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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
Mspolletjr
June 17, 2013 at 8:05 pm

For years has not congress been legally stealing the Social Security funds for pork barrel spending ,perks,etc ??

D. Clark
June 17, 2013 at 7:56 pm

Neither my Mother of Father ever collected a dime of SS, yet they paid in all their lives. I wonder why my family has never been reimbursed for the thousands of dollars we were defrauded out of?

MICHAEL T
June 17, 2013 at 7:26 pm

SETTING ASIDE THE MISUSE OF THE SOCIAL SECURITY PROGRAM, PERHAPS PEOPLE SHOULD BE A BIT MORE WILLING TO BUILD TOWARDS THEIR RETIREMENT THEMSELVES INSTED OF EXPECTING THE US GOVERNMENT TO CARE FOR THEM. THIS INCREASING NEED OF THE PEOPLE TO DEFER RESPONSIBILITY FOR ALL ASPECTS OF THEIR LIVES ON TO SOMEONE OR SOMETHING ELSE DISGUSTS ME. EVEN THE MISGUIDED CREATORS OF SOCIAL SECURITY NEVER INTENSED THAT IT BE THE "GOVERNMENT PENSION" IT HAS BECOME FOR SO MANY. RELEAN HOW TO DEPEND ON YOURSELVES ....TAKE RESPONSIBILITY

frankfooter
June 17, 2013 at 7:19 pm

I believe Obama and the congress crooks are having a contest to see which can p-ss away the most money in the shortest time in an effort to complete the job of bankrupting our entire system. who at S.S. opened the bank account for congress in the first place? WHO O.K.d it? Is it our bright leader who gives OUR money to all who will contribute to his campaigns, or lives in his beloved birthplace in the middle east.

Bobbie Fenton
June 17, 2013 at 7:10 pm

We all know that the government has mismanaged these funds for years. They have been taking this money and using it for all kinds of things other than what it was originally intended for. If it had been put into an account for what it was specifically designed for and NOTHING ELSE, ONLY for the AMERICAN CITIZENS WHO PAID INTO THE SYSTEM, then this article would never have been written. It's unfairly squandered on everyone BUT the hard working people who paid for it.

jeanne
June 17, 2013 at 6:48 pm

Like Mildred said..that money was in there until government decided to use it ....and we were never consulted about it..there was plenty to carry everyone thru for many years to come..talking to our congressman will do no good..is there a dept that will fight for us...or do we just take it lying down??

Billy
June 17, 2013 at 6:36 pm

Here is an idea. Collect SS at 62 if ya want to in a lifetime you can only collect what you pain in with interest, after that runs out you sit down with a government accountant and see what else you have. Now, if you depend on that SS money to not eat cat food on your toast, God bless you, the check keeps coming in, but if that monthly check is just wasted at the local casino for giggles, then the check stops. Many retired today get back all they paid in with interest after several years, then its all Welfare, but people working today will have to live into their late 90s to get it back. Many present retirees have generous union pensions and inherited much, something that will be more rare in the future. I know congress should have kept their hands out of the cookie jar, but does not matter, reality is what it is. My idea is also not totally fair for those who saved more and spent less while working, but we have to do something and this will at least address SS main goal.

Rey
June 17, 2013 at 6:05 pm

The idea that our Congress can raid our Social Security money for loans, pet projects or for their cronies is outrageous..The money was meant to be invested on behalf of the contributors (US), and not for Congress to mess with it...Now they are telling us that is going going to be a shortage..All this because they loaned it out or gave it away..why can't they collect the loans?..I'm sure that the money lent out when paid with back with honest interest would more than make up the shortage and put it back in the black

mildred
June 17, 2013 at 6:00 pm

Social security moneies would not be so near depletion if that money had been left for what it was intented and government houses had not borrowed from it back in the 60 to finance the war (conflict ) in vietenamn and to pay off other debts the Social Security would be so in the black that the monies would never have ran out but the houses of our federal government decide that it was o>k. to steal money that was meant to cover the retirement of the poor elderly and people who were or become disable thur no fought of ther own.

Charles F. Johnson Sr.
June 17, 2013 at 5:49 pm

Only U. S. citizens who have paid into S. S. should be allowed to receive benefits from the program.
Just let the liberals and their environmental friends finish off the job of wrecking America that Obama has been doing for the last 4 plus years.
Obama's trip to Ireland, I wonder did the mother-in-law who l
lives at the Closed White House go on the trip. Just wondering!