of spending it on other programs we would not have a problem. Stop giving money to all the countries would be a great start and put it into SS. They actually owe SS over 2 trillion dollars. Ther are thousands of other programs that could be eliminated or cut also.

Gonza
July 05, 2013 at 5:59 pm

How about stopping the fraud? There are people collecting checks that have no business doing so like illegal aliens just to start.

David
July 05, 2013 at 5:23 pm

Simply by eliminating the payroll tax earnings cap — and thus ending this regressive exemption for the top 5.2 percent of earners — would, according to the Congressional Budget Office, solve the financial crisis facing the Social Security system.

Janis Hoesel
July 05, 2013 at 5:18 pm

I also agree with making disability easier for people over 50 to apply for and recieve as we all know the body ages and maybe you can't do the work you have mostly done. You might do some other type of work, but chances of getting hired are very slim. So in that case, age would be a disability! Age discrimination is very much alive in the real working world. And I guess the government thinks it should just keep giving young, able-bodied people all the handouts and entitlements, because of their poor life choices or they can get SSI and work in another name. Anyway, even 62 is a little late for SS. Most people do not retire early, but some have to, and there needs to be some programs in place to help those who cannot wait!