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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
Sonjia carter
July 07, 2013 at 11:38 pm

QUIT Giving it to all the ILLEGALS and People claiming alcohol or drug addiction. Sorry, but you choose that road. There are so many born with disabilities or become disabled due to health after working for years. I worked 35 years, I had chemicals spill on me 20 years ago on the job, and ended up with cancer along with some other major health issues like heart problems and COPD. But they still won't even let me have what I put in there back. It's NOT fair. People who worked and need it later should be able to get it back.

USMarine
July 07, 2013 at 11:22 pm

This is the ponzi scheme all were warned about when it was instituted. It now comes home to roost. Lika any ponzi scheme, first comers make out like a bandit which encourages others to want to partake. Late comers get holding the bag. So what else is new?

tony
July 07, 2013 at 11:00 pm

listen social security has been hijacked by the people running this country and in cohoots with the Big rich Corporations. As the bible says the rich shall rule over the poor & they will seek to oppress wages but then it states that Christ shall hear hear the oppress of those who cry out but Christ warns just be patient, I shall get revenge I will have my sword in one hand & my wrath in the other. Christ says I shall cut & slay from east to west & North to South. I will say this much the American Government & Corp America Is no better than the Mob they just took the funds from that system and did what they wanted to.
Theives & educated criminals that stole the funds simple as that.

paul
July 07, 2013 at 10:28 pm

High income people pay the most into the system and get the least back compared to what they put in.... Then they are usually in a higher tax bracket when they retire so most gets taxed back to the government anyway

maureen
July 07, 2013 at 6:27 pm

Why have I not heard of this man's ingenious proposals until now? and I read a lot (and watch many weekly news shows)!

Good4Nuttin
July 07, 2013 at 5:46 pm

I think that the answer to the problem is to stop allowing the contributions of Social Security to be taken out and placed in the general fund. If Johnson had not allowed this during the Vietnam War, we would have invested the money more wisely in OUR future.

Submarine Veteran
July 07, 2013 at 5:43 pm

We lament that there are no term limits for members of Congress. I beg to differ on that point. There are term limits and "We the People" have the power to impose them. You do that by voting at every election, including the mid-term elections. That way, if your Representative or Senator is failing to use good judgement and is not doing what is right for America - then you, as a member of "We the People", can limit their term. Pretty simple and effective. All we have to do is enforce that for a couple of election cycles and they WILL get the message. Then we can force them to limit their benefits to the equivalent of what hard working Americans get or they are out. Simple and effective.

I agree with the proposals stated in the article. No we just need to make sure it happens. That's where term limits come in.

collector
July 07, 2013 at 4:37 pm

Am in full agreement with above points & would hope suggestions of consultant will be seriously considered. Wonder what implications will be IF immigration problems are fixed & fewer illegal immigrants collect SS.

RW
July 07, 2013 at 3:04 pm

While people living longer may have some impact on funding, remember too that many people are working well past 65 now. I live in FL and there are quite a few older workers including my father who is 71 and paying in to SS and recently starting to receive it. What a distressing are the numbers of people collecting who are non-contributors- contributor plus spouse or dependent, immigrants. Add to that, the "borrowing" and it makes for trouble. The money is already "someone else's" so why the government thinks they can use it as a slush fund is wrong. That too is why they want our health dollars- more slush, without regard for the people!

Hysteria Fighter
July 07, 2013 at 10:26 am

There they go again, everything is the fault of that "evil" Social Security System!

SS would not have a problem if all the surplus money that was "borrowed" by congress during the last 40 years, is finally paid back with interest. Congress keeps forgetting that important fact when they start floating their ridiculous ideas of further cutbacks on payments to the medical profession, cutting back on benefits for SS recipients, raising retirement ages, ect,ect,etc.

Yet with all the problems, all the "complainers" keep re-electing the same congressmen. I say vote them all out! Maybe then something will actually be done to honestly correct Social Security's shortcomings.

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