Retirement Age Stars In Soc. Sec. Debate

Prominent Group Of Actuaries Say Raising Retirement Age Necessary With Longer Life Spans

(AP)  Want to keep Social Security from going bankrupt? Make future recipients wait longer for their first benefit check because they probably will live longer anyway, an influential group of actuaries says.

The next president and a new Congress will come under increasing pressure to act to fix the Social Security system. Democratic presidential candidate Barack Obama rejects any increase in the retirement age while his GOP rival John McCain opposes tax increases as a possible fix.

The American Academy of Actuaries, which advises policymakers on risk and financial security issues, wants any potential solution the White House and lawmakers might consider to include raising the retirement age from the current range of 65-to-67-years-old. The group provided The Associated Press with an advance look Thursday of its recommendations.

Current benefits are supplied by payroll taxes from today's workers, all of whom pay a 6.2 percent Social Security payroll tax on income up to $102,000. Their employers match it, for a total tax of 12.4 percent. The tax applies only to earned income, not to passive income such as dividends and interest.

Benefits are projected to exceed the Social Security system's tax revenues in about nine years. The program's trustees have said the Social Security trust fund will be depleted by 2041 without changes.

A major problem, the actuaries say, is that people are living longer. That means they are drawing more money from the program.

When Social Security started in 1935, the average American's life expectancy was just under 60 years, according to the Social Security Administration. By comparison, people now eligible for Social Security can expect to live on average a little past 76, the agency says, "meaning workers have more time for retirement and more time to collect Social Security."

For many years, 65 has been the retirement age to receive full benefits. But under changes in 1983, only people born before Jan. 2, 1938, can collect full benefits at 65. Those born after that date face a gradually rising retirement age for full benefits until it reaches 67.

Current estimates show that by 2040, 65-year-old men and women could live at least 18 more years after becoming eligible for full Social Security benefits.

"You just can't have people living longer and longer and longer, and have the program with a frozen normal retirement age of 67. It just doesn't make sense," said Bruce Schobel, the chairman of an academy task force on retirement security principles. "Eventually people will have a larger and larger proportion of their lives spent in retirement until you reach the point where we just can't afford it."

The academy is not staking out a position on when people should retire and acknowledges that saving Social Security will take more than just raising the retirement age.

"All that we're suggesting is that some increase in the retirement age should be part of any package," Schobel said.

Obama already has rejected such advice. "We will not raise the retirement age," Obama said in June at a campaign event in North Carolina.

Obama has, however, called for a Social Security payroll tax on incomes above $250,000 a year, compared with the current $102,000 threshold.

"Barack Obama is opposed to raising the retirement age. He believes we should strengthen Social Security while protecting the middle-class families that rely on it," said Jason Furman, Obama's campaign economic policy director. "To that end, he would like to work with Congress on a plan to ensure that people making over $250,000 pay a little more to strengthen this vital program for generations to come."

McCain originally said everything was on the table to fix Social Security. He recently has amended that position, saying he would not increase payroll taxes. "I want to look you in the eye: I will not raise taxes or support a tax increase," he told supporters Wednesday.

Former Texas Sen. Phil Gramm, who served as a McCain adviser until he resigned earlier this month, told The Washington Times this month that a bipartisan deal to save Social Security might include raising the retirement age to 70 over 30 years.

Stop spending SS money on illegal aliens and their families. Stop paying money on fakes, who get their children to act retarded so they can collect money before their even an adult. Stop disability to fakes, but pay for real disabilities. Stop loaning SS money to the government. Make the Fed Gov repay all the past loans, at 18% just as we have to pay. If that bankrupts the Fed Gov then change the way the Feds run things.

[shippg-2009]

There should be no caps, but also no graduated tax for the rich. 6% flat rate should be sufficient.

The SS account should be dedicated to SS only. It is not a cookie jar.

[babooph]

If the rich paid in, no benifit would be cut.

[deacon20081]

Cut out the benefits paid to illegal aliens, step number 1.

[babooph]

Cut military spending in half & we can retire at 50-no one ever wanted to attack us & get our retired people.The military spends much on Israel support-stop that & we need much less military & Islamics calm down too.

[buddysmomo1]

why not pay back too social security the money taken out of it too build those buildings like the strom thurman building in columbia ,sc with that so-called art structure that cost if i remember right 100,000 i never could see where art was involved the money has never been repaid and seniors are made too feel like dirt because they want a retirement out of the money taken out of their paycheck everypayday and we do not even get credit for all that was taken out

[lloydbest1]

"Posted by Element51
By removing the cap it sounds like you want other people to pay for your benefits...." Posted by rhs648 at 04:38 PM : Aug 01, 2008

Why not? Element51 has been paying for other peoples'' benefits for however long (s)he has been paying into the system. So have I. In fact, you are paying for other peoples'' benefits right now, even as you read this rebuttal.
When all three of us retire, other people will be paying for part of our benefits. Some of your retirement income will be footed by folks entering the workforce; some of whom, in fact, earning more than you do.
As much income as your tax bill implies, I have to disagree with your assertion that benefit caps also be removed. Part of my reasoning goes back to a concept called Noblesse Oblige. Simply put it means from those who have much, much is required. Specific to this example you are (or should be!) putting enough money into a private account to fund a very comfortable lifestyle upon retirement, with out the the additional income you might be getting from a removal of benefit caps. In any case, we are seeing far too much "Noblesse" in recent years and not nearly enough "Oblige".

[wl7bzh]

The government plan for a slush fun backfired when the baby boomers lived longer than they were supposed to.

Guess they just couldn''t get us involved in enough wars-that is the pattern, economic crisis then start a war to divert attention and reduce population. But then the middle east scrap ain''t over yet.

[tryhonesty]

RepubliCONs have tried to distroy Social Security from its creation. Period. The Greedy OLD Party (GOP) wants the very 1-3% of the richest people in America to rule the world. If the RepubliCON war mongers can waste a trillion dollars or more on stupid wars, they can afford to pay for a first class social security system for Americans!

[rhs648]

It''''s time to remove the cap and require everyone to pay in to social security. As it is now, there are many who make way above the cap and then are elgible to draw the max amount when they reach retirement age. John McCain is a good example. Check out how much he is drawing in social security added to his Senatorial salary and his military retirement. It will surprise you. I was shocked when I learned that he was getting social security. If I go back to work they take mine away but I guess there is a different system for politicians. If government will keep it''''s hands off the system and they eliminate the cap there will be no problem.

Posted by Element51

By removing the cap it sounds like you want other people to pay for your benefits. I already pay around sixty thousand dollars per year in stare and federal taxes. Enough already. Let the people who receive the most benefit pay more. If you are going to remove the cap, remove the cap on how much we will receive back. It should be proportional to what we put in.

[perm3800]

Had Social Security taxes not been treated as part of the general fund (it has been calculated in as a normal part of the available budget since Viet Nam) and had all the programs that ''borrowed'' against it prior to that repaid the ''loan'', there would be very little problem. Income to SS, earning interest either at the gov''t bond rate or at a commercial rate, would have been more than sufficient to meet the payout. But money has been removed and never returned and the expeditures are treated as an ''entitlement'' program (meaning discretionary, politically) and so to be renegged. No wonder, with the government treating SS the way it does that companies are renegging on their retirement programs and forcing employees to invest their 401Ks in company stock and then devaluing the stock just before retirement bubbles occur.

It all goes back to the change from "Personnel" to "Human Resources" - since 1980, the human element of the economy has become just another cost of production rather than an element of income generation.

[javadavid]

As I understand it, a big part of the problem with Social Security is that the generation that is now retiring consisted of massive numbers of workers and that the current generations of workers contributing to the "pot" is much smaller. Many companies across many areas of service and manufacturing in the U.S. have a very difficult time finding people to do required work at a pay rate that is equivalent to what the market will pay for the products/services.

Why don''t we solve both problems by fixing our broken immigration system and allow low-skilled laborers to obtain permission to work in the U.S.? These workers will be paying Social Security taxes, contributing enormously to the amount of money available in the fund.

[barbaram99]

i never had kids. Mum wanted to be a grandmum. Years ago I said not by me. I aint bringing a child in to this world.

[element51]

It''s time to remove the cap and require everyone to pay in to social security. As it is now, there are many who make way above the cap and then are elgible to draw the max amount when they reach retirement age. John McCain is a good example. Check out how much he is drawing in social security added to his Senatorial salary and his military retirement. It will surprise you. I was shocked when I learned that he was getting social security. If I go back to work they take mine away but I guess there is a different system for politicians. If government will keep it''s hands off the system and they eliminate the cap there will be no problem.

[jmurrieta1]

Gosh, these peasants might have almost 10 years of retirement!

That is far too much time off for the bosses to approve!

How can the billionaires keep up their standard of living if the wage slaves aren''t kept chained to their benches until they drop?

[jmurrieta1]

There would be plenty of money for America to fulfill its promises--something it''s been a bit short on of late--if the SS tax were imposed on ALL income (even stock dividends!).

Not to mention if Congress could keep its grubby paws out of the "trust fund".

[lloydbest1]

Raising the retirement age is merely a band aid. Much stronger measures are necessary to insure that, after 40 or 50 years of working life, retirees can collect the incomes they are entitled to when they are no longer at an age they can effectively compete with the younger workers. Here are a few suggestions:
1. Stop raiding the SS fund for other projects. This is the biggie. If we can''t do anything else we MUST do this one thing.
2. Elimiate, not merely raise, the upper income limit.
3. Beyond a certain income, say $150000 or $200000, have those deductions graduated; the more one makes, the more one pays proportionally.
4. Consider taxing assets as well as income for our wealthiest citizens. But let''s not go overboard here; and such a tax should be temporary.
5. Make members of our three branches of government pay into the system as well. Cheap symbolism, maybe, but this insures our representatives have a stake in fixing SS. They do not now.
6. And raise the retirement age. Band aid or not, it is still part of the solution.

I''ve been paying into Social Security for over 45 years, now. I am too young to retire but when I do, I would like a reasonable income for as long as I live - however long that is. Lest you think your ol'' buddy Lloyd is being a bit of a whiner, let me assure you that given what the Social Security Administration tells me I can expect as income, I will never get back what I put in....

[bozworth4]

One way around this delima for the young (62 or younger). huff paint, do drugs, drink very heavy. Any of which can be dependent and qualify for Disability. Another way would be a bad back. Not to worry with any of these benefits you can still work and earn extra income. What 25 hours weekly??? (not sure) Unlimited, if paid in cash. So figure a way to get your money back before the money runs out, or our highly intelengent leaders "fix it"! HAHAHA!gaspHAHAHA.

[grannieof2]

We The People must demand that ALL Gov''t employees & elected officials (both local & national) be under the Social Security umbrella. Doesn''t anyone know that they do not pay into the system? They have their own which they do not pay into. My Mom is a retired Gov''t employee and she receives over 4K a month. Anyone know of any collecting Social Security in that range? We demand they start collecting the same as the normal guy & you watch how fast it gets fixed!

[greeneyes222]

"an influential group of actuaries"

Yeah, don''t fix the problem, make an accounting change.

Maybe the American Academy of Actuaries should have a little less influence. This is the same old insurance game of coming up with reasons not to pay so the profits continue to roll in. How do these idiots sleep at night?