Retirement Blog

Finance Blogs » Retirement » No more Social Security at 62?

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.

«
»
Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
1,722 Comments
Bruce
July 08, 2013 at 6:46 pm

Put Congress under the working mans laws of social Security and
they will have better ways to protect our monies we have worked
for over the years. Have the ones who have borrowed out of the SS funds over the years pay it back. Meaning the CIA, FBI and some others of intress. Than the systrrem will work for the blue collar workers as it was planned for back from DAY ONE!
Bruce HUNT

Joe Knox
July 08, 2013 at 6:40 pm

This article only discusses one issue. Two other major concerns involve the anticipated insolvency of Medicare and the expected impact on the federal budget from higher interest rates. My respect goes to those politicians with the courage to address these issues with specific proposals.

Linda
July 08, 2013 at 6:29 pm

Why should millionaires and billionaires pay 1% or less into social security and people who make $10,000 pay 6%? Lift the cap on social security and make everyone pay their fair share and social security would be solvent forever without anyone being cut. Above all stop voting for the Republicans they are stealing from the poor like me and giving it to the rich. Pay attention to what is going on and turn off Fox News. They're not your friends.

mike shay
July 08, 2013 at 6:20 pm

Stop paying it to people who have never put into the system. Illegal aliens; phony disability claims and aliens that have been brought into this country by relavtives just to get on the system. Start there and we will have more than enough.

Bill Bryan
July 08, 2013 at 5:46 pm

The essential problem with Social Security is that each administration going back to Kennedy has considereed social security to be a slush fund and have borrowed from it to fund varioud and sundry wars, programs etc. without repaying what they borrowed. Both the respective executive branches and the legislative branches have been guilty of this, possibly because neither of those entities are dependent for their own retirement upon social security.

norman reich
July 08, 2013 at 5:13 pm

several years ago the president or some other big wig took several billion dollars from SS to fund some of their promices and never paid it back.Everyone should pay into SS.Also they should stop paying those that are getting it that haven't paid any in,like a lot of illegaling.s that Obama started pay

Brad
July 08, 2013 at 4:56 pm

What does not make sense is that people who earns over $113,700 a year does not have to pay social security tax over that amount.They should still pay no matter how much they earned. that is what is wrong with our financial brainless congressmen. Rich people keep getting rich. That is why social security is going broke.

Rene’ Hodge
July 08, 2013 at 3:31 pm

How can they keep deducting social security from your wages and then tell you there is nothing there when you retire?
What is that called legally stealing peoples money!

Pearl sanchez
July 08, 2013 at 3:30 pm

I am close to retire I have work all my life and have put into social security since I was 16 years old. The problem with the system is that they are given it to some who don't deserve it.
They live off the system. they have never worked a day in the life. There are some that truely deserve it how really need it but there are some who have ADHD and are capable to work and the system say ok you get a free ride. My son has ADHA and has work all his life and he does not live off the system. Our goverment as made it to easy to get SSI and now the one who put in to the system will have to suffer. I can name countless people who get it and it is not fair. Drug users get it. why should I pay for there mistakes. It was there choice. Fix the the problem. Don' make the hard working people suffer for our goverments mistakes

Linda River
July 08, 2013 at 2:51 pm

I totally agree with GJE. Especially the part regarding illegal immigrants & Congress! Also, There should not be welfare for people that are able to work, and they should STOP paying for over one child. Birth control is available to those who want it. And yes, It's free. But as long as they are getting checks and food stamps,they are NOT going to stop having children they can not afford. I have been paying into Social Security for over 30 years and I WANT MY MONEY when I retire. And I repeat, MY MONEY! I WORKED FOR IT!!!