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Social Security — more for less

By Jennie L. Phipps · Bankrate.com
Tuesday, February 26, 2013
Posted: 6 pm ET

Thomas Saving, a professor of economics at Texas A&M University and director of its Private Enterprise Research Center, offers some startling retirement planning statistics.

His analysis of Social Security data shows that men with top earnings -- the highest 10 percent -- are living much longer than they used to. Their life expectancy past age 65 has increased six years in the last three decades. That has led many people -- including some in powerful places -- to think we ought to raise the age of eligibility for Social Security.

But Saving says this ignores the fact that over the past 30 years, life expectancy beyond age 65 for men with below-average incomes has only risen a single year. If the age of Social Security eligibility goes up, then men with low incomes who die at younger ages will get less from Social Security than people who live longer and have a longer time to collect.

Social Security was never envisioned to be a retirement plan, Saving says. From the very beginning, people who earned less and paid in less got a larger percentage back than people who earned more and paid in more. "(Former President Franklin D.) Roosevelt called what people put into the system 'contributions.' No doubt about it, it's a redistributive plan," says Saving, who is himself 79 and personally familiar with how Social Security works.

In a paper written for the National Center for Policy Analysis, a public policy research organization, Saving suggests that if the decision is made to raise the age of Social Security eligibility, then the benefit formula should be changed so that high earners get a still lower percentage return on the money they pay in while lower earners get a better return than they are getting now.

However it is done, Saving believes the Social Security system has to be adjusted to reflect longevity in order to make the system solvent. "Otherwise, we're looking at two workers for every retiree, and the tax is going to have to be 25 percent," he says.

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65 Comments
Knowsfacts
February 27, 2013 at 7:48 pm

Dear JL
Your comment prove your ignorance! Good luck!

T. Kirkpatrick
February 27, 2013 at 7:03 pm

The fact that Social Security is going to Hell in a hand basket should not surprise anyone. Much like any other program administered by the Federal Government the abuses seem to go un-checked. I have have been a productive member of the workforce for the past 50 years and have contributed to the fund during my entire working life. I have worked hard, and invested even harder. I have always been realistic enough to understand that as a productive member of society you are,for the most part, master of your own destiny. With this being said I have no problem, and view it as a personal responsibility, to help those who have fallen on hard times, just not the irresponsible. I never thought that I would say this...."It's so broke it can't be fixed."

James Lecato
February 27, 2013 at 7:01 pm

GOD only know what will be left of this country if the REPUBLICANS get back into office!!!

James Lecato
February 27, 2013 at 6:54 pm

Wow!! What a bunch of bull. Why do the people in America believe this bull? Social security is fine...THAT'S RIGHT FINE!!!
To start with it's based on the number of people putting in and the number of people taking out. So, yes there is a strain right now because their are more people(Boomers)taking out. But, the facts are over the next 20 to 30 years the number of people taking out will go down. Plus, the number of people putting in will go up.
Fact the baby boomer's are taking out about 45% to 55% of the moneys being used. So, 20 to 30 years from now when their dead. It will mean a reduction in benefits paid out, as high as a 55% reduction.
SO STOP TELLING ME THE SKY IS FALL>>>>REPUBLICANS!!!!!!!!!

Thomas Catalano
February 27, 2013 at 6:47 pm

ON SORT OF A DIFFERENT CHANNEL, I HAVE PAID INTO SS MY WHOLE LIFE ( I STARTED WORKING WHEN I WAS 16 YEARS OLD) BUT BECAUSE I'M A FEDERAL RETIREE I ONLY GET 1/3 OF WHAT I SHOULD GET. BECAUSE PRESIDENT REAGAN THOUGHT IT WAS A GOOD IDEA. WELL, IT'S NOT. IT IS HURTING ME.

firefly
February 27, 2013 at 6:33 pm

To Kent I am in the same boat - house half the original value, as well as my 401K.

firefly
February 27, 2013 at 6:30 pm

To CKC - See if the illegals head back home when they find out that they may not get SS. My bet is that they are just fine with the system of jobs/welfare/food stamps/free educations and health benies. Most likely some demagogic politician will fix the SS system so that it will let every person in the US, citizen or not draw from it.

BTW you mention Koch brothers and tea-baggers. Can't you leftist come up with anything new?

kent richwine
February 27, 2013 at 6:30 pm

I totally agree that soc sec should be given a bump at age 82. Everything you mentioned has happened to me. I saved a sizeable sum for retirement only to see it mostly wiped out due to the economy that was out of my control. Now I am faced with down sizing once more. If we were to experience a need for a unexpected problem (new refrigerator) etc... we would be out of luck.

firefly
February 27, 2013 at 6:18 pm

If raising the age for Soc Sec is robbing seniors then I've been robbed, since the age of my qualification rose before I retired, but I also was told in time enough to make the necessary adjustment to my career. I think folks infused with the entitlement mentality might have a problem with that, BUT GO AHEAD and eliminate the folks that never paid in, and raise the age to 70 for folks 50 and younger, that might save it for now.

Keep in mind that SS was NOT designed to be able to fully support anyone, but was designed to be a supplement to a persons own retirement savings. Those that squandered their money on cars, boats and other hobbies and then whine about not having enough for a personal retirement program are just whiners..

ckc
February 27, 2013 at 6:12 pm

Did any of the geniuses who resent illegals so much ever realize that they too are paying into the system--but not getting anything back!!! Yeah, they have bogus social security numbers in order to get a job--but since the numbers aren't for real (of for a dead person) they can never collect any money. So, in effect, those illegals who you gripe about are paying for YOUR social security benefits!! So don't gripe; odds are, you are going to get more back in benefits than you ever paid in--unless, of course, the Koch Brothers and their tea-bagger stooges have their way and deep six Social Security and Medicare.