Getting older has its perks -- from potential tax breaks to everyday discounts. It’s like turning 21 and getting carded all over again. Only now, in some ways, the older you are the more you may be able to save.
If you’re closing in on retirement, you may be in position to start saving more and also claim higher tax deductions on your current income. For those who contribute to an employer-sponsored 401(k) plan, you can defer an additional $6,000 a year once you reach the age of 50. For an IRA, you can contribute an extra $1,000 a year.1
Once you reach age 55, you can contribute an extra tax-deductible $1,000 to a health savings account, assuming you have an accompanying eligible high-deductible health insurance plan. At age 65, the standard deduction on your tax return increases as well: $7,850 for singles or $15,100 for couples (if both spouses are 65 or older).2 If you paid eligible out-of-pocket medical expenses that exceeded 7.5 percent of your adjusted gross income, you can deduct that amount from your return as well. This also applies on a joint tax return even if one spouse hasn’t reached age 65 yet.3
In some areas, people who are below a specified income level could even qualify for property or school tax deferrals or exemptions at a certain age.4
This information is not intended to provide tax advice. When it comes to investing and completing tax returns, be sure to work with a qualified tax professional.
Another perk for retirees: You can go back to college for a lot cheaper than today’s students. Many universities let people audit classes for free or a nominal fee. Or check out the Osher Lifelong Learning Institute (OLLI), a nationwide program that offers non-credit educational programs specifically designed for adults aged 50 and older -- often offered at established college campuses.5
If you’re feeling the need to get some exercise, take a look at your health care plan to see if you have free access to a local fitness club through the SilverSneakers membership, which is available with many Medicare Advantage and Medicare Supplement plans.6
On the flip side, there are of course some costs that may increase as you grow older. Potential increases in health care costs may come to mind, but what about car insurance? Research reveals that drivers over the age of 70 are more likely to become involved in accidents and accident-related fatalities than younger drivers, so some insurers begin raising premiums starting at around age 65.7
However, there are ways this demographic can proactively reduce those rates. For instance:8
• Defensive driver class -- Some insurers offer reduced rates for older drivers who take a defensive driving course that is geared toward senior drivers.
• Retirement military discount -- Some insurers offer reduced rates for veterans.
• Mature driver discount -- Some insurers will offer a discount if you are older and have an excellent and extensive driving history.
Interested in reading more? Here are some articles that may be of interest to you:
[CLICK HERE to read the article, "Tax Breaks for People Over 50," from U.S. News & World Report. March 14, 2016.]
[CLICK HERE to read the article, "Dot Seniors Spice Generational Mix in UMass Boston's OLLI Offerings," from Dorchester Reporter. Sept. 8, 2016.]
[CLICK HERE to read the article, "Interesting Senior Discounts to Add to Your Repertoire in 2016," from The Senior List. Feb. 1, 2016.]
[CLICK HERE to read the article, "Car Insurance for Seniors," from Insurance.com. June 21, 2016.]
[CLICK HERE to read the article, "Senior Driver Discounts," from DMV.org. 2016.]
Raymond C. Lantz, Jr. is the president and founder of USA Wealth Group, Inc. Ray has many years of experience advising clients in retirement and sophisticated tax planning strategies, multi-family and commercial real estate projects, and legacy planning. Ray is a graduate of Clark University, holds a law degree from Boston College, and a master of laws in taxation from Boston University. You can hear him every Sunday on Money Wise with Ray Lantz on WBSM 1420AM or on the Radio Pup app.