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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
Roger Stewart
July 27, 2013 at 10:49 pm

If Congress were not stacked with millionaires : they would solve the problem. They are so greedy that they cannot see the real problem. The whole system would be fixed immediately if they had to live with this solution!!!!!!!!!!!!!!!!!!! Too bad that they do not represent John Q. Public. They only look out for themselves. They should not be given any retirement because it still should be an honorary job. They simply don't need it !!!!!!!!!!!!!!! Rome only lasted four hundred years and now is a tourist destination. I guess that is what we can expect. Maybe the Chinese and East Indians will come see what we used to be. Very very SAD !!!!!!!!!!!!!

To
July 27, 2013 at 10:24 pm

I see more people on welfare that seem to have no reason receiving it and talking about how they can't work more than so many hours or they will lose benefits yet they purchase alcoholic beverages.

bernard
July 27, 2013 at 10:22 pm

at 60 year old hope to get my social security at age 62 maybe?

Howard Fitchpatrick
July 27, 2013 at 9:13 pm

If congress and the former President had kept their hands off of a program that's going to kick into high gear soon we would be ok. But this is par for the course in todays politics. How about putting those congressmen into the social security till.

Vinnie
July 27, 2013 at 9:03 pm

What about all the money that a person who dies before he/she gets to collect S.S.? For example, my 88 yr. old father paid into SS for 65 yrs. + never collected any of it. I didn't get it because I was over 18 + he didn't have a wife when he died. Anyone want to tell me where all those dollars go?

Sally Vee
July 27, 2013 at 8:32 pm

Apparently, the government took Social Security money to fund other things. What did they use it for? How about taking money from elsewhere now and putting it back in the Social Security fund.

Rob
July 27, 2013 at 6:01 pm

I the Federal Government would pay back what they took out of Social Security, with interest, and keep their greedy paws out of it, it would last as long as there are workers to fund it.

Ronny Chase
July 27, 2013 at 5:15 pm

Where is the huge amount of money that has been colleced from all the many people who died prior to turning 62? Many paid in
$ 100,000.oo plus...

Bob Venceil
July 27, 2013 at 4:24 pm

Welfare (AFDC) has been coming out of Soc Sec for years... Those of us who work will end up with nothing, after supporting those who don't work. Maybe when Soc Sec runs out, we can all be on Welfare...

Jack Ashcraft
July 27, 2013 at 12:49 pm

If Congress had to rely on social security in lieu of the padded extravagant plan they voted and funded for themselves there would not be ANY shortfalls in social security.