If the aging process has been getting you down lately, be of good cheer. Once you reach age 50 you have more to look forward to than free colonoscopies. Here’s a long list of benefits, replete with authoritative links that explain the applicable rules and requirements.
Retirement Account Catch-up Contributions. In the year you turn 50, you may qualify to make increased annual contributions to various types of retirement accounts, including 401(k)s, 403(b)s, SARSEPs, SIMPLE IRAs, Traditional IRAs, and Roth IRAs. Making catch-up contributions can shelter your nest egg from thousands in taxes. For details, click here.
AARP Memberships. Another reason why turning fifty is nifty: you can join the AARP and access huge discounts on insurance, airlines, hotels, and restaurants. For more information, click here.
Free Colonoscopies. If you’re 50 or over and covered by Obamacare, your next colonoscopy should be free. By law, most health plans must provide without charge the level of care recommended by the U.S. Preventive Services Task Force. The Task Force recommends that starting at age 50, insureds receive either a colonoscopy, fecal occult blood test, or sigmoidoscopy that screens for colorectal cancer. In the case of colonoscopies, this free coverage extends to administered anesthesia and any removal of polyps. For a discussion of colonoscopy benefits under Obamacare, click here.
Health Savings Account Catch-up Contributions. If you’re 55 or older by the end of the tax year and meet IRS requirements, you can up your HSA funding by $1,000 per year. For the official rules, click here.
Penalty Free Withdrawals from Retirement Accounts. Withdrawals from IRAs and retirement accounts before you reach age 59½ are subject to an early distribution tax of ten percent (with limited exceptions). After you turn 59½, however, the penalty disappears. To view the details, click here.
Free Tax Assistance. The IRS’s Tax Counseling for the Elderly (TCE) program offers free locally-based tax help to those who are 60 or older. To locate a TCE outpost in your community, call 1-888-227-7669. When prompted, be ready to provide your ZIP code.
National Parks and Federal Recreational Lands Pass. Once you turn 62, you can buy a lifetime Senior Pass for only $10. This gets you into more than 2,000 federal recreation sites, which makes this pass one of the best deals the government has ever offered. Bonus: your spouse gets to tag along for free, even if he or she is younger than age 62. For details, click here.
Eligibility for Social Security Benefits. Upon turning 62, you can elect to start receiving Social Security retirement benefits. But if you forgo benefits until you reach your full retirement age (age 67 for those born after January 1, 1960), you’ll boost your monthly check by about 30 percent. For the official online estimator of your projected individual benefits, which is based on your reported earnings history, visit https://www.ssa.gov/retire/estimator.html (when prompted, enter your social security number, date of birth, place of birth and mother’s maiden name).
Medicare Eligibility. Medicare is a federal health insurance program that covers those aged 65 or older. Medicare Part A provides hospital insurance and Part B provides medical insurance. The government recommends that you sign up for Medicare three months before your 65th birthday, even if you’re not ready to begin receiving benefits. For details about applying online for this coverage, click here.
Standard Deduction Increases. If you don’t itemize and turn 65 before the end of the tax year, you likely qualify for a higher standard deduction. For tax year 2015, if you’re married filing jointly and you or your spouse is 65 or older, the standard deduction increases by $1,200. If both you and your spouse are 65 or older, the standard deduction increases by $2,400. For further details, click here.
Penalty-Free HSA Withdrawals for Non-Medical Expenses. General rule: if you spend Health Savings Account funds on anything other than qualified medical expenses, you incur a 20 percent tax penalty. However, once you reach age 65 you’re exempt from this penalty (note: even after turning age 65, you’ll still have to pay ordinary income taxes on any HSA spending for non-qualified medical expenses). For the IRS’s explanation, click here.
Deduction for Medical Expenses Expands. If you’re under age 65, you can only deduct those medical expenses that exceed 10 percent of your Adjusted Gross Income (AGI). Once you turn 65, however, the threshold for deductibility drops to 7.5 percent of AGI. And if your filing status is married filing jointly, the 7.5 percent threshold applies even if only one spouse has reached age 65. See IRS Publication No. 554 at Chapter 4. Note: starting with tax year 2017, the 7.5 percent threshold expires and taxpayers of all ages will be subject to a threshold of 10 percent.
Senior Property Tax Exemptions. In many jurisdictions, long-term residents qualify for property tax discounts on their homes. The requirements for these discounts vary, so check with your county assessor’s office.
Full Retirement Age for Social Security (for those born after January 1, 1960). For an online estimator of your projected full retirement benefits, visit https://www.ssa.gov/retire/estimator.html and enter your social security number, date of birth, place of birth and mother’s maiden name.
Required Minimum Withdrawals. When you reach age 70½, you usually have to start taking mandatory withdrawals from your IRA, SIMPLE IRA, SEP IRA, or other tax-advantaged retirement plan (Roth IRAs don’t require withdrawals until after the owner’s death). There’s a complex formula for figuring out how much you have to withdraw each year, which you can read about here. Warning: if you fail to cash out the required amount, the IRS imposes a 50 percent excise tax. In a sense, this 70½ birthday benefit is all about avoiding the government’s draconian penalty.
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For anyone who loves to save on breakfast at Denny’s and the like, a huge list of senior discounts offered by national chains and well-known businesses appears here.
As always, if I’ve missed anything in preparing the above list please leave a comment below.
Photo of giant colon display at Kentucky State Fair by Jason Meredith—abandon all hope ye who enter here!