Retirement Blog

Finance Blogs » Retirement Blog » No more Social Security at 62?

No more Social Security at 62?

By Jennie L. Phipps ·
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.

Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
August 26, 2013 at 6:51 pm

why is the government not paying socialsecurity and ssi back the billons it borrowed years ago seems very strange to me

August 26, 2013 at 5:49 pm

Talk is cheap, Action now is the key. The Folks in Washington and big Business (i.e. AARP) all have their "hands" in the
cookie jar. This must be attacked like a "War" all cards on the table. Also, till we Balance our Budget nothing will really
matter (The Chinese own the US, one day the US Dollar will not
be the Standard to the "World", just like the UK Pounds once was). Till "We The People......, speaks I'm the 99%!

Joseph A. Zupo
August 26, 2013 at 5:18 pm

The Federal Government should get out of the retirement business. Nothing else needs to be said.

Ms Jan
August 26, 2013 at 4:03 pm

I agree with Nick and Louise 100%..

August 26, 2013 at 3:31 pm

All of us who have worked paid into social security and so did our employers. It is not our fault that those who tell us how badly they want to work for us when running for office mismanaged
the funds. How about cutting the salaries of congress, government workers, president, etc. Congress should curtail the
vacations of the president and his family. He is elected. This is not a country with royalty. Do you people realize there are
families living (no, make that existing) on less than $15,000 a year?

August 26, 2013 at 2:58 pm

take those that have not paid into social security off the monthly check..stop 'stealing' from this fund for things other than what it was intended....this is NOT a BENEFIT .... workers and employer paid into the fund over the working years .....

August 26, 2013 at 1:55 pm

At the rate us baby boomers are dieing off I wouldn't think the government would have a worry. Most of us have paid in and don't live to draw more than a couple of checks before we die of cancers . Our life expectancy should not be so high.

August 01, 2013 at 6:22 am

Why not let the govment refund the money that it stole to fight the Vietnam war with.All I hear is that s.s. will be broke in such and such.Sounds like more "f" ing lip service and nothing gets done about it.

August 01, 2013 at 2:23 am

I ment to say less job competition sorry.

August 01, 2013 at 2:21 am

retirement age should be lowered to like age 55 how can a 62.64,or 65 year old man compete in the real world. men and women should retire at 55 and make way for the young people. less job completion that way and more jobs for the economy and it keeps America full of young hard core workers.