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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
EDDIE
July 07, 2013 at 12:51 am

Stop paying the foreigners Social Security when they land on the boats....It might save us Billions
Stop giving out money to these Spanish, African, and Hatian groups that come here, sign up, and then go back home, collecting OUR hard earned money

BBrown
July 06, 2013 at 11:32 pm

The social security, and disability needs an audit to determine percentage of people receiving money that have ever paid into the system. I know there are able bodied young people on disability that have used the system the same way women with children use housing, health care and food stamps. Too many young adults feel it is a way of life, without taking any responsiability for their lives. A father in Plano has been on disability for over 8 years, and he stays home to take care of his children with a new one added last year his wife works.
Makes you wonder how this happened, children are a full time job but this contradicts the definition of disabled .. Social security is not being paid only to those who paid in to the rate they paid. Money is going out but no one has asked for an accounting.

Norman
July 06, 2013 at 9:45 pm

With all the government surveillance and data storage, it is time for an audit of the SS, income, costs, payments in all aspects, legals and otherwise, young and old, payments to the general funds, etc. Let the people understand where the money went. If we choose too, the situation can be balanced and made equitable. Trouble is, the elected federalists do not want to make the SS system equitable. When the SS payouts are used to buy votes, what do you expect?

Adel
July 06, 2013 at 9:19 pm

I see some folks don't like taxes, even it it is used to support old people and the disabled.

Dennis M
July 06, 2013 at 8:29 pm

Why does the SS tax end at 100,000 plus? Why not tax the rich as well as the people below 100,00.

Inez
July 06, 2013 at 8:29 pm

The jobless do not pay into SS or Medicare or Federal or State Taxes, No brainer. The more people working...... and esrning decent wages the more money into those coffers.Thousand of jobs were cast aside due to outsourcing, We want to legitimisize illegals who work for less money and under the table pay! i

Inez
July 06, 2013 at 8:29 pm

The jobless do not pay into SS or Medicare or Federal or State Taxes, No brainer. The more people working...... and esrning decent wages the more money into those coffers.Thousand of jobs were cast aside due to outsourcing, We want to legitimisize illegals who work for less money and under the table pay! i

Chris
July 06, 2013 at 8:05 pm

Hey! Here's a thought! How about the Social Security Administration start COLLECTING the money that was taken from it's fund over the years by other Government agencies? I am sure that would help at least a little bit. But it may also let the other parts of the Government know that taking from SSA, to buy another fighter, or fund school lunches or whatever is no longer acceptable!!!! I wish I had the means to calculate just how much money was taken and how much the payback would be with current FEDERAL INTEREST RATES!

Steve H
July 06, 2013 at 7:42 pm

To those people that say they would rather have the money that they paid into SS instead of the monthly benefit. they need to do the math. I am on SS and receive $1400 month. I paid in approx. 63,000 over a 37 year period and my employer also paid in 63,000. That 126,000 will buy a fixed annuity life time monthly payment in the private sector of only $543 a month as long as my wife and I live. So let me see, do I want $1400 a month or $543 ?? Go on line to the SS web site and it will tell you how much you and your employers have contributed. You might be surprised. I would give SS another $126,000 out of my 401K if they will give me another 1400 a month.

Dj
July 06, 2013 at 7:24 pm

And uhh... in the meantime, until congress makes up its mind about what to do with SS and disability, how about you stop taking it out of my checks every week so I can afford to buy food & pay bills? You can't promise me the benefits of this program when I get ready to retire so why should I continue paying into something that's just going to be an ideal soon enough? It's a waste of my hard earned money.

I need to survive here & now & this being taken out of my checks isn't helping.
These people worked back then at 20xs the pay rate I get with 20xs the hours I get if they didn't save for retirement beyond SS that's certainly their problem isn't it? My mother is saving for her retirement instead of relying completely on public worker 401k what's these people's excuse?!

I shouldn't have to work 3 jobs & go to school to pay for their mistakes especially if they have kids, make their kids take care of them. Other elderly parents are not my responsibility, my own parents, when elderly, will be my responsibility.

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