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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
Shields
August 01, 2013 at 12:48 am

Note: some aspects I like about the article's stated plan. Here is why:1. Companies are afraid to hire older workers because of extra cost, and possible out more due to decreased health,2. Many people have stopped taking financial responsiblity for themselves, we as americans of all ages need to get back to that,3. Americans need to know that they need to prepare to fund significantly more for there retirement,4. Government mismanages and misappropriates everything, there are too many "hands in the pot," 5. Economically (companies, government, and individuals) it is a red tape burden with a lot of waste, and innovative American could manage better without interference. It should also be noted that forgeiners working here as well as illegals, pay into ss, but will not benifet from it. Also despite "better" access to healthcare, Americans are not as healthy as previous generations, and really are not expected to increase in longevity, but to cause significantly increased healthcare expenses when older adults.

sgt grunt
August 01, 2013 at 12:01 am

There should be no income limit for anyone paying into social security. No one collecting below age 65. Extreme caution and
investigation for those collecting SSI.

Jan
July 31, 2013 at 11:59 pm

Why not all government official's in DC take one month no pay, no insurance' no perks, no free gasoline? Live like the person on minimun wage Then come back to the table with a realistic solution to SS. End the Bickering and Nonsense! They are there to serve the people not make a name for themselves and there party.

Debbie Shumaker
July 31, 2013 at 11:43 pm

Obama has compared Warren Buffett's earnings to his secretaries for years. Warren Buffett doesn't need social security. He doesn't need Medicare. Neither does his secretary. I have no problem with means testing before payment of benefits.

tim
July 31, 2013 at 11:26 pm

Why don't all elected officials stop getting a paycheck when they don't have that job anymore we don't get paid when we don't work anymore

Lisa Pheasant
July 31, 2013 at 11:22 pm

It's getting harder to even get a job now, since I'm older and have been layed off. Companies seem to be wanting to hire all young people. and..my unemployment ran out, so what's going to happen if they raise the age limit for social security?

Jerry Hoefen
July 31, 2013 at 10:32 pm

Reality check main issue socail security is lost jobs in usa pay the maxium tax .With 15 million lost of jobs in usa paid good money into social security . You would think goverment would stop buying imports from comapnays who out source jobs. Apparently goverment has open check book for imports . cASE IN POINT AIR FORCE PURCHASED 100000 IPads with our taxs. Remember for every dallor paid by the tax payer pays social security trust so does employer so no wonder companys out sourced jobs

Jim Burns
July 31, 2013 at 10:28 pm

Why dont the young people in goverment take a cut ,instead of touching our social security ,see how the like it.

rod
July 31, 2013 at 9:00 pm

how can the goverment just not pay u for something you payed in to all your life, they dont let you off of paying taxes

francisco ayala
July 31, 2013 at 7:45 pm

I agree with Bobbie Harris , ss shouldn't be touched at all . But our gov continues to lie to us . We put them in office we could take them out too . Lets stop the Madness before its to late.

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