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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
stan kaszok
August 30, 2013 at 8:42 am

We need a law of the land that says no aid to anyone unless all us domestic programs are funded and solvent. stop the tax an social security income for our seniors THAT DEAR MR REAGAN STUCK ON THEM. Or at least make the tax go directly back into the social security fund to help it out.

John G Vair
August 30, 2013 at 8:19 am

I pay SS because I have to and it is said that it is a type of retirement system.If the program was used for only retired WORKERS then you would have money to burn. It is not the workers that are sucking the money out it is all the social programs that our elected representatives tie to it. If you want a program to work then use it for the purpose that it was intended to support.

Jr
August 30, 2013 at 7:54 am

Make obama put back the, I think it was 535 million dollars he took out for his obama care. or maybe that's what he give to solyndra just before they went bankrupt. Funny thing, they had money not spent but wasn't returned to the(Just keep it, your having a hard time)government. Why can obama steal Social Security and Social Security Disability money and use it for his (pet) projects, yet never see the need to pay it back? He's a lying thief is why!!

patricia hallman
August 29, 2013 at 8:08 pm

I just turned 67 today,eveyone always told me when you reach the age to get social security u have so much to look forward to.bull.i recieve foodstamps. big $16.00 a month, now i dont get free medicad i have been cut off half the stuff i was getting before. how are seniors supost to live on what social security & medicare give you. before i didnt have to pay for my medication but now i do.Reason seniors cant afford to live on what they get is because there are people out there that lie to get social security.i know for a fact because there are quite a few i know who gets it& half of them are able to work.thats why seniors dont get alot because the people who get it dont need it.

scoots
August 29, 2013 at 7:03 pm

The main purpose of social security has been totally violated. It's not for the elderly anymore. The politicians have not only used it for their personal slush fund, but have made everyone eligible, no matter what their age is, to file claims against the system. Its a total disgrace to those have paid into it their entire life .

Judi Howell
August 29, 2013 at 4:42 am

I have been steadily having problems with declining health and eyesight but have no income and to address these issues I must go ahead and file early. Waiting on addressing these issues will only add up to more strain on the system (as they become more serious)

Leroy
August 29, 2013 at 12:14 am

Make it 65 to start drawing 70 to get full benefit, also make it harder for people to get disability . I am 80 years & still working.

arizona
August 28, 2013 at 9:41 pm

I retired at 62. idea,estimate how long I'll live ,estimate how much I'll get give back what I put in.Let me invest it, no wait the Govt thinks I'm to stupid to do the right thing for my own future.Oh well never mind. good-bye

p t ches
August 28, 2013 at 5:24 pm

Plus return it to a dedicated fund and pay back all the "IOU's "

dl
August 28, 2013 at 2:45 pm

Raise the Soc Sec cap from about $115000, to into the millions, so the wealthy pay that tax. It isnt us little guys fault Congress set this up to Benefit the rich. It was designed for the little guy.