http://www.csa.us/email/spirit/ssarticles/0113Money.html
In this time of belt-tightening, and as we face longevity, there are many ways to make your dollar go further. We’ll explore everything from finding tax breaks for seniors to using consignment stores. Click here to view article.
With seniors living longer, there is increasing pressure to make the best use of income from various sources, including Social Security, pensions and investments. In addition, seniors face many economic problems: the investment market has not been able to provide the returns it once did, health care costs continue to increase, municipalities are raising property taxes and the price of many necessities, such as food and gasoline, have been getting more expensive. Although conventional wisdom also holds that our household expenditures should be lower in retirement than in our working years, this is not necessarily true; unanticipated costs can quickly ruin a budget.
The bottom line is that the poor economy, longer lives and increased costs make it necessary to squeeze every dime. Seniors today must exercise greater care than ever before in managing their finances.
Social Security
Most seniors can’t depend on Social Security to cover their living expenses. According to an Employee Benefit Research Institute (EBRI) study, Social Security provides on average only 40 percent of the income needs of persons 65 and over. Pensions and annuities account for approximately 20 percent of income, though this percentage may decline as companies terminate pension plans and taxpayers object to generous benefits for public sector employees. “The upshot is that people over 65 will need to rely on earnings and personal savings to meet nearly half of their retirement income needs. It’s a scary thought, but one that needs to be confronted,” says EBRI.
One of the first questions for seniors approaching retirement is whether to start taking Social Security early at reduced amounts or wait until the full benefit kicks in. Social Security says it calculates the reductions so that regardless of when benefits are started, people will collect approximately the same total amount over the remaining years of their lives. But each person’s situation is different, based on your financial situation, health and needs, and requires careful consideration before making a decision. The Financial Planning Association compares each strategy.
Investments
With a still-shaky economy and sometimes-volatile investment returns, it’s best to be proactive with investments, whether certificates of deposit (CDs), stock funds or bonds. “The best thing to do is become active in overseeing how your retirement income grows. Passivity is deadly. Get interested, get involved, educate yourself and start managing your future now,” advises Investopedia. In “How to Maximize Your Retirement Income,” the site also advises “looking outside the box” by investing in real estate, becoming a venture capitalist or investing in items that have appreciable value.
Although interest rates on CDs and money market funds are low now, you can still shop around to find the best rates. Look for ads online or in your local paper to see which financial institutions are offering the highest returns. Avoid getting overtaxed by deciding whether to use a traditional IRA or a Roth IRA. A traditional IRA allows for tax deductions on qualifying contributions but taxes withdrawals, while a Roth IRA does not allow for tax deductions but provides tax-free qualified withdrawals.
Taxes
Many states offer exemptions to seniors for property taxes. While the rules vary from state to state, the exemption is usually a percentage of the home’s value. For example, Colorado exempts 50 percent of the first $200,000 of the value of the residence from being taxed.
Kiplinger has a retiree tax map that provides information about state sales tax, income-tax range, Social Security, retirement income exemptions, property taxes, tax breaks for seniors and inheritance and estate taxes for each state.
For example, “Illinois generously excludes a wide variety of retirement income from taxation. But combined state and local sales taxes are steep. In some areas, the combined rate can be as high as 10.5%—among the highest sales-tax rates in the U.S. Most property is assessed at one-third of its market value, and for seniors there are numerous homestead exemptions tied to age and income.”
Spending Less
In 1916, the YMCA and other civic groups launched National Thrift Week to promote frugality “for success and happiness.” Thrift Week celebrations were held throughout the nation, including events such as Have a Bank Account Day and Pay Bills Promptly Day, according to “The Leap to Cheap,” an article in AARP. Unfortunately, National Thrift Week came to an end in 1966, about the time that the United States was enjoying an era of prosperity.
Seniors over the age of 70 may remember the penny-pinching days or may have heard stories from their parents. Whether or not we’ve lived frugally in the past, this economy and the demands of getting older may require taking new measures to decrease our spending.
Living on less may require significant change, such as downsizing. If you can get by with a smaller residence, downsizing (or renting) can reduce your living expenses. Relocating to a place with lower cost-of-living expenses, either in the United States or overseas, can also help your budget, although the trade-off is separating yourself from family and friends. To stay in your current home, you may need to put off retirement by continuing to work as long as possible.
In addition, more than 2,000 federal, state and private benefits programs are available to help seniors, especially low-income seniors, get help with medications, health care, food, utilities and more, according to BenefitsCheckUp. This free program from the National Council on Aging, a nonprofit service and advocacy organization in Washington, D.C., provides an online questionnaire that will guide you to programs in your state. For example, the California CalFresh Program offers a debit card, dependent on your household income and other revenue sources, that you can use to buy food from grocery stores.
Small Efforts
You may also stretch your dollars with smaller actions that can add up to big savings:
- First, making a budget can help you see what you spend money on each month and if there are areas that can be pruned. You can list the items in order of importance. For example, rent/mortgage, utilities, transportation and medication are more important than entertainment (cable), restaurants and some clothing items. Figure out what you can do without.
- Before you shop, make a list and try to stick to it, so you’re not buying on impulse. If there are regular items you shop for, such as a brand of soup you like, wait for a sale and stock up.
- Use coupons, either from the newspaper, online coupon sites or the websites of the products you use.
- Instead of paying for magazine and newspaper subscriptions, use the library or share subscriptions with friends who have the same interests.
- Watch gas prices in your area and patronize stations with lower prices.
- Look at your phone and Internet bills; can you find better deals?
- Consignment stores are springing up everywhere and offer good deals on almost-new items.
- Find online deals on EBay and Craigslist. In addition to buying items at bargain prices, you can also sell items you don’t need and make some extra cash. If you’re unfamiliar with how the two Internet sites work, check out “Guide to eBay” or “How to Use Craigslist”
- Many places, including ones you wouldn’t think of, offer senior discounts. If you don’t know, always ask. You’ll be surprised. (See sidebar).
- Keep your car longer.
- Take advantage of the Golden Eagle card from the U.S. Park Service, which for $10 gives seniors over the age of 62 free entrance to all national parks.
Make Sure to Ask for Senior Discounts
One of the advantages of being a senior is the availability of discounts, but they’re not always advertised. Much of the time you have to ask. Also, AARP offers many discounts with membership, which is $16 a year.
Restaurants
- Applebee’s: 15% off with Golden Apple Card (60+)
- Arby’s: 10% off (55+)
- Ben & Jerry’s: 10% off (60+)
- Boston Market: 10% off (65+)
- Burger King: 10% off (60+)
- Chick-Fil-A: 10% off or free small drink or coffee (55+)
- Chili’s: 10% off (55+)
- Denny’s: 10% off, 20% off for AARP members (55+)
- Dunkin’ Donuts: 10% off or free coffee (55+)
- Golden Corral: 10% off (60+)
- IHOP: 10% off (55+)
- KFC: free small drink with any meal (55+)
- Krispy Kreme: 10% off (50+)
- McDonald’s: discounts on coffee everyday (55+)
- Steak ‘n Shake: 10% off every Monday and Tuesday (50+)
- Subway: 10% off (60+)
- Sweet Tomatoes: 10% off (62+)
- Taco Bell: 5% off; free beverages for seniors (65+)
- Wendy’s: 10% off (55+)
Retail and Apparel
- Banana Republic: 10% off (50+)
- Goodwill: 10% off one day a week (day varies by location)
- Hallmark: 10% off one day a week (day varies by location)
- Kmart: 20% off (50+)
- Kohl’s: 15% off (60+)
- Ross Stores: 10% off every Tuesday (55+)
- Salvation Army Thrift Stores: up to 50% off (55+)
Overnight Accommodations
- Clarion Motels: 20%–30% off (60+)
- Comfort Inn: 20%–30% off (60+)
- Comfort Suites: 20%–30% off (60+)
- Econo Lodge: 20%–30% off (60+)
- Hampton Inns & Suites: 10% off when booked 72 hours in advance
- Hyatt Hotels: 25%–50% off (62+)
- Marriott Hotels: 15% off (62+)
- Motel 6: 10% off (60+)
- Quality Inn: 20%–30% off (60+)
- Rodeway Inn: 20%–30% off (60+)
- Sleep Inn: 20%–30% off (60+)
Activities and Entertainment
- AMC Theaters: up to 30% off (55+)
- Bally Total Fitness: up to $100 off memberships (62+)
- Cinemark/Century Theaters: up to 35% off
- Regal Cinemas: 30% off
Miscellaneous
- Great Clips: $3 off haircuts (60+)
- Super Cuts: $2 off haircuts (60+)
http://www.csa.us/email/spirit/ssarticles/0113Money.html