It’s never too early to start thinking about how you want to spend your time — and your money — in retirement. No matter if you’re hoping to retire as early as possible or plan to work until you can’t, having a plan for how you want to spend your senior years helps make sure your dreams come true.
Fortunately, there are some surprising and interesting facts that could help you make the most of your golden years. From social security rules to insights on investments, learn how to make your retirement easy.
1. Social Security Won’t Cover All Your Expenses
Ignoring whether or not Social Security will still be solvent when it’s time for you to claim your benefits, Social Security isn’t designed to be your only source of income during your golden years. According to the Social Security Administration, Social Security benefits are only intended to replace about 40 percent of your income from when you were working.
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2. Social Security Might Not Be Taxed by Your State
The IRS taxes up to 85 percent of your Social Security benefits, but depending on where you live, you might not have to pay state income taxes on your Social Security benefits. Only thirteen states impose state income taxes on all or a portion of your benefits: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont and West Virginia.
3. Travel Is the Second Most Unexpected Expense in Retirement
Although 43 percent of retired boomers said they were spending more than expected on healthcare costs, travel costs were also something they didn’t adequately budget for, according to a recent study by Capital Group. In fact, 40 percent of retired boomers said that travel costs in retirement were higher than they had anticipated.
4. The IRS Offers Free Tax Help for Seniors
You probably won’t look forward to doing your taxes in retirement any more than when you were younger, but the IRS has a special program, Tax Counseling for the Elderly, to provide free tax assistance age 60 and older. You can get answers to questions, and some programs can even prepare your return for you.
5. Retirees Could Still Be Paying Off Student Loans
If you think you won’t have to worry about student loans in retirement, you could be wrong. According to the Consumer Finance Protection Bureau, the number of older student loan borrowers — defined as age 60 and older — increased by at least 20 percent in every state between 2012 and 2017. In more than half of states, the number increased by 46 percent or more during the same time period.
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6. Retirees Are More Likely to Directly Own Stocks
On average, 54 percent of people ages 65 and older own stocks, according to a 2017 Gallup poll. However, it’s adults 30 to 64 years old who own the most stocks at 62 percent.
7. Retirees Can Still Save With Roth IRAs
Just because you quit your day job doesn’t mean all retirement plans are off-limits to you. As long as you have taxable compensation, including wages from a side job or self-employment income, you can contribute to a traditional IRA until the year you turn 70 ½ years old.
There’s no limit to how old you can be to contribute to a Roth IRA. But, there are limits to how much you can contribute to a Roth IRA.
8. Retirees Qualify for Additional Tax Breaks as They Age
As you get older, you qualify for additional tax breaks at both the state and federal levels. Seniors have a higher standard deduction, and 37 states don’t impose state income taxes on Social Security benefits. Potentially the weirdest of all: In New Mexico, if you make it to 100, you don’t have to pay state income taxes as long as no one else claims you as their dependent.
9. Seniors Think Green
According to a Statista survey, people ages 60 and older were the most committed to recycling. Further, the survey found that 48 percent of people ages 60 and older “always recycle” compared to 41 percent of people 30 to 59 years old, and 33 percent of people 18 to 29 years old.
10. Retirees Use Airbnb … and Cash In
Airbnb might seem like a millennial fad, but it’s also a great resource for people in their 60s. In fact, “the number of over 60s who have booked as guests” increased by 66 percent in 2017, according to an Airbnb press release. Also, seniors took home $2 billion that same year by serving as Airbnb hosts.
Click through to read answers to the most frequently asked Social Security questions.
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