Skip to content

U.S. Government Establishes Social Security Retirement Age at 78!

April 1, 2014

Effective October 1, Congress set the Social Security retirement age at 78.  This is the first major age increase since the system started.

By way of background, the retirement age was not a carefully calculated number.  65 was originally determined by German Chancellor, Otto Von Bismarck, in 1889 as a reward for “old” people being old.  His system was a simple one with those working slightly taxed to provide for the retired.  In those days very few made it to age 65, so coverage was minimal.

Social Security was enacted in 1935 using Bismarck’s age, model and reasoning.  At that time there were about 80 workers for every person who would receive Social Security benefits so the tax burden was negligible.  Today, there are a little more than three workers per retiree with the benefit age starting at about age 66 (and at age 62 in some cases).  With people living much longer, the burden on those working grows greater each day.  It is estimated that 20 years from now there will be less than two workers per recipient.  There are also payments for widows and widowers with young children, payments to the permanently disabled and a small burial benefit, but these benefits do not seem to be heavily burdensome.  Today, the average life expectancy is age 80, with more than 3% exceeding age 90.

When Social Security started, a 1% “tax” was placed on all wages up to $3,000 with a matching amount from the employer.  This amounted to a $60.00 maximum contribution.  Benefit payments for the first 30 to 35 years were to people that had not contributed sufficiently to the system with funds coming from the tax on those working.  By 1960, the wage base rose to $4,800 with a 3% tax each for employee and employer – a $288.00 total contribution.  By 1980, the covered wage base rose to $25,900 with a 10.16% tax – a $2,631.44 total contribution.  Today, the wage base is $117,000 with a 12.4% tax on the employee and employer amounting to a combined contribution of $14,508.  The self-employed pay both portions themselves.  There is also a partial recoupment by the government since the once non-taxable benefits are now 85% taxable for many recipients.

It is estimated that the current unfunded Social Security liability covering payments over the next 75 years is about $10 trillion.  Unfunded Medicare liability is additional but is not covered here.

It seems one of the big issues of the day should be what to do about this unfunded liability. Right now our Congress people do not appear to be addressing this.  In the 2000 Presidential campaign both candidates offered possible solutions – none good, but they were talking about it.  Not since and up to today, nothing new is being offered at all.   This is a critical area that must be addressed and dealt with before it reaches the crises level.

Increasing the retirement age to 78 might be an exaggeration, but if you read this far, we know it got your attention.  Write to your Congress people imploring them to seriously address Social Security solvency.  Today is “April Fool’s Day.”  It seems we are the “fools” because we elected flaccid leaders that are only adapt at pushing important issues to the sidelines.

6 Comments leave one →
  1. Robert Blum permalink
    April 1, 2014 1:04 pm

    Nice April Fool’s article Ed. In paragraph 4 is $ 117.00 a typo or an April Fool’s joke?

    • April 1, 2014 2:10 pm

      Opps – typo. S/b $117,000.

      • April 1, 2014 9:44 pm

        It was almost changed – still missing a “0.”

      • April 2, 2014 8:33 pm

        It’s fixed!

  2. Robert Nagler permalink
    April 1, 2014 1:09 pm


  3. April 2, 2016 7:46 pm

    Who is the joke on?

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: