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December 2, 2004 04:20 PM

Tax Policy Promotes Early Retirement


Excerpt: It has become widely accepted that many Americans will have to work part-time during "retirement" to maintain their living standards. But a new study has found that taxes, direct and indirect, will eat up much of what those people might earn. In short, it won't pay to work after about age 66, because you'll take in after taxes as much from your pensions and Social Security as you would by working.


It has become widely accepted that many Americans will have to work part-time during "retirement" to maintain their living standards.

But a new study has found that taxes, direct and indirect, will eat up much of what those people might earn. In short, it won't pay to work after about age 66, because you'll take in after taxes as much from your pensions and Social Security as you would by working.

Encouraging work at older ages is worthwhile, and a critical policy goal for an aging society, according to the study by the Boston College Center for Retirement Research.

Yet "the current system of beliefs and taxes provide strong work disincentives," says Barbara Butrica, a senior research associate at the Urban Institute and the study's co-author.

Butrica is calling on politicians to pass laws that provide incentives to work at older ages, including a payroll tax credit, indexing the normal retirement age to life expectancy, reducing benefits at younger ages and removing phased-retirement regulations.

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Read all 23 posts in the same category of Retirement:

Bush Says Social Security Plan Would Reassure Markets - Dec 17, 2004
Are You Ready To Retire? - Dec 13, 2004
Last-Minute Retirement Planning - Dec 12, 2004
Small Change Adds Up To Big Savings - Dec 09, 2004
Bush To Borrow To Fix Social Security - Dec 07, 2004
Moving Smoothly Into Retirement - Dec 07, 2004
Get Healthy, Get Wealthy - Dec 06, 2004
Five Books to Retire By - Dec 05, 2004
Fidelity Analyzes Pension Performance - Dec 02, 2004
Social Security COLA Increase Looks Puny - Dec 02, 2004
No More IRA Leniency - Nov 29, 2004
To Yield A Good Retirement, Get Real, And Work It Out - Nov 28, 2004
Social Security Reforms On The Way? - Nov 26, 2004
Some New Ways To Preserve Your Retirement - Nov 23, 2004
Living Trust Offers: How to Make Sure They're Trust-Worthy - Nov 22, 2004
How to Forecast a Lifespan - Nov 21, 2004
Be Happy, And Put Retirement Fears to Rest - Nov 21, 2004
Seven Ways to Stop Saying 'Oops!' - Nov 21, 2004
Retirees Don't Have to Be So Frugal: A Case for Withdrawing Up to 6% a Year - Nov 17, 2004
How to Avoid Living Like a Poor Student at Age 70 - Nov 09, 2004
What Social Security Might Look Like - Nov 09, 2004
Are You Retirement Ready -- Or Not? - Nov 03, 2004