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.

 

[John Galt]

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

 

[johnblake]

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

 

[John Galt]

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.

 

[Ready-4-ER-at-14]

After watching the TV shows Hoarders and the show Pickers, I realized that my possessions could easily get the best of me as it had many of those people. Every item has a story. I had to get rid of a lot of stuff when I downsized, and find the last small bits of excess almost impossible to part with. (no paths, just a little too full storage locker in the building)

My parents had sheds and part of the basement full of stuff. Mom would have a rummage sale and sell some of the better stuff, and the not wanted collected in the corners. Then new stuff came and was on top, or in front.

That said the joy and allure of buying something way below worth and reselling at or slightly above worth is addicting. I always sort of wanted to be an auctioneer and get to touch all the unusual tools and stuff and figure out what they were used for.

My dad had a hobby of buying a riding lawn mower, fixing and selling it in retirement. Maybe if I could only have one flipper at a time.... : ) One car, one house, one interstellar space ship....

Wondering if the people in this old thread are still enjoying the things they did earlier or moving on to other interests.

 

[ExFlyBoy5]

Wow...I think this should be awarded the NECROPOST of THE YEAR!!!

This day in history, 12-19-2004: Renata Tebaldi, Italian soprano, dies at 82

 

[Red Badger]

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.

I think your missing the point - especially on this forum.

Let's see...

1. Get up and dress in whatever work attire is required
2. Commute to work in the Great American Road Rage environment
3. Arrive per schedule and perform work duties under whatever rules / policies prevail
4. Commute home in the Great American Road Rage environment
5. Un-attire
6. Have $8 of $10 go to taxes, add job expenses (commuting, etc) and pocket a lot less than $2

Or, slip outside, grab a cold one from the patio fridge, ease into the hammock and contemplate the misfortunes of those contending with #'s 1-6 while calling it retirement.

Don't get me wrong. I'm not against a side hustle or semi-retirement. My gig is PT volunteering for causes that I value. But if one is working a traditional job that does require aforementioned activities, it's hardly retirement.

 

[Big_Hitter]

I think your missing the point - especially on this forum.

Let's see...

1. Get up and dress in whatever work attire is required
2. Commute to work in the Great American Road Rage environment
3. Arrive per schedule and perform work duties under whatever rules / policies prevail
4. Commute home in the Great American Road Rage environment
5. Un-attire
6. Have $8 of $10 go to taxes, add job expenses (commuting, etc) and pocket a lot less than $2

Or, slip outside, grab a cold one from the patio fridge, ease into the hammock and contemplate the misfortunes of those contending with #'s 1-6 while calling it retirement.

Don't get me wrong. I'm not against a side hustle or semi-retirement. My gig is PT volunteering for causes that I value. But if one is working a traditional job that does require aforementioned activities, it's hardly retirement.

bro - you do realize that you are replying to a 12 year old comment?

 

[Yachi]

Usually when they talk about life expectancy, they quote life expectancy at birth, which is a ridiculous thing to use for indexing retirement age.
Many of our gains in life expectancy at birth have been made by reducing infant mortality. While this greatly affects life expectancy at birth, it does nothing to the working/retired ratio.
I suppose if you really want to tie it to life expectancy you could set a maximum life expectancy at retirement age. Right now the life expectancy of a 67 year old male is 16.4 years, and a 67 year old female is 18.84 years. This would do a better job of adjusting for gains in the treatment of diseases affecting retired people.
What you're also concerned about is the amount of people who worked vs the amount who made it to retirement, so maybe we should look at life expectancy at median working age vs life expectancy at retirement age to gauge the chances of dying prior to retirement age.

 

[Big_Hitter]

Many of our gains in life expectancy at birth have been made by reducing infant mortality. While this greatly affects life expectancy at birth, it does nothing to the working/retired ratio.

i'm sorry but the more people we have living past infancy the more workers we will have per retiree

 

[daylatedollarshort]

That said the joy and allure of buying something way below worth and reselling at or slightly above worth is addicting. I always sort of wanted to be an auctioneer and get to touch all the unusual tools and stuff and figure out what they were used for.

My dad had a hobby of buying a riding lawn mower, fixing and selling it in retirement. Maybe if I could only have one flipper at a time.... : ) One car, one house, one interstellar space ship....

Wondering if the people in this old thread are still enjoying the things they did earlier or moving on to other interests.

I also find bargain hunting a fun hobby. In order to not have too much stuff, I stick mainly to finding bargains on consumables like groceries and event tickets. I have never resold items but I've watched the show Flea Market Flip and I think I would enjoy refurbishing furniture as a potential hobby with some extra income potential.

 

[Koolau]

Ah, yes. JG. Brings back memories. You can tell how long I lurked before joining. YMMV

 

[Teacher Terry]

i work p.t. in my pj's on the computer at home when I feel like it. It is the perfect job)