Why retire later? U-M experts show how to encourage longer careers
August 28, 2012
ANN ARBOR, Mich.—What if every U.S. worker got an automatic 10 percent pay raise at age 55? According to a new University of Michigan study, most people would work quite a bit longer before they retired, to enjoy the extra income.
By eliminating social security payroll taxes starting when workers are 55-years-old, the study shows that people’s take-home pay would jump by 10.6 percent and they would work 1.5 years longer on average, paying more income taxes and helping to reduce the Federal deficit.
“People are living longer, healthier lives, and so far have opted to take most of that extra time as additional retirement rather than work,” says U-M economist John Laitner, who conducted the analysis with U-M economist Dan Silverman. “We are proposing a way of responding to this situation through targeted tax-rate changes that would reward older workers for staying on the job and also benefit the economy as a whole.” (more…)