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Publication #FAR9034

 

Pitfalls of Unreported Income1

Josephine Turner and Donna Davis2

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As a baby boomer, I've had the opportunity to experience my grandparents' retirement years, my parents' retirement years, and am rapidly facing my own retirement years … or am I? Baby boomers are facing retirement challenges that are changing the way families must deal with their futures.

The "three-legged stool" has long been used to demonstrate planning for retirement income. The legs include Social Security, a pension plan, and personal savings and investments. With the continued debate about the solvency of Social Security, early retirement, and longer life spans, a fourth leg is being added to many plans. This leg is continued employment. For many, it may be the only leg they can count on when or if they retire.

The real reason many people will never be able to retire is that they never plan to retire. This is especially true for low-wage earners, who may choose unreported income as a way of making more money up front. However, unreported income offers no pension, pays no money into Social Security, and won't provide insurance for Medicare. Likewise, the unreported income job takes away the possibility of the numerous tax credits offered to working families with a lower income. In short, unreported income ultimately means that retirement may never happen.

Retirement planning is not only for the wealthy. It's for all workers who want to retire.

Listening, learning, and living together: it's the science of life. "Family Album" is a co-production of University of Florida IFAS Extension, the Department of Family, Youth and Community Sciences, and of WUFT-FM. If you'd like to learn more, please visit our website at http://www.familyalbumradio.org.

To listen to the radio broadcast:

http://www.radiosource.net/radio_stories/223.mp3

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Footnotes

1.

This document is FAR9034, one of a series of the Family Youth and Community Sciences Department, Florida Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida. Broadcast as program 223 and published March 2009. Reviewed March 2012. In the interest of time and/or clarity, the broadcast version of this script may have been modified. Visit the EDIS website at http://edis.ifas.ufl.edu.

2.

Josephine Turner, professor, and Donna Davis, senior producer, Family Album Radio, Department of Family, Youth and Community Sciences, Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida, Gainesville, FL 32611.

The Institute of Food and Agricultural Sciences (IFAS) is an Equal Opportunity Institution authorized to provide research, educational information and other services only to individuals and institutions that function with non-discrimination with respect to race, creed, color, religion, age, disability, sex, sexual orientation, marital status, national origin, political opinions or affiliations. For more information on obtaining other extension publications, contact your county Cooperative Extension service.

U.S. Department of Agriculture, Cooperative Extension Service, University of Florida, IFAS, Florida A. & M. University Cooperative Extension Program, and Boards of County Commissioners Cooperating. Nick T. Place, Dean.