If I somehow manage to strike it rich in the next 10 years, my retirement planning objectives will change. I will buy an apartment in Paris (where property costs are very dear). Once settled, I will spend afternoons at a sidewalk cafe, order "un café au lait, si'l vous plait," and listen to snippets of melodic conversations among Parisian passersby. When I'm overcome by ennui, I will ask the waiter for the check. "Garcon, l'addition, si'l vous plait!"
I know enough French to ask for directions to the train station and airport, but over the past couple months, many of the country's public transportation systems were gridlocked. The people of France have been throwing a collective temper tantrum, protesting government plans to raise the retirement age for the country's pension system from 60 to 62.
Is the French populace spoiled or what?
Working helps the brain
In last week's blog, I presented one case for working longer. It can make a big difference in your quality of life if you postpone retirement and work for a few extra years. Then again, it can arguably make a big difference in your quality of life if you hasten retirement a few extra years.
In a study called "Mental Retirement," the authors found a correlation between early retirement and cognitive decline. They looked at test scores in the U.S. and a dozen European countries. The population was divided among people in their early 50s and people in their early 60s, and it was noted whether they were working or retired.
As it turns out, those people in the U.S., Denmark, Sweden and Switzerland, where a large percentage of the 60- to 64-year-old subjects remained in the work force, performed remarkably better on the test relative to those of the same age in Austria, Belgium, France and the Netherlands, where the subjects were mostly retired. Conclusion: A stimulating, challenging work environment can keep your mind sharp.
Tax the rich
There are other ways to save pension systems besides raising the retirement age. As I pointed out on two previous occasions, the Special Committee on Aging came up with 30-plus solutions to fix Social Security. My favorite solution is to eliminate the cap on Social Security taxes. Right now, only earnings up to $106,800 are taxed. If the cap is eliminated, high earners would get a smaller check (so what?), and Social Security would remain solvent over the next 75 years.
This solution can be taken a step further. In a recent Wall Street Journal opinion piece, Ken Langone, a co-founder of Home Depot, suggested that rich people shouldn't get Social Security checks at all. "It makes little sense to send Treasury checks to high-net-worth people in the form of Social Security," he writes. "I guarantee you that many millionaires and billionaires will gladly forgo it. …"
Hey -- this is not my idea. It's coming straight from the mind of a wealthy capitalist.
Honestly, though, if I were to strike it rich in the next 10 years, I might forgo that Social Security check, too. But right now I am really counting on it.
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