In a recent report submitted by the Social Security Board of Trustees, it has been projected that the retirement trust funds may get depleted by 2033. The same was projected in the last year's report as well. It has also been projected that during that time, the program may only be able to pay only around 77% of the benefits promised. Apart from that, it should also be noted that the disability trust fund will get depleted in 2016 and at that time, it will be able to pay only 80 percent of promised benefits.
It should also be noted here that compared to 1940, when the Social Security Administration began paying benefits to the retired, the life expectancy of people have increased in 2011-2012. During the 1940's, the normal retirement age was 65 years and after that men had a life expectancy of 12.7 years and women had life expectancy of 14.7 years. However, with the passage of time, men now have a life expectancy of 18.7 years and women have life expectancy of 20.7 years.
With the recent projections, the situation is such that if something doesn't change, there won't be much money left to pay social security to the common man.
Suggestions to fix the problem
Donald Fuerst, senior pension fellow at the American Academy of Actuaries, offered a controversial suggestion to fix the problem of social security benefits so that it can be continued for a long period of time. In his controversial suggestion, he says that the minimum age of claiming social security benefits should be raised to 64 or more from 62 years. Many people have been sceptical of this suggestion. However, Fuerst have given certain suggestion to make it less problematic or less painful for the workers. Let's take a look:
- Phase in changes for an extended time period: A sudden change can be difficult to accept for many people. So, the changes that needs to be brought in should come in phases. This will help people adapt to the work-life reality.
- Lower benefits paid to high-salaried workers: Those workers who receive a higher pay should get low benefits. According to Fuerst, people from wealthier socio-economic groups show more longevity than people coming from poorer socio-economic groups.
- Bring changes in social security disability program: Requirements should be made lenient for people who are in the age group of 62 years and full retirement. Thus, it will help them to not do work which requires physical labor that they cannot afford.
- Discard or cut down wage taxes: This should be applicable both in case of employers and employees especially those who fall within the age group of 62 years and full retirement. This will also be an incentive for employers and they will be happy to employ older workers on job.
The suggestions given by Fuerst have their own pros and cons. Now it will depend upon the Congress as to how it will react to it.