Although quite a few people of modest means enjoy aviation as a hobby, those of us who fly small aircraft often encounter the financially comfortable ($10-100 million in savings; when a house in Palm Beach costs $210 million, a centimillionaire can’t be considered “rich”). U.S. government coronapanic policies made these folks quite a bit wealthier, sometimes doubling their net worth in nominal dollars. At the same time, what they’re able to charge for working hasn’t changed too much and the Trump tax law changes caused their marginal tax rate to go up (state income tax no longer deductible from federal).
All of these people have enough savings to retire, but many continued to work when a year of hard work could increase their net worth by 5 percent. Quite a few of them have said that they’ve scaled back their efforts ever since asset prices took off. A year of hard work will now bump the net worth by only 2 percent and the typical person I’m writing about is in his 50s or early 60s. He might have only 10 more years of reliably good health. Why spend that final decade of vigor at a desk and starting at a computer if it won’t move the wealth needle significantly? These people already own a house, a vacation house, and a reasonably new fleet of vehicles. They don’t have a landlord demanding a 40 percent rent increase. Why not play tennis, kiteboard, hit the golf course, ski every day, or travel?
Does it matter to an economy when more of the most successful people retire younger? If we assume that their financial success can be attributed to luck, then it might be good. More positions will be open at the top of various enterprises, which will motivate people in their 40s to work harder. If, on the other hand, we assume that hard work, skill, and intelligence were primarily responsible for success, the American workforce is losing a lot of its best people.
“Why spend that final decade of vigor at a desk and starting at a computer if it won’t move the wealth needle significantly?
Depends on personality and what they are doing. Some people may get more life satisfaction out of working than playing tennis or golf (e.g. the President and other aging politicians ).
Doctors stuck working night shifts or aggressive 24×7 on-calls may prefer to retire as soon as savings permits.
While others with a penchant for strippers and getting strippers pregnant as allegedly one Hunter Biden will need to keep working for overseas oil and gas firms so that they can pay their child support without being in “significant debt”.
The senioritis is definitely in full force. Not just seeing your buying power decrease by 10% every year despite working, but generally putting away what was enough to retire 20 years ago is much like a repeat of that 4th year of highschool. Of course, the goal posts changed & in our 4th year we suddenly needed 500 credits instead of 120 to graduate. It does seem we’re all going to be working to age 70 & depending on social security, no matter how many centimillions we have. The lion kingdom doesn’t see any other option for the government than increasing quantitative easing while talking down future inflation expectations. They desperately need 1000% inflation.
That’s the whole point. The serfs get poorer and not uppity at all because their existence immediately depends on the next paycheck from the corporate overlords.
many continued to work when a year of hard work could increase their net worth by 5 percent
Seems like an overestimate of labor contribution to net worth. One’s entire wage is taxed at the top marginal rate 40.8% due to competition with investment income. One must pay social security tax on much of the wage as well. And one must pay state income tax on the wage AND on the investment income for the privilege of living where the moderately high wage jobs are.
The last bit is a real killer. If the choice is between paying 12% st cap gains in MA vs 0% in NH, or between paying 13% lt gain in CA vs 0% in FL, the effective wage tax can easily exceed 100% if domicile is required for employment and investment income is significant. Moreover there is little meaningful climate difference between MA/NH or CA/FL other than the freedom to breathe fresh air in the lower taxed states.