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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
Auggie
August 28, 2013 at 1:00 pm

I always did say that if Congress and Senate was in the Social Security System they would fix it and fix it fast. Instead of being in the system they have a system just for them and believe me it is much better that the american people have. Where else can you work for four years and get full retirement and medical for life, where else can you be convicted of a crime and go to prison and still receive your annual wages and medical, only is the US Congress and Senate. The terms for the US Congress an Senate should be limited to 4 years like the president and then they go back to work and do not receine a pension until they reach the social security requirement age and then they would receine SS like the rest of us.

accapotain
August 28, 2013 at 11:50 am

THE GOVT BAILS OUT BANKS BOTH HOME AND ABROUD TO THE TUNE OF TRILLIONS OF DOLLARS.THEY SIT ON THE MONEY AND IT DOESNT GET RECIRCULATED INTO THE ECONOMY LIKE SS BENIFITS DO . WE SHOULD LOWER THE RETIREMENT AGE IF WE ARE GOING LOWER BENIFITS .THAT WOULD OPEN THE JOB MARKET . AND IF ANYTHING IS TO BIG TO FAIL ITS THE NUMBER OF BABY BOOMER VOTERS !

don
August 28, 2013 at 12:08 am

no, no more early retirement. Mittens needs a new dressage pony and the Koch brothers are running out of asian teenagers as personal attendants.

hater
August 27, 2013 at 11:47 pm

How about we stop providing billions a year to those giving birth to paychecks, I mean babies. Also, no green card, no english, no benefits. Easy to say, easy to do.

Ram u
August 27, 2013 at 3:56 pm

How about eliminate pensions for all politicians so they don't make a career of robbing the citizens of this great country

Star paying all politicians minimum wage ........so all politicians can work a second job as so many do while struggling to make ends meet

Greed it so simple

All politicians should be limited to 2 terms

Litlemac
August 27, 2013 at 3:29 pm

How about making Congress give back all the money they've taken out of the SS system. Social Security would be totally funded for generations without the need for input from anyone else.

Wanda
August 27, 2013 at 2:33 pm

No reason why social security should start at 62 - should be the regular age of 65. Too many people take it early

Venita Hawk
August 27, 2013 at 3:14 am

Rather than letting people quit contributing to social security after they have reached a certain point in income each year, have them continue to contribute the whole year no matter how much their salary is. That would bring in a considerable larger amount each year.

Anita Bonville
August 26, 2013 at 10:46 pm

How about having every individual pay social security tax on every dollar of payroll they earn. Why are some people exempt and some pay social security on only part of their earnings?

sunshine
August 26, 2013 at 8:00 pm

we have to stop the giving away money to NATO and other countires.Sell closed military bases to the highest bid other than giving it away

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