
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, December 9, 1993                   TAG: 9312140006
SECTION: EDITORIAL                    PAGE: A22   EDITION: METRO 
SOURCE: HAL H. EATON
DATELINE:                                 LENGTH: Medium

KEEP WORKING? IT'S NOT WORTH IT

ON NOV. 12, the Roanoke Times & World-News published a commentary by Dr. Katherine Dowling entitled ``A healthy solution for all would be: Keep working.'' On Nov. 29, you printed a reply by Philip Ash entitled ``Seniors got entitlements the hard way: They earned 'em.''

Ash's reply was on target, but he left out several other considerations concerning the earning potential of retired senior citizens.

Consider this scenario: I retired last year on Social Security and pensions from two careers, one spanning 26 years, the other 22 years. If I choose to continue working (I'd like to) and earned $20,000 for the year, here's the result:

Federal and state income tax would immediately take 35 percent, leaving me $13,000. I'd be obligated to pay 15.3 percent of the earnings to the Social Security self-employment fund, or $3,060, reducing my take-home pay to $9,940.

Social Security rules require that I refund $1 for each $3 earned over $9,720. That's a reduction of $3,427, leaving me $6,513. Tax rules also require that I pay federal and state income tax on one-half of my Social Security income, since my pensions and earned income in retirement would be more than $32,000. That's a little more than $1,600.

My final income from $20,000 in earnings is $4,913. In other words, I get to keep less than 25 percent of what I earn.

Dr. Dowling, who urged the elderly to ``keep on working,'' just doesn't know arithmetic. Additionally, should she keep on working in retirement, her income might well approach $200,000 annually - about 10 times mine.

Should she earn that much, her percentage of income tax would match mine, at about 35 percent; income, $130,000. Social Security tax on her income is 15.3 percent of only the first $53,400 of earnings; subtracting $8,170 leaves her $121,830. She'll lose all her Social Security income, which should be a maximum of $15,000. She'd pay no tax on nonexistent SSA income, so she keeps $106,830 of her retirement ``extra income'' - a whopping 53 percent, compared to my 24 percent.

Several retired friends have offered suggestions. One, with a genial if enigmatic smile, says, ``Go to cash.'' Another advises me to start a business and take a loss. Frankly, I don't know how, given my limited expertise in narrow fields. Still another friend suggests, ``Volunteer.'' The last bit of advice I got was most cogent: ``Give it up.''

I can and want to work. I'm not dead yet. But the current tax structure makes such work rather futile for my income bracket. It obviously works to the advantage of the retired wealthy.

\ Hal H. Eaton of Mouth of Wilson is a retired pastor of a local church and Bible teacher at Oak Hill Academy.

by CNB