Getting older has it’s share of downfalls, like gray hair (or no hair), hearing and vision problems, a few extra wrinkles and plenty of aches and pains. If you are getting close to retirement or already retired, you can expect to live longer than previous generations. Life expectancy is now closer to 80 years of age rather than 70. So, taking advantage of the financial benefits of getting older has never been more important. The following ideas will help you increase your income while decreasing your expenses.
Increased Retirement Account Contributions
Annual contributions for the Roth IRA and Traditional IRA are $6,000 but if you are age 50 or older you can contribute an extra $1,000. If you contribute to a 401 (k), 403(b) and most 457 plans, you can contribute up to $19,500 per year. However, if you are 50 or over you can contribute an extra $6,500. It is called the catch-up contribution and it is one of the financial benefits of getting older.
The Health Savings Account (HSA) contribution limits allow for a max of $3,600 for an individual and $7,200 for family each year. However, if you are 55 or older you may contribute an extra $1,000 with a catch-up contribution.
No Early Withdrawal Penalty
You can begin withdrawing from your IRA once you turn age 59 ½ and not worry about the 10% early withdrawal penalty. You may also begin taking your 401(k) at the same age. However, if you get terminated and you’re age 55 and older, you will not be penalized for early withdrawal.
Senior Discounts
Many restaurants, entertainment venues, retailers and museums offer discounts for people as young as 50 years old. You just need to ask! You can also join certain programs such as AARP or AMAC at 50 years of age for additional discounts. These organizations often will get you discounts at hotels and for rental cars.
Some retailers, including grocery and department stores, will have a senior citizen day and offer special discounts. These discounts are often very lucrative, such as 5%-10% off your entire order. Local recreation centers and YMCA’s also offer senior discounts to help you stay in shape and healthy.
National Parks Pass
The National Parks and Federal Recreational Lands Pass is good for more than 2,000 federal recreation sites. It covers entrance fees at national parks and wildlife refuges and the day fees at national forests and grasslands. If you are age 62 or over, you can get a lifetime pass for just $80. The pass can also cover a 50% discount on a variety of other options including camping, swimming and boat launch.
Property Tax Reduction
Many local governments offer a reduced property tax rate for seniors. Some of these offers are significant so be sure to check with your state or accountant for your local tax break. These reductions can include school taxes, homestead exemptions and discounts for a disability. Each state is different and has various stipulations so it’s not practical to list them all here, but your local government’s website should have valuable information.
Income Tax Reduction
Some localities and school districts that normally have income tax, do not tax retirement incomes. This can be an instant increase for your income during retirement. Check with your local community and school district to assure you are not getting taxed once you begin receiving your retirement. This can mean up to a 10% income increase based on what you would normally pay. Of course, some states also do not have income tax. That may be something to consider if you plan on moving during retirement.
Free College
Many states offer free (or greatly reduced) college classes for students aged 55 and older. Each state has different rules so be sure to check to see what your state has to offer! Most tuition free school programs will require the older students to wait until the class registration has ended. The school will try to fill the classes with paying students first but offer up any remaining space for free to the older community. Remember that the class registration may be free but there could be other charges like books or lab fees, depending on the course you choose.
The United States Department of Education, Adult Education and Literacy division provides free training for those aged 60 and older. Some classes are aimed at those wanting to rejoin the workforce, but it is a great resource for those who just want to learn a new skillset. It offers computer literacy classes and language skills just to name a couple.
Less or Zero Debt
As you get older, you will (hopefully) have a lot less debt to pay off. This will allow you to ramp up your savings during your peak-earning years. Ideally, you would like to have your main residence paid off by the time you retire. A house payment is not something you want to worry about while you are enjoying your golden years.
Cheaper Health Insurance
Once you turn age 65, you can greatly reduce your insurance premiums by signing up for Medicare. There are numerous options once you sign up for Medicare. Regardless of which one you choose, you are sure to be paying a lot less than if you were paying for it all out-of-pocket. You can pick a plan that costs nothing or others that will offer better benefits for under $150 per month. Premiums can be deducted from your Social Security each month, so you don’t have to worry about getting a bill.
Special Services
Many local communities will provide certain services for older adults. These services can include free or low-cost transportation for doctor visits and trips to the store. It can include discounted or free public transportation as well. Free medical services may also be available, which can include nurse visits to your home, medical devices for your home, medical alert button and free meals delivered directly to you. Local community centers also offer free or low-cost entertainment, fitness classes and other free courses like painting and pottery. What a great way to meet new people!
Retirement Income
You can begin getting Social Security benefits as early as age 62. However, the benefit will be reduced by about 30% compared to waiting to the full retirement age of 66 and 10 months. Of course, the longer you wait, the more you will receive each month. There are too many scenarios to list here when it comes to Social Security, so be sure to do your research on what works best for your situation.
If you are lucky enough to have a pension, you may be able to start drawing on that as soon as you retire. If you have IRA’s, 401(K), 403(B) or a 457 plan, you may be able to start taking the benefit at age 59 ½. The point is you will the option to start enjoying the fruits of your labor. When you want to start enjoying those, is totally up to you and maybe your spouse. But what a great option to have.
Final Thoughts
A lot of us would like to stay young forever. However, growing older isn’t so bad when you see all of the benefits that come along with it. Even though you may see a few more wrinkles or gray hairs, you can stay young at heart by keeping active and taking advantage of the financial benefits of getting older.
Thanks for reading our article. Please leave a comment and let us know your thoughts and any other ideas you might have!
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