NEW YORK - Affluent Americans support raising the Social Security age because people are living longer, a Bank of America Corp. survey said Wednesday.
About 59 percent of people with more than $250,000 in investable assets said the government should increase the eligibility age for collecting retirement benefits, according to the study, which interviewed 1,000 individuals in December. Social Security lets recipients take reduced payments as early as age 62. It currently provides full benefits at age 66 and increases payouts for those who wait until age 70.
“Many don’t think they’ll start taking benefits until later,” said David Tyrie, head of personal wealth and retirement for Bank of America Merrill Lynch. “They’re living longer and are still working or plan to be working when they become eligible, and don’t need it yet.”
The trust fund which pays for Social Security benefits is projected to begin shrinking after 2022 as people are living longer and there are fewer workers supporting each retiree, according to a report by the Social Security and Medicare Boards of Trustees. The program is funded by payroll taxes. Congress voted last week to extend through 2012 a two percentage point cut in that levy on workers’ wages to 4.2 percent.
Many employees age 55 and older are remaining on the job to save enough for retirement as fewer businesses offer retiree health benefits and traditional pensions that guarantee a stream of income, the Employee Benefit Research Institute said in a report released on Feb. 16. There also is a desire by some, particularly those with more education, to keep working if they enjoy their positions and are physically able to do them, Ebri said.
More Older Workers
The rate of people age 55 and older participating in the labor force, which means they are either working or looking for employment, was about 40 percent last year compared with about 29 percent in 1993 based on U.S. Labor Department data.
“People aren’t saying retirement is about hitting an age,” Tyrie said in a phone interview last week. Less than 15 percent of respondents over age 50 in the Bank of America study said that age would be a primary cause in their decision, he said.
About 62 percent of respondents in the survey who weren’t retired yet and were younger than age 62 said they would wait to full retirement age or after to begin collecting Social Security. About 20 percent said they would begin collecting before full retirement age.
Those surveyed weren’t asked what age they would raise Social Security eligibility to, said Matt Card, a spokesman for Charlotte, North Carolina-based Bank of America, which is the second-largest U.S. lender by assets.
Deficit a Concern
A separate study of affluent Americans released in December by Wells Fargo & Co. found that about half, or 47 percent, also were willing to take a cut in Social Security or Medicare benefits if the money went to reducing the U.S. debt, according to that survey of 801 individuals with at least $100,000 in investable assets.
Wealthy Americans estimate on average that Social Security will cover about 23 percent of their monthly retirement income, the Wells Fargo report said. The San Francisco-based bank has about $280 billion in individual retirement account assets, said Karen Wimbish, director of retail retirement for Wells Fargo.
While Americans are worried about having enough saved for retirement, they’re also concerned about the U.S. deficit and solvency of Social Security, Wimbish said.
“The country’s debt and its spending beyond its revenue capacity is clearly on the minds of people,” Wimbish, who is based in Charlotte, N.C., said in a phone interview last week.