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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
This is your fault.
July 27, 2013 at 10:00 am

The American people have created this fiasco at the election box.
The People have failed to demand that their government be run with conservatism and prudence, yet, the out of control elected officials and government continue to spend outlandishly and outrageously on pork barrels and 3rd world democratic emerging projects that have a ZERO return for the American tax payer.
Obama has failed to lead, failed to produce and failed to do his job as promised to do.
I have no sympathy for the American people for they have created this this problem by nonchalant attitudes toward their government and reckless, sentimental voting at the polls.

Doris Dey
July 27, 2013 at 9:49 am

Their goal is, for us to pay into it, spend it elsewhere and then raise the requirements so most people never get back what they paid into for.

Linda
July 27, 2013 at 8:33 am

For sure it is a proven fact, it doesn't really matter what the voters say, our elected officials do what they so chose. If some of the money spent overseas on countries that don't even like us, our government would not be in the shape it is today. Deposit some of those funds in social security.

Bill
July 27, 2013 at 8:22 am

The revolution starts now...there is no need to wait for Congress to enrich themselves any further...off with their heads...prepare the pikes...

the1hawke
July 27, 2013 at 8:11 am

trust fund? roflmao. any person with real intelligence knows there is NO TRUST FUND it's a bunch if iou's from congress. prepare for the revolution!

Lorraine
July 27, 2013 at 1:48 am

Don't know if anyone has suggested this, as I have not read all the comments. Why not level the playing field for all employees? Do away with early retirement benefits for government employees. Federal employees can retire after 30 years of service, and in my state, state employees can retire after 25. If they are under 65, they can continue their government insurance until they reach Medicare age. Eliminating these benefits would surely result in government (taxpayer) savings. Don't tell me these benefits are because government employees make less, because that is not always true.

shagg
July 27, 2013 at 1:45 am

this would be the third but i'll just short version,POLITITIONS AND ARE PRESIDENT WE SHOULD JUST HAVE NON OF THE ABOVE,THEY ARE THE ENEMY. OK I HOPE YOU CAN READ ARE I'M A D-M-W REAL SOON, ANYWAYS WHAT HAVE I GOT TO LOOK FORWARDE TO,NADA

shagg
July 27, 2013 at 1:29 am

well when you start on these lotto games ,it was to be tottaly for education,"never fkn happened." well other programs that where well guess what obamama you and thye bush boy's FKD up and you keep doing it so why should we listen to these azzes,and the imigrants well if we don't have any americans . to do jobs then let them legaly come over and work and not use them as a shooting range

bob
July 26, 2013 at 11:31 pm

its sounds to common sense for congress lol

Richard Trundle
July 26, 2013 at 10:22 pm

If OBAMA AND THE LAW MAKERS wanted too do their jobs right,they do something about S.S. And let lesser important things GO... BUT IT LOOKS LIKE ALL MOST WANT TOO DO IS START RACE PROBLEMS>