Aging has its benefits: As the years pass, you gain more wisdom and perspective on life. In addition, you have access to more financial benefits. From discounts to deals and deductions, there are many ways to make your funds go further as you age.
Here’s how getting older can save you money:
— Senior discounts.
— Travel deals.
— Tax deductions for seniors.
— Bigger retirement account limits.
— No more early withdrawal penalty.
— Social Security payments.
— Affordable health insurance.
— Senior services.
— Free college.
If you show proof of identity such as a driver’s license, you may be able to get a discount on your next restaurant meal or retail purchase. Many museums, movie theaters and entertainment venues provide reduced admission prices to people above a certain age.
AARP negotiates discounts for members, who can join as early as age 50. Discounts are sometimes available on necessities such as groceries and clothing. Not all senior citizen benefits are publicized, and sometimes they are given only to those who request them and show proof of age.
“I would absolutely recommend asking for a senior discount,” says Coreen Sol, a chartered financial analyst and author of “Unbiased Investor: Reduce Financial Stress and Keep More of Your Money.” “If there are opportunities to keep more of your money with no risk, it is a good idea.”
[READ: Great Senior Discounts for 2023]
Many hotels and rental car companies will provide a discount to seniors who are above a certain age or are AARP members. Travelers are eligible for 10% off some Amtrak fares at age 65 and older. Citizens and permanent residents age 62 and older can get a National Park Service lifetime senior pass to over 2,000 federal recreation sites for just $80.
Tax Deductions for Seniors
People age 65 and older are eligible for extra tax deductions. Seniors are eligible to claim a bigger standard deduction than younger taxpayers. The standard deduction is $1,500 more for each spouse who is age 65 or older, or $1,850 as a single filer. 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.
Bigger Retirement Account Limits
Workers age 50 and older can make catch-up contributions and defer paying income tax on as much as $30,000 that they contribute to a 401(k) plan, $7,500 more than younger workers. The IRA contribution limit is also $1,000 higher for workers 50 and older, or $7,500 in 2023.
The catch is that you are typically required to withdraw money from traditional retirement accounts and pay the resulting tax bill after age 72. However, retirement account owners 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 important to note that the distribution must go directly to the charity,” says Emily Benedetto, a certified financial planner for Abacus Wealth Partners in Santa Monica, California. “You cannot receive the distribution and then direct it to the charity.”
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 59 1/2, there’s no more 10% 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,” says Barbara Weltman, a tax and business attorney and spokeswoman for the book “J.K. Lasser’s 1001 Deductions and Tax Breaks 2023.” “The 10% penalty goes away, but you are still paying tax on the withdrawal.”
You will have to wait until age 59 1/2 to avoid the early withdrawal penalty on distributions from 401(k)s associated with previous jobs or IRAs unless you qualify for an exception to the early withdrawal penalty.
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. 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 $164.90 per month for most retirees in 2023 (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.
Many communities provide low-cost taxi or van services to help seniors citizens get to doctor appointments or go grocery shopping. 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 others. Your local library or community center might also have events specifically for older residents.
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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Update 08/09/23: This story was published at an earlier date and has been updated with new information.