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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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1,721 Comments
raze
July 06, 2013 at 7:10 pm

To those of you that made comments regarding SS as a handout/welfare and that there are people who are not US citizens receiving SS benefits. Here are some facts that you should know:
1) if you work long enough and earn wages qualified(meaning taxed) under the SS system, you are eligible to receive SS monthly benefits. You do not have to be a US citizen. You need to have legal status in the US however.
2) SS and SSI are two different kinds of benefits and paid from different trust funds. SSI(supplementary security income) benefits are paid to those in need(disabled & elderly) from general tax revunues(like welfare. Whereas SS is paid from the SS tax revenues to workers(and their families like spouses & children)whose earnings were subjected to the SS tax. Please don't confuse the two types of benefits. This article only refers to SS.

Dj
July 06, 2013 at 6:56 pm

Wow really? somehow none of this information shocks me.

Keith C. Parsels
July 06, 2013 at 6:16 pm

How about just giving me the amount I paid in Tax free and we will call it even. I've payed into SS since 1968 My first job and was forced to retire at 58 in 2010 to make way for cheaper employees.

Bill Stanley
July 06, 2013 at 5:31 pm

@Walter Dlugokiencki…..” I was orphaned adopted went into the Army to make a better life and I did and never received one cent of walfare. People ought to be screaming at their reprensentatives to make people work or make it really prove that they are so disabled than I can see helping them out….”

You have the right to be proud of what you accomplished, and you are right at calling the country’s representatives to task. There are literally multi-thousands of people on the Social Security payroll who are able to work but have been determined by SS to in fact be disabled. This is a system that, before it determines eligibility, sends applicants to one of their own doctors (that is a doctor chosen by the system) to be examined and to make a determination of their disability. By that point applicants have already seen several doctors. It is however, from what I can determine, that SS doctor that ultimately determines the disability. Many are rejected who truly need the benefits while thousands who are able to work do not. There must be some criteria by which all must comply, but more so “disabled” must be better defined. I do not like seeing some well muscled dude coming out of an uptown spa or gym but on Monday is too disabled to get dressed and go to a 40 hour a week job. That is only one example. There are those who drive new pickup trucks or luxury cars while I have to struggle to pay the notes on an inexpensive, 4-cylinder econo-vehicle. Many of these people feel they are entitled and only get what they deserve. It is cases like this that have bankrupted the system. So yes more people should be contacting their representatives and doctor screenings should involve more than a blood pressure check and a urinalysis that checks for drugs.

RON
July 06, 2013 at 1:01 pm

ALL PRESIDENTS, V.PRESIDENTS, CONGRESS SHOULD NOT RECEIVE SOCIAL SECURITY AS THEIR PENSIONS ARE EXTREMELY HIGH WHEN THEY RETIRE.
ALL THEY LIKE TO DO IS SPEND THE PEOPLES MONEY FOOLISHLY ON STUPID THINGS." when is china moving into the whitehouse???????

walter dlugokiencki
July 06, 2013 at 1:01 pm

This country provides every means possible to make a good life. If people are too lazy to provide for themselves than they should be put in the military, live in empty prisons and let the gov't train them for new jobs, just given the food they need for the week (not money to spend on anything). I was orphaned adopted went into the Army to make a better life and I did and never received one cent of walfare. People ought to be screaming at their reprensentatives to make people work or make it really prove that they are so disabled than I can see helping them out. I'll bet these supposedly needy people will make it somehow.

ronald corey
July 06, 2013 at 12:54 pm

if the gov't would stop giving aid to forein countries and use that in the USA instead,to help with our own dissasters of fires,floods & tornatoes. THEY SHOULD REPLACE ALL THE MONEY THE GOV'T TOOK OUT OF SOCIAL SCURITY DURING ALL THE PRESIDENTS WHO DID ABUSE IT,THOSE PRESIDENTS WHO TOOK MONEY OUT OF SOCIAL SECURITY SHOULD BE DENIED THEIR BENEFITS NOW FROM SOCIAL SECURITY NOW AS THIS IS A FORM OF STEALING AND SHOULD BE PROSECUTIED TO THE FULL EXTENT OF THE LAW, NO EXCEPTIONS. GOV'T SHOULD KEEP THEIR HANDS OFF SOCIAL SECURITY PERMENTALY

vikc
July 06, 2013 at 1:13 am

why not take the ones off of social security & ssi who is able to work, and not use social security for the easy way out, but to use it for the hard way out which is a hard working person who put so much into it to make a comfortable living while setting in the old chair looking on days to come and go.

VERY CONCERNED
July 06, 2013 at 12:18 am

Tom Faciana, YOU don't get it. The people currently on Social Security SUPPOSEDLY have already had SS deducted from their pay when they were working. We all pay into it in hopes of something to look forward to during our retirement years. I understand that people are living much longer. However, why should we continue to have these automatic deductions when we can't even have the funds that are OURS (we paid into it) when it's our turn to retire? Who'll take care of OUR needs?

If we had those extra thousands to invest, for CDs, annuities, or under our mattress, instead of putting it into what won't be there for us in the future, at least we'll have that money saved up and available to us. I'm asking to keep what WE EARNED. I'm not asking for handouts.

If one can't spend, don't make it everybody else's problems. I know how it is to be broke on payday. We've been there and done that. That's why we vowed to do better for our family. The point is, once it's it's gone, it's gone. There's enough welfare and resources to help the needy. We used them as we should when we first started. Temporarily. Now, those resources we can't qualify for. Therefore, i
we'd like to keep as much of our pay check for our children's college education and for my husband's and I's retirement. That's not me not getting it, being poor at math, or not caring about other folks as you said. We donate plenty. It's also money we earned so we should have the right to save it. Also, that's caring for my family's well being because from the looks of it, things are going downhill. I can only depend on us to make wise decisions for our future.

Why, do you have something in stored for us that we could look forward to? Again, SS deductions from our check are supposed to be for when WE get older. I'm only asking for what Social Security is intended for and for whom it's intended for. But, what else is new?! People would rather party all day and all night and expect others to care for them. Again, don't make your problems my problem. We willing give back and there are many times where we're forced to because I should feel bad for others not wanting to do better for themselves. Their poor decisions are already affecting us responsible adults. Enough is enough.

rob
July 06, 2013 at 12:02 am

Companies that make there products over seas tax them heavy when they bring there product's back to the US for resale, and give the proceeds to S.S.

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