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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
mary
June 06, 2013 at 7:12 am

i agree with Lee and Joe - we paid into this fund. I have been paying into it for 41 years and it better be available when I retire and....put the congress and senate on Obamacare and Social Security. It's not right or fair that they get treated like kings while we are treated as paupers.

SKEETER STANLEY
June 06, 2013 at 7:02 am

i have paid into social security since i was nine yrs old and am i getting it all. NO WHY BECAUSE WE TRUSTED SOMEONE THAT SPENT IT ALL. THAT MY DEAR IS BULL. THEY GOT SHORT ON MONEY SO THEY SPENT AND DO SPEND EVERYONE ELSES. THATS NOT RIGHT. ITS BULL.

Brian
June 06, 2013 at 6:25 am

Reading Bill's blog is one of many. I have a nephew whose (ex) inlaws, both John and Carolin are on the Social Security dole. John used to live off workmens comp. Now he and his wife live off of SS disablity. Both work under the table, she bartends while he does construction work. They have a fifth wheel RV, two large SUV's, totally resurfaced drive way (concrete), new six foot incloure fenced in yard, pool, new siding. This is where are Social Security is going. To back scams. I also know a former co-worker who is doing the same. Glen Burnie, Pasadena, Baltimore just to name a few. SS disability screening needs a major overhaul to include moving congress members over to SSI like the rest of America!!!!

darlene
June 06, 2013 at 4:55 am

its my money and I want it now !

Joe
June 06, 2013 at 4:36 am

How about members of Congress are put on SS retirement like the rest of us? This BS of collecting a huge pension after one term needs to end. Also put them on O'Bamacare. You can bet these clowns would straighten the problems out pronto!

bill
June 06, 2013 at 12:06 am

All "disability" cases should be reviewed, and rewards should be offered for reporting fraud, as in the numerous covert videos we see of "disability" cases doing strenuous work and recreation. The person committing the fraud should be indicted on a felony, and Soc Sec staffer who signed off on the fraudulent case should be investigated for a possible felony. I personally know a 32 year old living on a disability for diabetes, an apparently well managed condition, because he competes in triathalons, and is essentially on a permanent and very active vacation.
Social security was intended for elderly and truly disabled people, not welfare for the parasites of society. Like most government agencies, the SSA is a nightmare of corruption and incompetence.

Bill Fitzpatrick
June 06, 2013 at 12:03 am

I am suggesting the two tier 50-50 retirement as one more option.

Bill Fitzpatrick
June 05, 2013 at 11:57 pm

With so many retirees wanting to work longer, but unable to work full time. I feel it may be time for a two tier 50-50 retirement, so if you normally collect $1400 @ 62 or if you waited, $2400 @ say 68,with a 50-50 retirement you could could collect $700 @ 62 and then another $1200 @ 68, for a total of $1900 for the rest of your life. This would allow one to work p.t. with a descent income while still building a larger full retirement. This is not the answer for everyone but could be the answer for many.I feel this could work for Social Security if the retiree would pay back 3-5% during their p.t. years.

Lee
June 05, 2013 at 11:15 pm

It is not not not their money....We (I) paid into this fund

Suzannah
June 05, 2013 at 10:48 pm

The incredible expansion of disability is a travesty...just another attempt to remove folks from the unemployment rolls, and to redistribute wealth. Odd how so many people are so much more fragile than people used to be....