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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
LadyChurchill
July 25, 2013 at 4:05 pm

You do realize that the so called fix is just another way of saying we have to make sure that less people collect any of the money they put in. This is exactly what Governor Perry called it, it is a Ponzi scheme and if you tried to set up the same system, they would throw you in jail. Our children are paying for the sins of their parents, and the sin they committed was believing that the democrats will give you something for nothing. There is no free lunch, only a plate full of empty promises.

Slave
July 25, 2013 at 3:45 pm

It's time to end this huge Ponzi scheme that Roosevelt bamboozled us with and let us take care of ourselves.

jules
July 25, 2013 at 3:32 pm

I never understood why teenagers should pay such hi % same as everybody. If they were taken out of the system till 21 years old , then then business would have a greater incentive to hire them..

Further why restrict SS taxes at the higher end ?

Peshwar
July 25, 2013 at 3:29 pm

The ignorant and brain dead people should get nothing. Nothing to ILLEGALS, and nothing to people who never paid into it.

AllSeasonRadial
July 25, 2013 at 2:38 pm

Wow, the anger and outrage in these comments, and almost ALL of it over stuff that either doesn't matter, isn't true or is poorly understood.

Here's the thing, people: as long as you are SO interested in ***restricting*** Social Security to only those YOU think deserve it, YOUR Social Security will be at risk from someone who thinks YOU don't deserve it. Why? Because you buy into the line that there isn't enough to go around. And that's all austerity is— a line of bullsh*t. Then you start drawing lines and making enemies by vilifying people who could otherwise join you and help your REAL effort.

Shift your attention from FEAR and PUNISHING other people (most of whom DON'T DESERVE IT) to ENSURING THAT EVERYONE GETS THEIR SHARE and YOU will be a whole lot better off.

Or, you could just continue tearing it down like some kind of shiftless mob and prove to everyone that nobody deserves it.

mike hricik
July 25, 2013 at 1:25 pm

social security should be used for retirement period!there are to many hands in the cookie jar.disabilty should be funded buy a different program not taking the money out of the social security.there should be a list of who uses the money thats in social security you would be amazed.and they should be ashamed.how could a country program go under when we make our own money, funny

Amber Jacobs
July 25, 2013 at 1:05 pm

How about they eliminate the maximum of $113,700.00. Why should the rich get the tax break when they hit that max? They should have to continue to pay in.

madeline
July 25, 2013 at 12:57 pm

I agree with you Sheilah, you committ a crime against our government why should you receive a check AND free room & board (prison)from the government.

Joe Berger
July 25, 2013 at 11:40 am

Yes, when you revise the disability program, CUT OUT ALL PAYMENTS to those with SELF-INFLICTED "disabilities". Like alcoholics, druggies, and terminally overweight folks who have already given themsevles diabetes and will not stop eating themselves to death. Use 'DISABILITY' funds for those who were BORN disabled, or were disabled at work or by an accident, or from a REAL disease (cancer, polio, but not diabetes induced by overeating) - NOT for those who disabled themselves so they never had to work!!

bob smith
July 25, 2013 at 10:17 am

quit giving chckes to drunks and takeing dungs saying it is a desiseaes..that would help alot