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Retirement Planning > Social Security

Squandering our most precious resource

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Thanks to the benefits of better nutrition, education and new technologies, today’s seniors are living longer and are more knowledgeable than any generation in history. A hardworking, dedicated and experienced pool of workers is an important key to national prosperity. Yet as a nation, we in the United States choose to squander this precious economic resource.

Consider the following. Most mature Americans have contributed to Social Security all their lives. But once your clients start collecting this government benefit, the tax code is structured to penalize them if they want to stay engaged in the workplace.

Any senior who has yet to reach their full retirement age as defined by Social Security and who wants to work can earn up to $13,560 without being penalized. After that, an individual loses a dollar in Social Security benefits for every two dollars earned. This insane “tax” discourages some of our most experienced and effective workplace contributors from remaining professionally engaged.

The non-partisan Employee Benefit Research Institute conducted a survey earlier this year. Nearly half of the workers participating in the survey reported having less than $50,000 in total savings and investments, excluding home equity and defined benefit pension assets.

Further, only 18 percent of respondents felt very confident about having enough money for a comfortable retirement. That means that four out of five people have some level of insecurity about their level of retirement savings.

To address this, today’s seniors need – and often want – to work longer. According to government statistics, 30.7 percent of individuals 65-to-69 are working or looking for jobs. Many of them not only need the income, they need the medical and dental benefits that come with employment.

And employers need workers. According to a recent Hewitt Associates survey, 25 percent of the workforce is nearing retirement age. Without some sort of action, U.S. companies during the coming decade could be facing a severe “brain drain” as experienced workers retire.

One short term solution to help us bridge the gap as we recruit and train new professionals is to extend the window of opportunity for experienced individuals to make a contribution.

Let’s give our seniors the opportunity to earn a supplementary income and medical benefits without penalizing them through Social Security. It becomes a win-win for our country and the many seniors who view the idea of being “put out to pasture” as an anathema.

It’s about time for a more sensible approach to Social Security. We should have policies in place that encourage your clients to work as long as they want — policies that make sense for today’s generation of seniors and not seniors of decades past.

Larry Barton is the president and CEO of The American College in Bryn Mawr, Pa. Comments and questions can be sent to [email protected].


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