A new book by Alice H. Munnell and Steven Sass, titled “Working Longer: The Solution to the Retirement Income Challenge”, published by the Brookings Institution Press, makes some important points about planning for retirement. Americans, they say, need to work longer because of a contracting retirement income system, the longer lifespans now enjoyed by many of us, and the rising cost of healthcare.

The aim, they suggest, should be to move the average retirement age from 63 to 66. This will increase Social Security benefits payable, permit workers to build up larger retirement balances and reduce the period during which they must rely on retirement assets. One way of encouraging this trend might be to increase the earliest age for receiving Social Security benefits, which is now age 62.

But here’s another one, which I have suggested in earlier posts: provide income tax incentives for workers to continue working beyond age 62. For instance, for those age 62 and over, the federal income tax rate on the first $50,000 of income could be set at 10%, with a 15% rate on the next $50,000. This would surely encourage people to continue working, adding more to Social Security trust funds and delaying the payout of benefits.