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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
PEN
September 16, 2013 at 9:15 am

I always finf these types of articles interesting and very incomplete. I have wondered for years if the monet BORROWED from Social Security during the Reagan years to help make up for tax cuts was ever returned to the coffers but I NEVER see reporters working to find that out ? Just wondering ?

Pat
August 31, 2013 at 12:12 am

1. People should NOT collect on a spouse's wages. If the spouse could aford to keep a partner home and did not earn credit in his or her own name they can afford to be kept by the spouse in retirement. A single low wage worker could work all his or her life and draw LESS than a spouse married to the highest paid collector even if he or she NEVER worked.

2. Disability should NEVER go to children unless the child needs 24 hour custodial care and the non-related custodian should be reimbursed directly no money should go to the guardian. If the child is in school or a program, the aid should be reduced because they can work like the rest of us. This encourages parents to "train" students to misbehave to get benefits. One parent (unmarried, never worked) collects over $5000 per month for her children although two of the kids hold jobs and do not file W-2's or pay taxes. They collect so many food stamps, which the kids boast they sell and go to the food bank to "supplement" All the kids eat at school as does the mother who just happens to have business every day at school during lunch hour.

3. One spouse ONLY should collect benefits if the spouse had multiple wives or husbands. (Pick one)

4. Raise the initial retirement age to 65 and 68 for full benefits, reduced for those who held manual labor jobs for the previous 20 years.

5. Give bipolar, anger management, depressives and other mental illnesses 6 months to regulate medication and cut them off.

Dawn
August 30, 2013 at 11:39 pm

stop the free-loaders from taking hard-earned money from WORKERS. Start allowing us to out that SS money into a nice little savings account that WE control instead of letting the government SPEND SPEND SPEND. It's OUR money. We paid it in, WE should be able to draw it out or CUT IT OFF. I vote for cutting off the government from MY payroll taxes.

Rutylou
August 30, 2013 at 9:19 pm

For Lou Jackson.

Lou, the wealthy pay the same dollars into the system on the first $115k as you do,,and when they retire they get no greater benefit. If, on the other hand, we made them pay on say the first $1,000k, they'd then get benefits based on that amount. Becarefulmwhat you wish for.

lou jackson
August 30, 2013 at 8:05 pm

Why isn't SS collected from those who make over 115,000.00? I know ordinary folks making more than this, why is there a cap at all. You don't want to piss-off the rich? And by the by, let's take away the tax exemption for every fast talking preacher that can afford a store front. The "gift of gab" should not entitle you to tax exempt status.

mercantilist
August 30, 2013 at 7:29 pm

The US SS has problem a not extreme comparison is where people are eligible at 60 for retirement. The leftist government proposes an increase in the retirement age to 62. In the US the biggest problem is with public sector employees. Police frequently retire at age 50 on pensions paying 3/4 of their normal pay. MEDICARE is already means tested as higher income people pay higher insurance premiums when they draw benefits and more into the system when the are working. With Social Security higher income people in retirement are taxes on much or even all of their SS.

2cold2
August 30, 2013 at 5:13 pm

No more funding to other countries, revamp the disabilty program and get all the abuser out of the system. Our seniors and truly disabled should be taken care of first. The government needs to take care of America first.

pal
August 30, 2013 at 3:33 pm

take the billion dollars we send over to syria and afganastan and iraq and fund the social security for us who have retired early at 62 and those expecting to retire in a few short years.

ronda
August 30, 2013 at 2:06 pm

Fund social security, medicaid etc... first! before wasting our money on foreign aid to countries that hate us, exploring mars, and all the other not so necessary expenditures. The welfare of all our citizens should always come first when our elected officials decide how to spend the money they take out of our paychecks every week. Take care of AMERICANS.

MSO
August 30, 2013 at 2:04 pm

'Raise the Soc Sec cap from about $115000, to into the millions, so the wealthy pay that tax.'

The rich already pay much, much more in federal taxes than the rest of us.

'now i dont get free medicad i have been cut off half the stuff i was getting before'

All your 'free stuff' is not now, nor has it ever been free. It sounds as if you have been freeloading for some time now and have to learn to live on the same benefit level as those who paid for your 'free stuff'

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