Here's how to make a boomer happy. Let him or her celebrate a 62nd birthday, draw Social Security and still keep working at full pay.
Unfortunately, the system doesn't work that way. Today, people who are between 62 and full retirement age -- 65 or 66, depending on their age -- can claim Social Security, but if they earn more than about $14,000, they have to pay back $1 for every $2 that they earn until they reach $32,000 and then they lose all of their Social Security.
But Robert Pritchard, a retired professor of finance at Rowan University in New Jersey, thinks that approach is all wrong. He wrote a piece for the June issue of the Journal of Applied Business Research on why it makes economic sense to eliminate the barriers to working and simultaneously collecting Social Security.
Pritchard, who will turn 70 shortly, points out that there is little retirement planning incentive to keep working after age 62, which means that many people who could continue to effectively contribute to society hang up their work boots and live off Social Security, pensions, and savings earlier than they might if there was a good reason to keep working. The net effect of that is unnecessary pressure on these resources, including rising interest when retirees sell bonds and declining stock values when they sell stocks.
If people could collect Social Security and work without penalty, they would continue to pay income taxes and they would continue to pay into the Social Security system while their employers would continue to do the same. The amount a person and his or her employer paid into the system would almost certainly be greater than the amount that he or she was receiving. "The government would be way ahead," Pritchard says.
He pooh-poohs the argument that encouraging people to retire early provides jobs for younger people. "That's a fallacious argument," he says. "It just isn't true. If you keep older people working and they keep buying and demanding goods and services, that is going to provide more opportunity for young people."
Pritchard is probably right about all of this, but I'm afraid it is going to be a tough sell in Washington.