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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
dave
June 18, 2013 at 12:14 am

Introduce a Bill in Congress to force the Government to pay back all the money they STOLE from the Social Security Trust Fund with 8% back interest and there would be no problem with the Social Security Administration . What happened is the Government robbed the Bank and now they say its going broke ... DUH ! What would they do if they had a brain ? It seems simple to me ... and why no one has forced the Government to pay the money back is beyond me ; it seems so obvious doesn't it , but NO ONE is doing anything about the THEFT ; hey if you took money from the Bank and did not pay it back they would say you were a thief but when Government does it and does not pay the money back they put the problem on WE THE PEOPLE ... Write your Congressman an E Mail and tell them to do this please . Thank you , dave

quasimodo
June 18, 2013 at 12:13 am

I do not understand why the doom and gloom if the 13% social security thats removed from our checks will not cover it then maybe they should up the percentqage a little bit, as long as I can remember its been 13% that self employeed people are forced to pay as the cost of living goes up then also the cost of social security should increase. the main thing I see is that if our goverment wouldnt have ever stolen money from that trust fund there would be plenty of money there, they stole the money they should pay it back and make sure social security stays solvent, and if it takes them laying off half the do nothing goverment employees in useless branches of thegoverment then they should do that our goverment is far to big with way to many people living off the tax payers hard work

BFC
June 18, 2013 at 12:03 am

How can I sue to stop the government from deducting SS from my paycheck? I'm 41 now, and will never see a dime of that money. Instead, people who have never contributed receive payouts that should go to me, since I have payed my dues!

Ann
June 17, 2013 at 11:58 pm

SSA is "trying out" a security program with metal detectors and about six armed contract guards which costs on excess of $250,000 to install and over $250,000 annually to run. Gestapo techniques of having long lines outside the office entrance, allowing only one person in at a time...search AND metal detector wand AND walk through...each "clean" person takes over three minutes and, GOD FORBID,if they have a belt on...there goes another 3 minutes; no drop off of paperwork without this search. The waits for an APPOINTMENT THEY set can be as much as three hours late but NEVER less than a 30 wait. This is yet another sign of mismanagement and obstacles for citizen access. Raise He// for us!!!

ALN
June 17, 2013 at 11:52 pm

Social Security has turned into a Federal Welfare Program. It was designed as a public trust for funds to paid in and held until retirement or disability of persons paying into it. For years it has paid benefits to people who never paid 1 cent into it. It is not rocket science as to why the funds will not be there for the folks that actually paid.

frank wilson
June 17, 2013 at 11:37 pm

the gulf war was funded by our social security monies since it was so inflated. Now we are going broke thank you george bush

larry giltz age 76
June 17, 2013 at 11:35 pm

how long do you think ss well be solvant

Charlene Murphy
June 17, 2013 at 11:10 pm

We would increase the social security pot if we stop giving non citizens who have not contributed 1 Penney to the fund SSI, supplemental social security. I find this appalling and do not know how many hard working Americans know the amount being paid out to these non contributing, non citizens. Example mother comes from Phillipines to live with daughter here , she is elderly ( never worked in U.S. or Phillipines) so is collecting over $800.00 monthly in SSI and then the daughter (born in phillipines but American citizen by marriage quits her job to care for mom so she can collect money from social security for care of elderly. Once the money starts they both take a month's vacation to the Phillipines. This is only one example of how are money is spent. I am also not thrilled to be supporting all the anchor babies of gang bangers!

vc
June 17, 2013 at 10:45 pm

I was hoping to retire in2014 at age 62 but you guys are frighting me I too work for the state and have a 401-k stock you mean to tell me I will have to use up all the extra money put aside befor I can get my ss I have worked séance I was 16 worked 2 jobs from age 31 on up til today I am still working 2 jobs broked down but still work the two jobs a total of 65 hours per week

mhz
June 17, 2013 at 10:35 pm

the gov has the money .. afterall it was them(congress) who kept taking money out of SS to fund their own little pet project .. make them pay for it back .. make a trillion and sent it to the SS .. problem solved .. btw -- this talk about SS running out of money is a trick by the democrats ... they took money out of my paycheck each and every time so that it would be there when it is time to collect .. this BS about not having any money there is bull ... arrest the congressman who took the money and make them pay it back ..

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