Getting older has its nuisances as your health starts to decline, eyesight and hearing can deteriorate, you start having aches and pains in unexpected body parts. However, it does have its perks. Some of those benefits are in the form of tax breaks that come as you get older.
Seniors have a larger tax deduction.
If you are over 65, you get a $1,550 higher standard deduction than someone younger. Furthermore, if your total income as an individual is less than $25,000, you do not pay any taxes on your Social Security. While above that, you start paying income taxes on half of your Social Security above $34,000, you still have 15% that remains untaxed. Even this is a nice little tax break over someone younger. The effect is that seniors pay less in income taxes per dollar of income.
Seniors can deduct medical expenses at a lower percentage.
If you are under the age of 65, you can only deduct medical expenses that exceed 10% of your income. However, when you reach age 65, that figure goes down to 7.5% of your income. What makes this a particularly good deal for seniors is the fact that your medical expenses also tend to increase when you get over age 65. This makes this a double tax break because the non-deductible percentage decreases when your expenses increase.
Seniors can earn more without filing taxes.
Another tax break for seniors is that an individual over 65 can earn $1,550 more than a younger person before they even have to file taxes. This means that you do not need to take the time or expense to file an income tax return unless you make more than $11,850 as an individual senior or $23,100 as a couple. While you still must file an income tax if you make more, this is still a significant benefit for most seniors.
Those 50 and older contribute more to retirement plans
If you are over 50, you can contribute $6,000 more to a 401(k) plan that is tax-deferred. Now, you do have to pay income taxes on what you withdraw, but deferment does give you a larger account to withdraw from. Consequently, if you are over the age of 50, you can contribute more to your retirement without paying taxes on it as you do so. This is a major tax break because it allows your account to grow even bigger than it would if you had to pay those taxes.
No more early withdrawal penalty at age fifty-nine and a half.
Once you reach fifty-nine and a half, you no longer have to pay the 10% penalty for early withdrawal. You can also avoid this penalty at age 55 on a 401(k) associated with a job that you just left. This is a significant tax break if you need the money at this time. You will have to pay income tax on any money you withdraw, but not having to pay the penalty can make a real difference. It is extra money that you do not have to withdraw from your account.
So yes, there are tax breaks for different generations. This is because as you get older your situation changes. Your income changes, your opportunity for income changes, your sources of income change. As a result, there are going to be tax benefits you get at some ages that you do not get at others. If you are younger, remember that most seniors do not get a mortgage deduction or the opportunity to deduct children. So, in general, various ages will get tax breaks that other age groups do not.
Does your plan meet all your retirement needs? Schedule an appointment now with one of our advisors for a complimentary review of your retirement plan.
For many people, the dream of traveling in retirement is strong. You may want to plan trips to see your adult kids and grandkids a few times per year, and likewise, you may have bucket list trips in mind. Because you do not have a job to rush back home to, retirement is an excellent time of life to travel more. However, many people do not properly budget for their trips. This inevitably means that trips simply do not happen or that financial stress makes them less enjoyable. Learning how to budget properly for your trips is essential if you want to enjoy them fully.
Add Traveling Expenses to Your Budget
The first step to take when planning for trips is to properly fund them. One of the easiest ways to accomplish this is to incorporate traveling expenses into your regular budget. Many retirees create an annual budget, and they break this down into a monthly budget. Even when retirees incorporate a line for traveling expenses into their budget, they often fail to allocate enough money for these experiences. Depending on your plans for various trips, a single trip may easily cost you several thousand dollars or more. If you plan to travel at least a few times per year, your budget will need to be adjusted accordingly.
Prioritize Your Trips
If you are like most retirees, you may have a lengthy list of desirable amazing destinations. However, you may only be able to visit a few of these destinations each year. Prioritize the trips that you wish to take so that you can cross those off of your list first. Remember to factor in costs for your trips to visit family with your recreational trips. Determine which trips that you want or need to take each year. This is essential if you want to properly allocate funds in your budget for all of your planned trips.
Research Expenses
The expenses for each of your planned trips will vary substantially. For example, you may have plans to drive to a few national parks and to take a trip to Europe a few months later. The Europe trip will be much more expensive. With both types of trips, you need to essentially create a detailed itinerary. Research accurate costs for each aspect of your trip to set a realistic budget. Remember to factor funds for food and gas.
Look for Savings
Seniors often qualify for special savings at restaurants, theaters, stores, hotels and more. When you begin planning each of your trips seriously, spend time analyzing all discounts available. Look for alternatives, such as staying at a different hotel that may offer a senior discount. Take advantage of senior discounts, but be aware that other discounts and savings may also be available. For example, you can travel during a non-peak season to save a substantial amount of money. You can buy plane tickets on non-peak days or in the very early or late hours of the day. These are only some of the many ways that you can potentially save hundreds or thousands of dollars on your trips.
Traveling may be one of your primary goals in retirement, but your dreams of taking amazing trips will not happen if you do not have money available. As you can see, you will need to budget properly for them in various ways have funds available for your trips. You can get started today by adjusting your budget and researching desirable destinations that you want to visit within the next year. By doing this, you can get the wheels in motion for taking exciting trips to amazing locations.
Does your plan meet all your retirement needs? Schedule an appointment now with one of our advisors for a complimentary review of your retirement plan.
No matter what your age is, it’s important to start preparing for the time when you eventually retire. One of the biggest financial issues you may encounter while you’re ready to stop working is how much money you will need for your health care. In general, this can be a sizable amount. On average, a person of 65 would need around $190,000 to pay for costs related to their health. This estimate doesn’t even take into account any preexisting chronic conditions or disabilities.
Unfortunately, one mistake people often make regarding retiring is believing that once they reach the age of 65, they will be eligible for Medicare and that it will cover all their needs. However, in reality, Medicare isn’t free and people are responsible for covering their premiums, deductibles and copays. Retirees who require coverage for dental care, prescription drugs, vision or hearing are also required to either buy additional insurance or pay for these things out of pocket.
However, there is good news. There is a lot you can do to manage the costs of your medical care. Planning can really be a lifesaver for your costs once you retire. These are ways you can ensure that you are covered:
- Health Care Investment Account: Creating an investment account for your estimated medical costs is a great idea. You should ensure that it’s kept separate from your other retirement money. Estimating how much you will need for the future can help you to be successful at saving for these costs. Additionally, these types of accounts also allow you to save money on your taxes.
- Consider Long-Term Care Insurance: Over half of people 65 or older will require long-term care at some point in their lives. Getting a long-term care insurance policy can ensure that your future health needs are met if you require assisted living, home care or a nursing home. This option is also expensive, but it is well worth it if you save early on and already have chronic health conditions or a family history of certain conditions.
- Take Care of Your Health: If your health is better after retirement age, it will be easier on you from a financial standpoint. Your health care expenses will be less than that of someone who isn’t in good health. Eat a well-balanced diet, incorporate physical activity into your everyday routine, maintain a healthy weight and get a good night’s sleep daily. This offers you a dual benefit in enjoying better health than your peers and helping you save money in the long run.
- Use COBRA: If you had health insurance through your last job, you can take advantage of COBRA to continue using it after you retire. COBRA allows you to use your work health insurance for up to 18 months after you leave the job as long as the company employs at least 20 employees.
These are great ways to go about planning for the time you eventually retire. They can help you to save plenty of money on any medical-related costs and can bring you a sense of ease.
Does your plan meet all your retirement needs? Schedule an appointment now with one of our advisors for a complimentary review of your retirement plan.
Falling is a threat millions of aging Americans face, especially those 65 and up. At least one in four elderly people will suffer a fall each year. The CDC analyzed data from a 2014 Behavioral Risk Factor Surveillance System (BRFSS) survey and found that suffering one fall doubles an elderly person’s chance of having a repeat fall. The survey also showed that only half of the falls that occur each year are discussed with a health care provider.
Falls Are Costly And Can Result In Serious Injury
From head injuries to broken bones, it’s estimated that one in five falls result in serious injury. Some statistics:
The Agency for Healthcare Research and Quality found that over 300,000 elderly people are hospitalized each year for hip fractures.
According to the Web-based Injury Statistics Query and Reporting System (WISQARS) by the Centers for Disease Control and Prevention, National Center for Injury Prevention and Control, fall injuries account for over 800,000 hospitalizations and 2.8 million emergency room visits each year.
A fall study published in SafetyLit found that 90% of hip fractures are the result of a fall.
Another study published in Academic Emergency Medicine found that the leading cause of traumatic brain injuries seen in U.S. emergency rooms is due to falls. The second leading cause was motor vehicle accidents.
As to the cost of falls, a study published by the Journal of Safety Research found that there were over 24,000 fatal and 3.2 million non-fatal, treated falls in 2012 for 616.5 million the fatal falls and over 30 billion non-fatal, treated falls.
What Can Happen After a Fall?
While not all falls cause injury, those that do often result in serious injuries, like head trauma or broken bones, which often compromises the person’s ability to perform activities of daily living or even live independently.
It’s often this very fear of loss of independence that causes elderly persons not to report falls. However, medical help must be sought immediately after a fall that produces an injury, especially if the person takes certain medications, like blood thinners, which can complicate the injury.
OALib Journal study found many people become afraid of falling again following a fall, even if the first fall didn’t result in injury, and that this fear often results in the person becoming less active. Ironically, inactivity weakens bones and can thereby increase an elderly person’s fall risk.
What Conditions Make You More Likely to Fall?
Risk factors are conditions that contribute to a person’s likelihood to fall. Some common risk factors include:
• Vitamin D deficiency.• Gait difficulty – balance and how a person walks.• Lower extremity and hip weakness. • Impaired vision. • Any medication that impairs gait, such as sedatives or antidepressants. • Any medication, prescription or over-the-counter, with side effects that impair motor function. • Foot issues, such as pain or neuropathy. • Ill-fitting footwear. • Environmental hazards, such as steps that need repair, rugs that aren’t secured, clutter, and other trip hazards.
The more risk factors a person has, the more likely they are to suffer a fall.
How Can You Prevent Falls?
The good news is that many falls are preventable. Risk factors can be modified to reduce the risk of a fall. Here’s how:
- Make A Safer Environment
- Look for trip hazards and either remove or secure them.
- Add grab bars and a shower seat to your bathroom.
- If you live in a multi-story home, consider converting to a downstairs bedroom and putting railings on both sides of all stairs.
- Increase lighting around and within the home.
- Make water-prone areas within and around the home slip-resistant.
- Retirement often means a fixed income. If possible, it is best to start planning for some of the more costly modifications, such as outdoor lighting, before retirement.
- Talk With Your Healthcare Team
- Your primary care physician can evaluate your risk of a fall and provide you with materials and resources to lessen your risk.
- Speak to any specialists you might see, such as a rheumatologist, to determine how the disease impacts your fall risk. Certain progressive diseases allow for some planning ahead.
- Ask your pharmacist to review all prescription and over-the-counter medications you take concerning fall risk.
- Make An Appointment With A Vision Specialist
- The eyes can change rapidly, especially for those retirement ages, make sure that you see a vision specialist once a year and as soon as you sense any change in your vision. They may recommend two sets of glasses if you need bifocal or progressive lenses; you may want a distance-only pair of glasses for outdoor activities since bifocal and progressive lenses can often make judging distance outdoors difficult.
- Start A Strength Training And Balance Exercise Regiment
- Tai chi is a great example of the type of exercise that will strengthen the lower extremities and improve balance. Again, speak with your healthcare provider to see what may work for you and you’re specific medical history.
Does your plan meet all your retirement needs? Schedule an appointment now with one of our advisors for a complimentary review of your retirement plan.
At the beginning of each New Year, individuals commonly take stock of various aspects of their lives. One of the frequently reviewed primary areas is personal finance. If you are thinking about retiring within the next few years or longer, you may want to create a resolution or two so that you can better plan for your non-working years. However, some people believe that it is simply too late for any type of plan to be effective or beneficial. While it is better to start preparing for non-working years early in your adult years, starting now is better than not making any preparations. These are some of the areas that you can resolve to address shortly.
Set Retirement Goals
Everyone has some dream about what their life may be like after they stopped working in a full-time position. For some, the goal is to continue working on a part-time basis. Others want to travel, and some may just want to be closer to family. A primary resolution should be to define your goals. Without specific goals, it is not possible to properly plan for the future. After all, maintaining your lifestyle if you travel frequently may be much more expensive than being closer to home.
Eliminate Debt
Another resolution should involve eliminating debt. Debt cannot usually be paid off quickly, so resolve to create a feasible debt reduction plan. When you pay debts off now, you can reduce the amount of income you need after you retire. For example, if you pay off your mortgage, car loans and credit card balances, you may be able to live on several thousand dollars less each month. By reducing the income that is required to live comfortably, you can feasibly retire with less money saved up.
Prepare a Budget for Retirement
In addition to making a plan to eliminate debt from your life over the next few months or years, you also need to prepare a budget for your non-working years. This budget will include estimated income from all sources after you quit working. It also will include reasonable estimates for expenses. Your planning should focus on cost-of-living adjustments related to inflation. If you plan to relocate to a new town after you retire, your budget should be realistic for that specific area.
Update Insurance Coverage
Many people who are preparing for the future fail to consider changing insurance needs after leaving the workforce. As you get closer to retiring, determine if you will continue to need life insurance. Analyze your needs for different types of medical insurance and long-term care insurance. Each retiree is in a different position, so there is no catch-all rule regarding how much or what types of insurance you need to have. Remember to update your budget with the premiums for these various insurance products. It is also wise to take into account deductibles that are associated with each policy when determining how much money you will need.
Some people are so discouraged by their late start at planning for this stage of life that they simply throw in the towel. However, you can see that your initial efforts in each of these areas can help you to get on the right path. Even though you think that you may be far behind others of your age, you may be in a better position than you appear to be at first glance. When you make these important resolutions and start acting on them quickly, you can move forward with a confident footing as you approach your non-working years.
Does your plan meet all your retirement needs? Schedule an appointment now with one of our advisors for a complimentary review of your retirement plan.
How To Get Rid Of Your Accumulated Medical Debt In A Few Easy Steps
Retirement planning and medical debt often go hand-in-hand. We try our best to save up money to use during our golden years. A nice little nest egg when we turn 65 and older sounds nice to lean back on. Unfortunately, our medical debt sometimes gets in the way. We sometimes forgo the care we need because we do not want to touch our retirement savings. We spend our whole lives planning, only to have it taken away from us in one split second.
We feel guilty and ashamed of our debt. We look at our debt as our inability to be responsible and pay what we owe. Luckily, there are ways you can fight this situation.
- You need to check for errors in your files. Depending on the source you look at, 7% to 90% of patient files have at least one error. Many factors make it difficult to get an accurate percentage, but you can be sure doctors do get their information wrong every so often. They convince you to get unnecessary treatments. These treatments add $1,000 to your debt each time you have one done.
You can ask for a copy of your hospital bills and compare them to the ones you got in the mail. Bills do contain errors. Why did you get charged for their errors? Most healthcare providers are not in the business of taking responsibility for their actions. They assume most patients will not look, so they get away with it.
You should speak with your insurance company too. Insurance companies have a pattern of not paying bills they promise to pay. Insurance companies are cheap. They do not want to put out any additional money they do not need to. You need to go over your records and the insurance records. Did you find any errors? Call them up and speak to someone.
- You should try to negotiate your bill. Some of the charges might be unfair. Call up your representative and talk to them. If you have shown good faith payments in the past, they might be willing to work with you. You can try asking for a discount. You pay a large amount right away and they give you a 25% discount. A plan like that may or may not work. You should give it a try at least.
- You need to ask for help. Asking for help is a sign of strength, not a sign of weakness. Talk to a negotiator who works in the healthcare field or billing department. You can try signing up for a plan where you make small monthly payments.
Speak with an advisor. An Advisor is skilled in that area. They will know what to look for. You should also try the American Fair Credit Council. They help people get out of debt and put money back in their savings every day.
Does your plan meet all your retirement needs? Schedule an appointment now with one of our advisors for a complimentary review of your retirement plan.
