Social Security reform may be making headlines, but a less-noticed government proposal for changing retirement income could also end up affecting millions of older Americans.
The Internal Revenue Service proposes to ease the transition from work to retirement by allowing workers older than 591/2 to draw a partial pension and hold a part-time job with the same employer.
Tax and pension laws generally forbid early retirees from collecting both a traditional pension and a paycheck from the same company.
The proposed IRS regulation would recognize older Americans’ budding desire – and employers’ developing need – for what experts call “phased retirement.”
“We need to rewrite our pension laws this year so that they say it’s OK for an employer to put his retirees on the payroll,” says Rep. Sam Johnson, R-Texas.
Advocates of phased retirement say it’s a win for employers and employees.
After years of nudging older workers out of the work force to make room for younger ones, companies are about to have the opposite problem. As tens of millions of baby boomers leave the labor force, there won’t be enough younger workers to replace them.
Labor analysts predict that many industries will face a severe shortage of skilled workers within a decade.
“Boomer retirements will mean a significant loss of intellectual capital for companies with older work forces, such as in telecommunications and utilities,” said Pierce Noble, a partner in the Dallas office of Mercer Human Resource Consulting.
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