Longer Lifespans, Less-Taxing Jobs Lead More Older Workers to Shun Retirement

HNWBusiness Law, Employment Law

Millions spend golden years making green

Cecil Lawrence’s friends tease him that he’s crazy to work at his age. The 90-year-old glass salesman just laughs and suggests that they’re even crazier to sit at home and watch soap operas. “I guess they’re content to be old folks,” he said.

Like Mr. Lawrence, about 2.7 million Americans are skipping retirement and working into their 70s, 80s and even 90s.  Most remain on the job, retirement experts say, not for the money but for the personal satisfaction.  The lifelong workers still account for only 10 percent of their generation, but the proportion of over-70 Americans who have “retired retirement” has edged up since the 1990s as people live longer, enjoy better health and hold less physically demanding jobs.  And the number will only increase with the baby boomers. Seventeen percent say they expect to work indefinitely, though financial necessity will be a bigger reason for their passing up Golden Pond, according to the MetLife Mature Market Institute.

Policy analysts who fear an “entitlement crisis” with the retirement of 78 million boomers welcome the trend toward longer working lives, saying it offers financial benefits for older individuals and the economy as a whole.

Postponing retirement by just five years would boost the average worker’s annual retirement income by 56 percent and add $1 trillion a year to tax coffers by 2045, enough to erase Social Security’s deficit, says the Urban Institute’s Retirement Policy Center.

Older workers bear the burden of convincing businesses that they can remain productive, said William Zinke, a human resources executive who’s created a nonprofit group, the Center for Productive Longevity, to change employer attitudes.

“Although age discrimination is illegal, it exists far more than we’d like to think,” he said.  Many employers view older workers as particularly expensive, either because they demand higher salaries or incur more health care costs than younger workers, said Gordon Mermin, a policy analyst with the Urban Institute.  But by the time workers reach their 70s, many aren’t looking for traditional health benefits, because they’re covered by Medicare.

Only 15 percent have employer-provided health insurance, and 14 percent have pension coverage, the institute says. Only 27 percent work full-time, while 38 percent put in fewer than 20 hours a week.

Many businesses also worry that older workers are harder to train and will retire too soon for the investment in them to pay off. But older employees’ loyalty, sound judgment and even temperament can make them good role models for younger workers, Mr. Mermin said.

“The key is an understanding employer who’s willing to make some accommodations,” said Cynthia Metzler, president and chief executive of Experience Works, a national group that provides training and employment services to older workers.

Tax, pension and age anti-discrimination laws have discouraged employers from establishing formal “phased retirement” programs that allow workers to reduce their hours but stay on the payroll, Mr. Zinke said. But some employers do it informally. And plenty of older workers don’t need a boss’s approval. Among workers 70 and older, 42 percent are in business for themselves, the Urban Institute says.


Some seniors complain that income tax laws discourage them from working.  Once you’re past your full retirement age, you won’t lose any of your Social Security benefits just because you’re working.  But a portion of your Social Security benefits may become taxable.

To determine whether you owe any federal income taxes on your benefits, the Internal Revenue Service looks at your “combined income.” That consists of your adjusted gross income (including wages from your job, pension payments and withdrawals from a 401(k) or IRA), any nontaxable interest income, plus half of your Social Security benefits.  If this combined income is between $25,000 and $34,000 (or between $32,000 and $44,000 for a couple filing jointly), you may have to pay income taxes on 50 percent of your Social Security benefits. That doesn’t mean you’ll pay half of your benefits in taxes. What it does mean is that 50 percent of your Social Security benefits must be added as income when filing your tax form.

If your combined income exceeds $34,000 (or $44,000 for a couple filing jointly), you may owe income taxes on up to 85 percent of your Social Security benefits. A tax adviser may be able to help you avoid this maddening situation: Say that on Dec. 31, the final dollar of annual income you earn from your job triggers taxes on your Social Security benefits.  That last dollar not only would be taxed as income, it also would prompt the taxation of a lot more income.

No matter how much you enjoy working in your golden years, you may wish you had stayed home that day.

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