Aging IQ is a news aggregate designed to create a location for all of your senior news from holiday meal ideas to cutting edge research. The below article was originally posted on their website by the author below.
Danielle Miura | January 07, 2023
Aging isn’t easy. Wrinkles, grey hair, vision and hearing loss, and aches and pains pile up. But there are many perks of getting older, especially when finances are concerned.
Here are seven ways that growing older can have some financial perks.
Senior Discounts
If you are willing to admit your age, senior discounts are a great way to maintain a budget and enjoy the perks of being an older adult. Restaurants, hotels, car rental companies, retailers, grocery stores, theatres, museums, and mass transit provided reduced prices to those above a certain age.
While 65 is the official age to claim Medicare, senior perks can start much earlier. AARP negotiates discounts for members who are as young as 50. If you are unsure if you qualify for a senior discount, feel free to ask. Unfortunately, many businesses don’t advertise their deals; sometimes, they are given only to those who ask and show proof of their age.
To learn more about your senior benefits, check out websites like SeniorDiscounts.com, which has one of the most extensive lists of senior discounts.
Tax Deductions
Even though seniors are likely to have fewer tax deductions, seniors are eligible to claim a larger standard deduction than younger taxpayers. As a result, the standard deduction for seniors is $1,350 more for each person who is 65 and older. In other words, an extra $1,350 for single individuals and $2,700 for married couples.
Seniors with significant healthcare expenses can deduct medical expenses that exceed 7.5% of their adjusted gross income (AGI). Although you can’t deduct vitamins and fitness club dues, you can deduct health expenses such as prescription drug costs, mental health expenses, glasses, dentures, health insurance premiums, and long-term care costs.
Larger Retirement Account Limits
Workers over 50 can make a catch-up contribution and defer paying taxes on $27,000 if contributed to a 401k plan or $7,000 to an IRA in 2022.
Taxpayers age 55 and older who have a high-deductible health care plan are eligible to put an extra $1,000 into a health savings account.
No Early Withdrawal Penalties
Once you turn 59.5, the 10% early withdrawal penalty is eliminated. If you leave your job after turning 55, you can begin taking penalty-free 401k withdrawals from the account associated with your left job. For example, if you get terminated at 57, you will not be penalized for taking money out of a 401k account, although you may be taxed.
However, you will have to wait until 59.5 to avoid the early withdrawal penalty on distributions from 401k accounts associated with previous employers or IRAs unless you qualify for an early withdrawal penalty exemption.
Social Security Payments
According to the Social Security Administration, an average beneficiary receives about $18,264 annually. These guaranteed, inflation-adjusted payments can provide stress relief to the rest of your retirement portfolio, allowing your investments to accumulate over a longer time frame.
Retirees can sign up for a reduced Social Security payment at age 62 or claim their full Social Security payment at age 66 or 67, depending on their birth year. If you delay your benefit until age 70, you will further boost your monthly Social Security payment. Check out your projected Social Security benefits at SSA.gov.
Affordable Health Insurance
Most retirees don’t need to stress about finding a job that provides health insurance because once you turn 65, you can sign up for Medicare. Medicare does a great job meeting a senior’s baseline healthcare needs at a relatively low cost.
Most retirees don’t pay health care premiums for Part A hospital insurance. The premium for Medicare Part B, which covers doctor’s visits and medical services, is $170.10 per month for most retirees in 2022, which is usually deducted from your Social Security check so you won’t get a bill. Retirees can fill in the gaps between Medicare Part A and B by purchasing a supplemental plan or getting their prescription drugs covered under Medicare Part B.
The key to maximizing your Medicare benefit is to take advantage of their services, including an annual wellness visit, mental health assessments, vaccinations, and preventative tests and screenings. In addition, review your coverage every fall during the Open Enrollment period. Finally, comparing costs and coverages each year is essential even if you are satisfied with your current health insurance policy.
Community Resources
Here are a few community resources for seniors that might be available to you:
- Low-cost transportation services to help seniors get to doctor’s appointments or go grocery shopping
- Local senior centers offer a variety of drop-in activities
- City halls can provide services such as Meals on Wheels, safety checks, and medical equipment rental
- Local libraries might provide educational presentations ranging on a variety of topics