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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
Dee
July 08, 2013 at 2:10 pm

The retirement age was raised in 1983. I was born in 1952 and my retirement age for full benefits is 66. This was done to force you to take a reduced benefit, not because anyone is going to keep working additional years. Fixing, how about removing the "cap" on payroll deductions. Also, start legalizing immigrants working "off the grid" and bring them into the system.

Tim Luckett
July 08, 2013 at 1:07 pm

Why don't they say what they really mean? They don't want any of us living to collect Social Security. It is neither social or secure. They're all a bunch of fking liars. They (the politicians) don't pay into the system or collect from the system, they just take the money. Come to think of it, since they don't really have a vested interest in social security, let's take away their right to spend the money from the fund.

ELois P. Clayton
July 08, 2013 at 12:59 pm

What's estonishing to I, is, the "bigshots", who gain these profits(illegally, through embezzlements and such), is NOT punished enough(financially), then are allowed to receive retirement pay.
They still from taxpayers, buy multiple pieces of real-estate, but when they are finally nailed for these crimes, they believe that soemthing is illegally being taken from them.
That's a huge sign of DENIAL, which is ALSO an indication, that these individuals, are suffering from mental Telepacy.
They are TRULY in denial, about how 'democracy' really works.

Ruark
July 08, 2013 at 12:36 pm

For heaven's sakes, tighten up the income requirements. SS was designed to give the elderly a safety net, not a lifetime supply of "party money." Somebody who makes a million dollars a year, or who has $50,000,000 in a stock market or bank account, shouldn't draw full SS, if any at all. You should see all the rich old dowagers in Vegas, lining up at the slot machines every month when their SS checks come in. This is not a difficult problem to solve, people.

nogoldenparachute
July 08, 2013 at 12:15 pm

Congress is only quick to act if a bill/law affects members of Congress. Most of our elected officals are either rich before they enter politics or become rich on the insider financial information they receive from corporations that seek legislation to benefit their own agendas. They have no need for Social Security,so it is not important to fix it.

Eazie Solushon
July 08, 2013 at 11:50 am

There's another very simple solution: cut the current
$106K salary cap, to force fat-cats to pay their fair
share. Combined with the proposal raised by GJE above
(keep Congress' greasy hands away from the trust fund), Social
Social Security will do just fine.

Debbie
July 08, 2013 at 11:16 am

Don't mess with my social security. I plan on taking it early in 2 years.

dee money
July 08, 2013 at 9:57 am

AMEN to all of the above!!!!!!!!!

J M Pope
July 08, 2013 at 12:58 am

Save our Social Security. SOS. Money for new immigrants should be based on a prorated formula on years of work and SS taxes withdrawn from their checks. Illegal aliens are not entitled to any US benefits of any type. All they need are shots and some health aid to make sure we do not contract any social diseases. No work, no social security for adults. Our country gives a way too much money. Now America is in a crisis of the worst way. I pray for God to heal our land.

GJE
July 07, 2013 at 11:56 pm

Hysteria Fighter is right! Let's force Congress to pay back into S.S. with interest. The question lies with how are we going to be able to make them do that? First thing we need to do is eliminate their ability to tap S.S. for the General slush fund. Second is to eliminate the payments to those who haven't contributed or limit for the short term contributors. Why should immigrants who recently came to this country within 10 years before retirement be able to draw S.S. for the rest of their lives which could be another 10-30 years when most of us have paid in all our lives? Illegal immigrants shouldn't get any social service programs, (welfare,food stamps,free health) They also contribute to excessive government spending. This money needs to go back into S.S. that the government has been stealing from the past several decades. Take the money that federal elected officials continue to receive after service and the continued benefits and eliminate them. That will save billons each year! Except for former Presidents, Congress members should be just like the rest of us when they are no longer in office. They have to survive like the rest of us and pay their way. Maybe then they will better understand the plight of the common worker. I'm sure there are several other ways we could find to repay the "borrowed" funds for Congress slush funds. Let's all put our heads together to fix this. It starts with electing officials that see this as an issue.

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