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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
Mike
July 26, 2013 at 9:40 pm

Take the cap off of SS, right now, people only pay up to $117,500 dollars, every dollar earned after that you do not pay SS on. You can keep the cap on businesses they pay into the system till you hit $117,500, but the individual continues to pay on his whole salary. Then cap the amount that a person can draw out per year. Right now, if I make $120,000 I would pay the exact same amount into the system as someone that makes $20,0000,000. The person making millions a year, does not need the money, the person making 40 or 50 thousand a year does. If they lift the cap on income and then cap what a person can draw out, they would be able to lower the rate for everyone. Will it happen, not on your life, the wealthy run America, they get the people they want elected and the elected official is going to keep them happy, to continuing getting money to be elected in the next cycle.

Carol
July 26, 2013 at 9:07 pm

Why is the Gov't paying spousal benefits? No monies (taxes) have been paid into the system for a husband's wife or a wife's husband. I thought it was a "contribution" program. Once you paid in, you got back something. I can understand paying a child who has lost a parent, but to give one-half of a spouse's SS check to a person who has never worked or paid into the system is fraudulent and UNFAIR, especially if they intend to raise the age or reduce the benefits for paid up recipients.

larry
July 26, 2013 at 8:37 pm

that's how this war has been funded trillions of dollars that working americans have put money into to retire on some day. instead of giving afganstan milions of dollars put it back into social security.

bdby48
July 26, 2013 at 7:33 pm

Having been on regular S.S. for several years I can't help but think of all of the ways the U.S. gov't has abused this fund meant for people who would retire someday & for the disabled who didn't have any other way to just get by. Having 3 degrees & a certified IQ of 168 I am appauled at how this gov't used this fund for anything that they could spend money on, a virtual slush fund & have never repaid 1 red cent back into it. It a miracle that theres anything left for us at all. I am so sick of this miserable garbage that we call politicians in this country. Gov's, senators, mayors, representatives & even more are consistantly acting worse & worse thru-out this country & they act like trash & are treated by the courts like nothing has happened & they keep trying to get re-elected .

jim
July 26, 2013 at 6:31 pm

Get all the undocumented aliens off the benefits. They haven't contributed to the system, so why should they reap the benefits. Same goes for all the muslims ,that the government is bringing into this country as refugies. Very stupid idea. Look at what these type of people have done to Detroit. Wakeup America, its time for all the rotten fruit to fall from the tree.

gem
July 26, 2013 at 3:33 pm

Sure hit those that are successful. If you are required to pay into SS you should get your benefit no matter what your wealth at retirement. Anything else would just be theft of funds paid.

Walt
July 26, 2013 at 3:21 pm

"•Cut or eliminate the wage tax for both employers and employees ..."

Yep, that would get more money coming into the Social Security system.

Ken
July 26, 2013 at 3:18 pm

Why have a max that is paid in each year. The highly paid only pay into SS for a few months or even a few weeks a year. Why not have everyone pay the same % for the entire year. That would put a lot more money into the system and the highly paid we be like the adverage worker who has to pay into the system all year long.

Marilyn
July 26, 2013 at 2:47 pm

STOP giving people who have never worked Our money for AS SSI . That is draining our money.

Dan
July 26, 2013 at 2:32 pm

Pedro--Current administration? You do not know what you are talking about.

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