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.
1,721 Comments
RHReese
July 11, 2013 at 9:24 pm

Don't have a Social Security wage cap. Everyone should contribute a full 12 months into SS with no cap on the amount someone makes. This would settle SS's short fall without hurting anyone financially.

fed-up
July 11, 2013 at 7:50 pm

the way i see it everyone that PAID INTO SS should get it --quit giving it to everybody that stubbs their toe just think i guess im stupid for working i have only had a broken back, cancer -lost a kidney and a knee replacement and still work 55hrs a week
so mabye we should stand up and say enough!!!! if you paid in you can recieve if not get a job and save your money--take all tose on ssi and let them do some form of work to recieve it --ss ias handed out to to many wake up america if you have worked all your life you are entitled to ss and remember the government is supposed to work for the people ALL of the people fo this great country

Judith Rodda
July 11, 2013 at 7:37 pm

Why not just raise the cap? People do not pay social security tax on any part of their salary over $110,000. There are hundreds of thousands of salaried workers make that amount and more. There should be no cap, period. No matter what the salary a worker should continue to pay into social security. That would increase ten-fold the amount going into social security. Then of course there should be a separate account where the funds are deposited and no politician, Senator, Representative or President would be allowed to touch it. Right now social security taxes go to the United States Treasury where it's mixed with all the other money. Congress gets to use that money any way it wants because it's all mixed together.

rich
July 11, 2013 at 6:36 pm

Many of your comments have merit, however printing more money is never a solution. Just look at the current administration. They over spent and inflation especially at the grocery store is out of sight. Now for a more realistic approach, remove the ceiling that s/s taxes are applied too. Then stop lending s/s money to the government.
PROBLEM SOLVED.

Jeff
July 11, 2013 at 4:25 pm

The Social Security Trust has $2.73 trillion! It's slated to be broke in 2033! But Congress owes the trust $5.4 trillion!
So just print the money and give it back! Then the trust will go on for another half century!

Bill Carter
July 11, 2013 at 4:11 pm

There are a few good comments above and a few that show how badly we've done in education and good manners.
I was lucky enought to be able to work happily until I was 81 and paid into SS since I was 14. I waited until I was 70+ to start taking SS.I am married to a European and know how wonderful National Health care can be(though their's may not perfect, it's way ahead of us , being 27th). Fortunately I have great health care as I spent 40 years in uniform mostly Reserves.
Disappointed in our Congress as they no longer feel obligated to the people even their own.
Many churches are no better... who preachers involve them selves in politics should lose their tax exemption.but we're too gutless. like punishing bankers that nearly did us in.
.We'd do ourselves and Mexico a big favor if we legalized all drugs and reaped the benefits of taxing them..This would do in the Cartel like it did the Mafia after prohibition.
I have voted Republican(not always) but the "bullies" took over and scared the good guys. So they are willing to take us all down if they can't have their way..(I think I saw that movie)
Way too long a comment here, but the subject was a good one. I'm a retired TV broadcaster and enjoyed every day.
We will return to sanity and greatness, I predict.

the other Bill Carter

Mark Allen
July 11, 2013 at 2:25 pm

Think about doing this: Start retirement at 55 but allow them to work if they want. Would provide more jobs. Remove the 103 or 107 thousand cut off of not paying Social Security tax. Removing the limit would keep Social Security solvent.
Sad thing is when you retire many are in poor health and can't enjoy retirement. By allowing individuals to retire at 55 that would also open up the job market to replace those retiring. If individuals want to work part-time allow them, but they will still pay the SS tax on any earned income.

Clark hotard
July 11, 2013 at 2:17 pm

the as fund was established to remain independent of the other branches of gov,t.

Dem president LYNDON JOHNSON and dem,s in congress voted to put the fund in the general fund, mainly to pay for the war in Vietnam.

the congress of both sides and especially Obama have been spending like drunk Indians at your expense.

the national debt contains more than 7 trillion of s.s money. Get on your congressmen and replace them all........

John Doe Jr.
July 11, 2013 at 1:49 pm

Stop worrying about the Illegal Immigrants, and the Disable Americans. Worry about the people that do not pay a cent for Social Security and yet they receice all the Benefits like everybody in Congress like Senators, Representives, Governors, Presidents, Vice President,ect.ect. And anybody else who work and are in the offices of the Government in Washington. Someone dies and they're set for life ,including all their Family. And yet we are the ones that are paying for them to receive Social Security.why don't we limit those who receive SS , And only for a little while after serving in Office. The people who can afford Social Security don't pay anything , while people who have worked very hard all their life have to pay and now are being told they might have to work longer or not get anything from Social Security. How fair is that?

Upset
July 11, 2013 at 1:44 pm

Ever wonder why when older people at 90 were edmitted to the hosiptals for a checkup and then all sudden,they said, "You need IV fluid,you have this.." and they said,"What?",because they got alzheimer's disease even if the old person is fine? What are they after for? Their Social Security and Medicare? It funny that more older patients died before they reach to 100 years old. Why at 90 or 91 years old?How many percents of these people were edmitted to the hosiptals in between these ages of 90 or 91 yrs old in these years of 2010 thur. 2013? Do your research and find out,like looking at the death notices on the newpapers. Your right,government is taking money paid by AMERICANS and spending for other uses.Do you think 401k is a great thing to save? Ha! Ha! Ha! Ever wonder why the government don't have 401k? Your right,government is taking money paid by AMERICANS and spending for other uses like their pensions while we lost ours. Can we find out why we have older workers still working over 65 yrs old in Washington D.C.?Can we allow reduce benefits for higher paid workers or keep old workers on the jobs? But we can't talk about them about that,why? Ever wonder why? Are there too many older workers with six figures and still working while people under and 55 or over 55 yrs old are still out of work from the high-tech fields who only get five figures and do have colleges backgound and exp.Where these jobs went? Who put up these ideas of having these jobs going oversea or it the other way around? Think about it.You know,it funny that John Kerry is over 65, still working and while his wife is in the hospital.Do they ever have some time off together?Are they rich enough?Can he ever think about retirement? Are there many like that in D.C.?Did you know how many college students with law background are still out of work? Are there too many old people in DC are abuse holding their jobs? Do they forgot about their retirement time,is it possible that they got a little bit of alzheimer and forgot about their retirement time or they love our money?

het
forget about their retie Are they rich enough or do they really need more? What are the reasons that they keep working?

Add a comment

(Comments may take 5-10 minutes to appear)