Does your vision of retirement align with the facts?
Here are some noteworthy financial and lifestyle facts about life after 50 that might surprise you.
Up to 85 percent of a retiree’s Social Security income can be taxed. Some retirees are taken aback when they discover this. It is worth mentioning that the I.R.S. offers free tax advice to people 60 and older through its Tax Counseling for the Elderly program.
Retirees get a slightly larger standard deduction on their federal taxes. This is true for all taxpayers aged 65 and older, whether they are retired or not.
Now, the standard deduction for an individual taxpayer in this age bracket is $13,500, compared to $12,200 for those 64 or younger.
Retirees can still use IRAs to save for retirement. There is no age limit for contributing to a Roth IRA, just an inflation-adjusted income limit. So, a retiree can keep directing money into a Roth IRA for life, provided they are not earning too much.
Seniors can potentially contribute to a traditional IRA until the year they turn 70-and-a-half.
A significant percentage of retirees have mortgage debt. Generations ago, seniors who lived in a home often owned it, free and clear; in this decade, that has not always been so.
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The Federal Reserve’s recent Survey of Consumer Finance found that more than a third of those aged 65-74 have outstanding home loans; nearly a quarter of Americans who are 75 and older are in the same situation.
As retirement continues, seniors become less credit dependent. GoBankingRates.com says that only slightly more than a quarter of Americans over age 75 have any credit card debt, compared to 42 percent of those aged 65 to 74.
About one in three seniors who live independently also live alone.
The Institute on Aging notes that nearly half of women older than age 75 are on their own. Compared to male seniors, female seniors are almost twice as likely to live without a spouse, partner, family member, or roommate.
Few older Americans budget for travel expenses. While retirees certainly love to travel, Merrill Lynch found that roughly two-thirds of people aged 50 and older admitted that they had never earmarked funds for their trips, and only 10 percent said that they had planned their vacations extensively.
What financial facts should you consider as you retire? What monetary realities might you need to acknowledge as your retirement progresses from one phase to the next?
The truth of retirement may surprise you. If you have not met with a financial professional about your retirement savings and income needs, you may wish to do so. When it comes to retirement, the more information you have, the better.