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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
Linda
February 27, 2013 at 11:17 pm

I do not want the age to go up. If a person works in an office then maybe they can continue to keep working longer. As for people working in construction it is very different. After a certain age our bodies will not let us do what we used to when we were younger. It is not safe for us and our bodies just can't do it till we are 65 or 70. Maybe if we sat on our behinds like congress then we could work forever...

Sam Heche
February 27, 2013 at 11:01 pm

Refering to Thomas Catalano comment. Federal employees do not have SS taken from their paycheck so while a govt. employee you got approx. 7% more. Working in the private sector you and your employer contributed approx. 15% combined to ss. out of you paycheck. What hurts you, is if you did not work for the Feds long enough to get a Fed pension. Your SS benefit is based on what you paid in and years worked. The Fed employees do not pay into a pension plan, Fed. employees retirement funds come from the current operating budget. Good Luck

R. Graber
February 27, 2013 at 11:00 pm

Be careful with saying that I will get back more in benfits than I paid. At 67, I have been paying in since 1964!. Invested at 5% per year, the equilvant about of compounded interest for 45 years would be significantly more than I will be getting back.

Shell
February 27, 2013 at 10:57 pm

We shouldn't even be having to talk about illegal immigrants. The key word is illegal.The remark by the man who said a 75 year old immigrant was able to draw Social Security without paying in, I believe, is inaccurate. If I am not mistaken you do have to have held a job and have paid in a certain number of months to collect.She may be drawing something from where she came from. I know someone who collected from Canada and the US, but she had worked many years in both countries.

donald
February 27, 2013 at 10:40 pm

Illegals DO get to collect. What does that matter though? If we would just take one hunk of billions of dollars we use to aid other countries and put THAT money into SS, things would be fine. We help other countries but they don't help us. Didn't we die in war for Kuwait? Why are we paying so much for gasoline now. Don't they OWE us something?

Pete Goesinya
February 27, 2013 at 10:08 pm

I'm 55 been "contributing" by force into SS every week for 37 years by the time I can dip into SS there won't be anything left or the age will increase to probably 80 before I can collect. Funny thing a good friend of mine making 300K a year just brought his 75 year old mother in law from china who never paid a dime into SS and begins collecting benefits. Somethings just don't seem right.

Robert Whitfield
February 27, 2013 at 9:47 pm

If the Fedral Agencies were forced to pay back Social Security for the money they borrowed or deverted from it w/interest , Social Security would not be having such a big problem , if at all .

money4nothing
February 27, 2013 at 9:12 pm

I sit back and watch 2 guys just down the street - one using his son's name to work under the table while he collects disability and the other with an old back injury that has long healed and is able to run, jump off the back of his pickup truck, cut tile and install it while picking up that heavy water filled bucket to fill the machine, ripping up the roads on his atvs and dirt bikes, carrying sofas and other pieces of furniture for more than 100 ft, carrying wallboard up stairs from the street from a distance of at least 100 ft, riding around on his snowmobile, riding his bicycle and his motorcycle, building a chicken coop in his driveway and transporting it to his back yard by pulling it on a skit with wheels, working under the hood on his plow truck and physically placing and adjusting the plow blade by hand, installing lights on the roof of the truck, and many many more things. How can someone collect SSI disability for a bad back ( I know this is what he is collecting for because I was there when the original injury occurred) and get away with it? I went for x-rays for my own back and the technician happened to be his sister in law and she didn't know me and noticed our addresses were practically next door and she told me he was all better and could work if he wanted to but chooses to rip the system off thus verifying what I had suspected all along. I even have video footage of this guy doing all this stuff and yet Social Security won't lift a finger to investigate this guy despite me calling and writing to them about this. I can only imagine how much they have paid out to this guy since I first noticed this stuff happening since 2006. Things like this is what is hurting those that really need the help for real injuries and disabilities yet no one is doing anything about it. I wonder how much more out there is going on like this that is helping to destroy the system?

Bob Connolly
February 27, 2013 at 8:55 pm

It's a shame too see the greatest country divided.Rise above and be part of the solution that restores this great nation,binds it and makes us stronger.

Hoopster 22
February 27, 2013 at 8:43 pm

To Firefly

Like ckc said illegal immigrants never get to collect social security. So, you need to thank them for funding your retirement. I suspect you may be bitter because you lost your job to an illegal immigrant who came to work every day and never complained about work like you.