Aging certainly comes with plenty of problems. Wrinkles, gray hair, vision and hearing loss and general aches and pains are all common ailments. But there are also many perks of growing older, especially where your finances are concerned. Here’s how getting older can save you money.
Senior discounts. If you’re willing to admit your age, you may be able to get a discount on your next restaurant meal or retail purchase. Many museums, movie theaters and entertainment venues will provide reduced admission prices to people who are above a certain age. AARP negotiates discounts for members, who can join as early as age 50, often allowing you to start using senior discounts at a younger age. Discounts are sometimes available on necessities such as groceries and clothing. Not all senior discounts are publicized and are sometimes given only to those who request them and show proof of age. “Discounts are available through a lot of different venues,” says Dave Austin, vice president of marketing services for AARP Services Inc. “There’s a lot of money to be saved if you are willing to ask.”
Travel deals. Many hotels and rental car companies will provide a discount to seniors who are above a certain age or AARP members. Travelers age 62 and older are eligible for 15 percent off some Amtrak fares and 5 percent off Greyhound bus tickets. Southwest Airlines has senior fares for passengers age 65 and older. Perhaps the best travel deal of all is provided by the National Park Service. Citizens age 62 and older can get a lifetime pass to over 2,000 federal recreation sites for just $10 in person ($20 online or via mail).
Tax deductions for seniors. People age 65 and older are eligible for several extra tax deductions. The standard deduction is $7,850 for individuals age 65 and older in 2016, $1,550 more than younger taxpayers. The standard deduction is also $1,250 more for each spouse who is age 65 or older, or $15,100 if both spouses were born before Jan. 2, 1951. If you are above a specific age and sometimes below a certain income level, you might also qualify for property or school tax deferrals or exemptions. “You have to check your state, county or local city rules,” says Jackie Perlman, principal tax research analyst at The Tax Institute at H&R Block. “Every state is different, and sometimes the municipalities within the state are different.” Also, if an individual or at least one member of a married couple is age 65 or older, you can deduct medical expenses that exceed 7.5 percent of your adjusted gross income, compared to 10 percent for younger taxpayers.
Relaxed tax filing requirements. People 65 and older can bring in $1,550 more (or $1,250 more per spouse age 65 and older if filing jointly) than younger people before they are required to file a tax return. Seniors can have a gross income of up to $11,850 as individuals or $23,100 as part of a couple where both members are 65 or older before they are required to file a tax return. “The filing thresholds are higher for those age 65 and older,” says Barbara Weltman, a tax and business attorney and spokeswoman for “J.K. Lasser’s Your Income Tax 2016.” “You may not even have to file a return,” she says.
Bigger retirement account limits. Workers age 50 and older can defer paying income tax on as much as $24,000 that they contribute to a 401(k) plan, $6,000 more than younger workers. The IRA contribution limit is also $1,000 higher for workers 50 and older, or $6,500 in 2016. The catch is that you are typically required to withdraw money from traditional retirement accounts and pay the resulting tax bill after age 70 1/2. However, retirees age 70 1/2 and older can avoid paying income tax on any amount up to $100,000 that they transfer directly from an IRA to a qualifying charity. “It’s got to roll over directly from the IRA to the charity as a trustee-to-trustee rollover,” Perlman says. “You can’t take money out of it and put it in a checking account and then write a check.” Taxpayers age 55 and older who have a high-deductible health plan are also eligible to put an extra $1,000 in a health savings account.
No more early withdrawal penalty. Once you turn age 59 1/2, there’s no more 10 percent penalty to withdraw money from your IRA. And if you leave your job at age 55 or later, you can begin taking penalty-free 401(k) withdrawals from the account associated with the job you left at an even earlier age. “If you get terminated from your job and you are 55 or older, you are not penalized for taking the money out,” Weltman says. “The 10 percent penalty goes away, but you are still paying tax on the withdrawal.” However, you will have to wait until age 59 1/2 to avoid the early withdrawal penalty on withdrawals from 401(k)s associated with previous jobs or IRAs.
Social Security payments. You can sign up for reduced Social Security payments as early as age 62 or claim the full amount you have earned at your full retirement age of 66 or 67, depending on your birth year. If you delay claiming your payments past your full retirement age up until age 70, you will earn delayed retirement credits that will further boost your monthly benefit. “The later you start, the higher your benefit,” Perlman says. These payments are adjusted for inflation each year and will continue for as long as you live.
Affordable health insurance. Retirees don’t need to worry about finding a job that provides health coverage or the sometimes high out-of-pocket costs of health insurance plans purchased through state health insurance exchanges. Once you turn age 65, you can sign up for Medicare. Most retirees don’t pay anything for their Part A hospital insurance. The premium for Medicare Part B, which covers doctor’s visits and medical services, is $104.90 per month for most retirees in 2016 (although some beneficiaries pay more), which can be deducted from your Social Security check so you won’t get a bill. Retirees can fill in some of the co-payments and deductibles by purchasing a supplemental plan and get their prescription drugs covered through Medicare Part D.
Senior services. Many communities provide low-cost taxi or van services to help seniors citizens get to doctor appointments or do grocery shipping. Some cities even provide free or discounted public transportation to people above a certain age. Senior centers might provide low-cost meals, affordable classes and entertainment and an opportunity to socialize with other seniors. Your local library or community center might also have events specifically for older residents.
Free college. College costs are a major expense for young people. But retirees might be able to take classes for free or at a very low cost. Many public colleges and some private institutions provide senior citizen tuition waivers or allow older people to audit classes for free or a minimal cost on a space-available basis. And there are over 100 Osher Lifelong Learning Institutes on college campuses that offer affordable classes specifically for retirees.
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10 Financial Perks of Growing Older originally appeared on usnews.com
