Keeping Older Americans in the Workforce
June 14, 2011
This year, Social Security payments will exceed Social Security tax receipts. Discussion is already underway producing numerous ideas for putting Social Security back on a stable financial footing. Unfortunately, most of the ideas tend to ignore a much larger problem: the urgent need to increase economic growth and employment so everyone (including the rapidly increasing number of senior citizens) can enjoy increasing standards of living, says Robert E. Pritchard, professor emeritus of finance at Rowan University.
Pritchard proposes to eliminate the existing earned income restrictions imposed at age 62.
If workers are permitted to receive Social Security benefits at age 62 without any limit to their earned incomes, the following benefits would be enjoyed:
- Starting at age 62, those workers who have seen large drops in the values of their defined contribution pension plans, as well as their homes, will realize a significant increase in income when they continue to work full-time and collect Social Security benefits, giving them an incentive to continue working.
- Many baby boomers will reset their retirement plans to continue working.
- Once older workers become accustomed to collecting Social Security benefits while still working full-time, they will feel a strong incentive to continue working full-time.
- The earlier a person starts to receive Social Security retirement benefits, the lower her/his benefits will be.
Pritchard's proposal provides one example of how government can provide an incentive for people to worker longer, thereby increasing the total economic output and helping to stimulate employment growth.
Source: Robert E. Pritchard, "Creating Social Security Incentives for Older Workers to Remain In the Workforce," Journal of Applied Business Research, May/June 2011.
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