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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
Dee
June 17, 2013 at 5:43 pm

Please write the Senators and overwhelm them with your email comments. They MUST be told what citizens really think or we will lose our country! (Put "www" in front of the link since yahoo deletes sources!): senate.gov/general/contact_information/senators_cfm.cfm

kevin blunt
June 17, 2013 at 5:39 pm

this will be a good start i am 60 and look to take my benifits at 62 but we
need to addrss this problem sooner rather than later, we are the largest
gereration and we are being followed by a much smaller generation we had
4-6 kids and more in families when growing uo now the average is two so this
problem has been in the making for some time .however if we stopped dipping
our hands into the till to fund other projects we would make a good start i am
thankful that someone is bringing this to light for discussion it is not going away anytime soon nor has it just become a problem.negitive comments do
nothing to solve a problem lets hear what others have to say

Peggy
June 17, 2013 at 5:32 pm

This money was paided in by our employers and ourself, where does the government get off and who authorized borrowing from this fund. No government official should have the authority to borrow money form the people. How will older people live without the social security. We really need to think when we vote for leaders.

lucky me
June 17, 2013 at 5:28 pm

why do we give grants to imagrents to do a business start up I.E. every store around here is owned a indian pakastani or what ever and they com wanting help to start a profitable store and I can't get a loan to start mine. makes me want to leave and come back and ask for help.

William A. Gilchrist
June 17, 2013 at 5:12 pm

Man, I hope the minimum age does not go up to 64. I have been planning to retire at 62 for years as the job I have will probably not keep me around any longer than that. It will be very hard for me to go get another job for the years that are the difference. I was promised I could retire at 62 for years. I have worked since I was 14 years old and I have paid my taxes and SS money. It would be entirely unfair to tell me that I have no choice but to work on. I expect money to be there for me as I have paid money to SS for nearly 50 years now.

Dee
June 17, 2013 at 5:10 pm

Obama's illegal aunt and DUI-arrested uncle have been stealing from the taxpayers for YEARS. They get free housing, free medical (most expensive of all), free food, and $750/month for doing nothing at all – and they’re younger than I am but I am FORCED to support them! On Monday, 8/29/11, his illegal uncle was arrested on a DUI. When the police arrested him, he threatened them with, "I'll call the White House" to get immunity regardless of criminal acts. And to top it off, now we not only have to provide free social services to these CRIMINALS but also Secret Service protection for them while they commit their crimes!!

Dee
June 17, 2013 at 5:09 pm

Vietnamese get disability retirement by claiming they can’t make a living as fishermen and because they are 40ish, too old to retrain(!) and have a language problem they are given SSI. SSI is also given to elderly immigrants from Russia (and probably many other foreign countries) because their families cannot afford to support them. I have no problem with my tax dollars helping or taking care of United States citizens but it really burns me that immigrants from foreign countries can get public funded services. We are being ripped off.

Jane Anderson
June 17, 2013 at 4:54 pm

Before parroting all this gloom and doom, then please crunch some numbers. What if, rather than people being taxed on their earning for Social Security, all this money went into an investment fund each year. I am not saying do it, but to figure out how much a person would have when they retired at 62 (65). Let's say this money was managed by the government but in a pretty good investment. And let's say none of this money can be used for anything else, and not to be used for any other person. What money was taken out of each paycheck and invested, that is what that person will end up with.

If a person starts working at age 20 let's say. Contributions from each paycheck each year for 42 (45) years. How much money would that person have?

charly
June 17, 2013 at 4:53 pm

Social security comes out of everyone paycheck so where is this kind of money being increased from our social security check per weekly it dose not matter we still work for that amount and they take that amount then why would anyone run short of money unless someone is stealing this money. why don't they let the people have that in there checks then if the wanted to save it for themself they can because we all have banks everywhere and it be earning interest while in there bank account not someone else's
account.

GiGi
June 17, 2013 at 4:50 pm

So glad I turned 62 two years ago!!!