It is a rite of passage to be eligible for senior discounts when you reach the age of 65. But for many seniors who live primarily on Social Security benefits and survive without a pension or savings, discounts are a necessity.
About half of people are in danger of not being able to maintain their lifestyle when they retire, according to the Center for Retirement Research at Boston College. Are you financially prepared for retirement? Are you saving for retirement properly? Whether you’re a retiree struggling to make ends meet or a worker worrying about building your nest egg, there are resources available to ensure that you don’t fall short of your retirement goals. Find out about saving tips and discounts to help with saving for retirement.
Best retirement plans
These days people are living longer than ever. There will be over 79 million Americans over the age of 65 by 2035, according to the Social Security Administration. For seniors, 33 percent of their income comes from Social Security. Of the 173 million people working 46 percent don’t have a pension plan and and 39 percent have not saved any money for retirement.
Saving for retirement begins with assessing your savings plans. There are various types of retirement savings plans that can supplement Social Security benefits and support a retiree’s lifestyle. To start with, consider your plans. Do you have a 401(k) or a IRA?
401(k). To be prepared for retirement many workers are encouraged to postpone retirement and continue working later in life. This allows workers to continue contributing to their 401(k) plans until they reach the age of 70, if they’re able to. If your company has a matching 401(k) make the highest possible contribution. It’s essentially free money. All of your contributions are tax deductible and the money grows tax-deferred.
IRA. For workers without a 401(k) plan an IRA is the next best option. Depending on the type of IRA (Roth or traditional), there are limits to how much you can contribute. Your bank or brokerage firm can help you set up an IRA. The main benefit of an IRA is you are in control of your money and decide on how to invest the funds.
Unlike 401(k) plans where employees and employers make contributions, with pension plans employees are not always required to make contributions. Employers sometimes solely put money away for employees while they’re working. Government jobs traditionally have provided workers with pension plans, but in recent times they’re becoming less common.
Typically when an employer retires, a pension check is paid on a monthly basis. Pension plans are taxed when funds are withdrawn. The amount you receive depends on the length of your employment, your age and your salary. Pension plans are protected if insured under the Pension Benefit Guaranty Corporation. But there are times when companies can’t meet their pension obligations.
A 401(k) looks like savings amount, but there are costly penalties to withdraw money before you reach the age of 59.5 years old. To prevent you from taking money out early the IRS taxes you 10 percent for each withdrawals. However, there are exceptions to the penalties for early withdrawals such as if you become disabled, die, or you’re fired, among other reasons.
To maintain your lifestyle in retirement, come up with a budget and find ways to cut costs. Senior discounts extend farther than just free cups of coffee. From grocery store freebies to travel and cruise discounts, seniors can tap numerous opportunities to cut back on their spending and stretch their budget. Finding ways to save and budget gives you peace of mind to enjoy your golden years.
And you don’t have to wait until you’re 65 years old to start asking for senior discounts. Many restaurants and shops honor senior discounts for people ages 50 to 55 years old. Make it a habit to always ask for senior discounts wherever you are. You may be surprised at the savings. Some eateries offer 5 percent to 10 percent off meals on certain days for seniors, or a free coffee or beverage everyday. Grocery stores also offer additional savings for seniors on specific days. To find deals and coupons in your area specifically for seniors, search online or visit SeniorDiscounts.com. Another tip to decrease your spending is to unsubscribe from advertisements and mailers that encourage you to spend.
If you have questions about your savings plan, seek financial advice from the experts. Make sure the person advising you is indeed an expert. Do your homework to find out about their job title before you take any financial advice. Who’s really an expert? Before you put your savings into someone’s hands, search the Financial Industry Regulatory Authority website to make sure they are trustworthy and to better understand professional credentials and designations.
Learn more about AAA Financial Services.
Did you learn anything from a parent or friend about saving for retirement? Share your thoughts on the subject in the comments section below.