You have spent countless hours, days, weeks, and months working hard in your younger years, and now it is time to slow down and take time to relax.
As you reach your senior years, people will offer advice about maintaining your physical health, but few mention financial wellbeing. Having your finances in order is an essential component of a successful and enjoyable retirement.
Here are some fiscal fitness tips for seniors to make sure their finances are as healthy as they are:
Social Security benefits
Having paid Social Security tax during their working years, seniors are entitled to retirement benefits. These are structured according to the timeline of claims, which means that claiming before reaching full retirement age will result in reduced benefits, calculated on your age, and the accepted retirement age. Not claiming until or after you reach full retirement age entitles you to maximum benefits.
Seniors can continue working while claiming Social Security retirement benefits, although the amount also decreases. The calculation of the reduction is a ratio of earnings to benefits.
If you start claiming Social Security retirement benefits while working before reaching full retirement age, the deduction is more than if you wait until full retirement age. To make the most of your benefits, delay retirement until the specified age, or use another income source and delay your claim until you reach the correct claim age.
Medical care becomes vital during your senior years as the body becomes more susceptible to illnesses and other conditions. Seniors are entitled to Medicare benefits, which help to cover the cost of doctor’s consultations and hospitalization. Additionally, they should consider an Accendo Medicare Supplement, which gives them additional benefits at competitively priced premiums.
According to Russell Noga from Medisupps, a basic Medicare Supplement Plan offers vital cover that seniors need. Part C Medicare benefits include those that the user might not be eligible for under Parts A and B that cover hospital care and diagnostic treatments. Part D covers prescription medications. Private insurance companies approved by Medicare administer Parts C and D.
Seniors should focus on a working budget that includes their income and necessary expenses. Savings are still necessary as they help in an emergency.
If part of their monthly income remains, seniors should place it in a savings account that is easy to access. Budgets should be written down to track planned and actual expenditure. Electronic spreadsheets make doing the necessary calculations more convenient.
Many seniors also draw an income from their retirement investment savings. If their monthly budget does not require removing the full amount they are entitled to, seniors should leave it in the investment account.
Insurance and taxes
Keeping up to date with insurance premiums becomes essential as you reach retirement age. This includes car insurance to cover the cost of repairing or replacing your vehicle after an accident, fire, or theft.
Life insurance forms part of your estate planning and pays out upon your death. Seniors still living in their homes need homeowner’s insurance to cover the costs of damage to the structure or injury to someone that occurs on the property.
Household possessions and other valuables should also be insured for theft or fire. Except for life insurance, most insurers offer reduced premiums for people over a specified age.
Being of retirement age does not exempt seniors from taxation by the Internal Revenue Service (IRS). The maximum standard deduction increases for seniors. All income sources, including Social Security retirement benefits, are subjected to taxation, although expenses may be claimed as deductibles. These include dependency exemptions, charitable donations, and estate tax deductions.