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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
Jon
July 26, 2013 at 1:09 pm

Yeah, I was someone's employee for almost 50 years. Everytime I got paid the SS system got paid. I had no choice. Now it's all I have to keep the lights on and have beans and rice. My SS income is below the poverty level and it seems our law makers think I am too well off. The SS system is a promise made to every worker every payday. The government should keep it's promises.

Giselle
July 26, 2013 at 8:46 am

Phil... you're exactly right. Now that I have met my 'social responsibility'... raised my daughters on my own.. held 4 and 5 jobs AT A TIME to pay for the home I bought ON MY OWN... no babies out of wedlock.. no kids ever arrested...both graduated high school and married well.. now that I'm 'on SSD'... because I blew out my back on one of these many jobs I HAD to have to make it, 'they' want to take this all away. What about alllll the taxes I paid in... aallll the SS that was deducted from my checks? I'm now, the minority... Single female. no dependants.
Lets' don't count the fact that I NEVER collected benefits from the government while I was raising my daughters. I paid for that ENTIRE parade. I was asked... how can you think you can collect now? I'M OWED BECAUSE OF WHAT I PAID IN THATS HOW. I now NEED the 'system'... and they want to deny me. I'm now, living on less a month than I paid in taxes all those years, and they want to take that. Go ahead... meet your responsibilities and see where it gets you.

Hector
July 26, 2013 at 7:03 am

we're talking about survival here and "Ive" wants to critisize our spelling. what say you just dock us a few points for spelling "teach" and let us big boys talk about how were likely to lose our means of survival? I will be the first to admit I cant spell kat (done on purpose), and I may not be a smart man but I do see what the government is doing with and planning for our future, and it looks grim.

Ive
July 26, 2013 at 12:58 am

I'm thinking most of you are idiots, then you sit down at a keyboard and prove it. My kindergarten grandchildren are better at spelling and grammar. (Social Society indeed)

Pedro
July 25, 2013 at 11:14 pm

Thanks to the current administration. Only in America!!!!!!!!

Ralph
July 25, 2013 at 8:26 pm

Seeing how the law makers have taken and spent the money in our Social Security system, then we should take all of the law makers off of social security and then all will be fine

Betty Taylor
July 25, 2013 at 7:51 pm

The system is absolutely broken, in fact crushed. I've read stories in newspapers about checks being cashed for years by children and/or caregivers of people who are deceased and the error is never caught until that person dies. Who is taking care of OUR retirement money? WHO? We all would like to know.

Frank
July 25, 2013 at 7:49 pm

How about getting those 9 million drug addicts, and other various freeloaders off disability. This is the biggest source of fraud against the people today.

Ben Kinlaw
July 25, 2013 at 7:09 pm

When SS begin paying a monthly benefit in 1940, there were 140 contributing to each recipient. In this article the numbers provide is a ratio of 2.82; 161 million contributing and 57 million recipients.

SS began paying a monthly benefit on January 31, 1940 and the first recipient was Ida Mae Fuller from VT.

She worked for three years and paid in $24.75. Her first check was in the amount of $22.54, she retired at age 66 and lived to almost 100. Fuller had collected a total $22,888.92 in monthly benefits after contributing only $24.75 to the system.

If you review the statistics, you will immediately establish we have a "flawed system" that should had been indexed over the years based on the years of extended life.

Phil Ramsey
July 25, 2013 at 4:27 pm

1% seems to want SS done away with
99% Need this money to live

The Rich get RICHER and the poor get POORER for evermore

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