Tax Policy Promotes "Early" Retirement

[REWahoo]

Selected quotes from a CBS MarketWatch.com article. *Always interesting to see how "early" and "retirement" are defined. *(If you are working are you really retired?)

Tax policy promotes early retirement
Few financial benefits in working late in life, study finds

By Robert Powell, CBS MarketWatch.com

BOSTON (CBS.MW) -- 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.

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.

At present, she says the implicit tax rate on work rises from 15 percent for a somewhat average 55-year-old male to 50 percent for some workers by age 70. Obviously, there's no point in working if you can earn as much sleeping afternoons away in a hammock as you can by making hammocks. Sounds perfectly reasonable to me.

What's more, Butrica says, delaying retirement has all sorts of additional benefits. Working longer increases economic productivity, generates additional payroll and income tax revenue, reduces the number of years in which people receive retirement benefits, and helps cover costs of retirement programs (Social Security) and other government spending. Plus, it can reduce the pressure to tax younger workers to support those in retirement. Anybody see any benefit for the delayed retiree here?

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"It will be hard to convince people to continue working at older ages. Why would someone keep working if they can make the same or more money by staying home."

[Zipper]

For extra spending money, do odd jobs for cash.

What I do for "extra spending money" is buy and sell
"stuff". Auctions, garage sales, flea markets or just
stuff sitting outside with a "FOR SALE" sign. I love it,
but am quite wary of it beginning to seem like
"work".

JG

[MJ]

What I do for "extra spending money" is buy and sell
"stuff". Auctions, garage sales, flea markets or just
stuff sitting outside with a "FOR SALE" sign. I love it,
but am quite wary of it beginning to seem like
"work".

JG

There is always doing small bank jobs to get your spending money.
Might be fun for awhile before it becomes a 10 year "work" stretch.

MJ

I don't see how they would make more money doing nothing. Even if the retired workers effective tax rate is 80%, they would get 20% of their salary, more that what the hammock pays.

My mom is retired works part time, and receives full pension benefits. I don't know what she's planning on doing when SS kicks in.

Hopefully this will be changed with SS reform. Reducing SS because someone takes on work makes no sense to me.

[REWahoo]

There is always doing small bank jobs to get your spending money.
Might be fun for awhile before it becomes a 10 year "work" stretch.

MJ

That's definitely a short-cut to early retirement. No worries about safe withdrawal rates, health insurance, TIPs vs short term bonds, etc. But I keep hearing the Johnny Cash song "A Boy Named Sue"....

[haha]

What I do for "extra spending money" is buy and sell
"stuff". *Auctions, garage sales, flea markets or just
stuff sitting outside with a "FOR SALE" sign. *I love it,
but am quite wary of it beginning to seem like
"work". JG

John, it sounds like you live in a rural area. How do you procure your stuff without a lot of auto costs? Also, how to you get sufficient traffic at your sales to get good bids? It has always seemed to me that a medium quality suburb is best for that sort of business.

Mikey

No Mikey, it does not work that way. We are in a
rural area, but there are 2 large auction barns within
10 miles, holding auctions on a regular basis. Last
night for example we went to an "Antiques and
Collectibles" auction. Small crowd and big lots of
inventory. Toward the end they were almost giving it
away. My wife was in the antiques business for 10 years and noted the stuff was selling for 10% of retail or less.
Truly amazing. Now, I do not really spend any time on this (if I did I would have bought a semi load last night).
I mostly sell with local ads, or if I buy cheaply enough
I consign to an auctioneer. My best results ROI-wise
are by buying from private parties (so I can negotiate)
and reselling to private parties. If I wanted to work at it
the potentail is quite large. Personally though, if I didn't
mind the extra work, I would buy real estate. I enjoy that more.

JG

[charlie]

I think we need to rename JG as "Cadilac Jack"

Cheers,

Charlie

[sgeeeee]

What I do for "extra spending money" is buy and sell
"stuff". *Auctions, garage sales, flea markets or just
stuff sitting outside with a "FOR SALE" sign. *I love it,
but am quite wary of it beginning to seem like
"work". *

JG

My DW has always been a pack rat and our house and yard are filled with what I consider to be too much stuff. But recently she has discovered a local newsletter that allows you to place classified adds for items (up to $99) for free. She has begun to find things to sell and loves getting paid real dollars for some of our junk . . . errrr treasures. She's even found ways to game the $99 dollar limit. I'm happy that we are finally getting rid of some of this stuff but am extatic that we are actually getting paid for it.

[wabmester]

You realize, of course, that the Efficient Market Hypothesis says that you can't make money this way, right?

I've also started to get sucked into this game. There's something seductive about finding a sucker to sell you something below market, and then find another sucker to buy it at market or higher.

I've been doing both the buying and selling online, so it's very little "work." It's easy to see how people can make a living this way (at least until the markets become more efficient), but I just can't bring myself to scale up.

I'm pretty sure I could make six-figures by scaling up, but that would mean my "fun" would shift from bargain hunting to logistics optimization, which is where it starts feeling like work to me.