So, in addition to a birthday cake and warm wishes from friends and family, your 55th birthday opens up a whole new world of benefits and discounts as well!
These benefits cover a range of aspects from health, finances, transportation, education, travel, and everyday purchases.
With even the youngest Baby Boomer now in the over-50 demographic, American retailers, grocers, travel companies, and restaurants are on an all-out competition for their business with a load of exciting discounts.
And before you ask, some senior discounts really do kick in when you turn 50, as long as you’re a member of AARP and are willing to claim your senior discount when you shop, dine, or book.
What is AARP?
The American Association of Retired Persons (AARP), is America’s leading organization for people aged fifty and older, providing AARP members benefits, marketing services, and lobbying on their behalf.
This article takes a look at the benefits that you can get at the age of 55 or older.
Reduced Insurance Premiums
Even though the age of 55 may seem like a limiting factor when it comes to insurance, crossing the age of 55 means that you qualify for the AARP Driver Safety course. This offers discounts on your annual car premiums. Some states have made this discount mandatory by law, so we recommend you verify whether it is indeed a law in your state.
Tax Deductions for Senior Citizen
There are extra tax breaks that an eligible senior citizen is entitled to once they attain the age of 50 or 55. Seniors are eligible to claim a bigger standard deduction than younger taxpayers.
If you’re employed, even if it is a part-time job, you can defer taxes or avoid them altogether by using various retirement savings and other health savings accounts.
Every taxpayer can choose either the standard tax deduction or itemize personal deductions on the IRS schedule. With the Tax Cuts and Jobs Act already in effect, 90% of all taxpayers, including senior citizens can take a tax deduction.
Older Americans can take the standard tax deduction on home mortgage interest, charitable contributions, real estate taxes, and even medical expenses. As an older adult, you can avail of a deduction of $1,650 higher than the deduction granted to younger people.
Investment Tax Breaks
The truth is that at your age, it’s highly likely that you may have to pay higher investment fees and incur huge expenses on your investment decisions. The reason your expenses related to investment go up is that you might be transferring assets or funds from one retirement account, which comes with various charges.
Fortunately for older Americans, you can deduct these expenses and charges from your gross income before taxes are charged. A tip here; Cater to your investment expenses in the tax year when your adjusted gross income is less. This can guarantee you the most tax break when calculating the deductible portion of the expenses related to your investments as a senior citizen.
Bigger Retirement Account Limits
For workers aged 50 or older, it’s acceptable to defer on paying income tax on as much as $26,000 as long as you contribute the amount to your 401(k) account.
The IRA contribution limit is also $1,000 higher for workers 50 and older, or $7,000 in 2020.
The only catch is that seniors will need to withdraw money from traditional retirement accounts, which means that they’ll pay the subsequent tax bill after reaching 70.
On the other hand, seniors can now skip the required minimum distributions for 2020 as part of the Coronavirus relief bill. If you’re aged 70 or older, you can avoid having to pay income tax on any amount up to $100,000 provided that the amount is transferred from a qualifying IRA account.
To top it all, you’re also allowed to have a high-deductible health plan and set aside a deposit of an extra $1,000 to your health savings account.
Free Continuing Education
Have you heard of the Senior Citizens’ Higher Education Act? If you haven’t, 55 is a good age to read up on what it is, as the Senior Citizens’ Higher Education Act helps you continue with your education after attaining the age of 55.
This means that you can return to college and enroll in a course without having to pay tuition. Keep in mind that this financial assistance is available only for eligible seniors. Here is the criterion for availing tuition fee deduction:
This benefit is income-based and you’ll only qualify for free courses if your taxable income for the previous year does not exceed USD 15,000. If you do not qualify for the free courses because your income exceeds the cap, you can target a credit-earning course. You can avail an exemption on a portion of the tuition fee and only need to pay a small part of the tuition.
Okay, so who doesn’t like a discount!
And for eligible seniors, that is for older adults aged 55 and above, discounts are one of the major benefits of your age.
For low-income seniors or for older adults on fixed incomes, a senior discount is an excellent way of cutting down on expenses and accruing more savings.
With a valid ID that presents your proof of your age, you may receive a number of discounts on purchases at the restaurant, retail stores, movies, or at the museum.
Several businesses across the country offer reduced prices to senior citizens who can show proof that they’ve crossed the age requirement of 55.
When it comes to senior discounts, AARP often negotiates discounts for its members. Most commercial institutions provide discounts to people of the age 50 and above, but this may not be the case everywhere.
Eligible seniors can avail of these discounts which are typically available on prescription drugs, clothing, and groceries.
Tip for older adults: Be aware that senior discounts are mostly not publicized, so you need to step up and ask for the senior discount on the items or services you have purchased. Remember, you have to show proof of your age.
Let’s go through some of the discounts that are available for older adults:
Retail Senior Discounts
Many retailers will offer a senior discount on their goods and services. These discounts may be applicable on items such as furniture, wheelchairs, hearing aids, clothing, and many more.
Here are some of the retailers that offer senior discounts- Walgreens, Amazon, Kmart, Kohl’s, Rite Aid, Banana Republic, Home Depot, Savers, and many more offer older adults a senior discount if they show proof of the age requirement.
Grocery Senior Discounts
Grocery discounts for an older person aged 55 and above are available in various grocery stores including Food Lion, Kroger, Fred Meyer, Safeway, Harris Teeter, Publix, and many more. The markdown and the products on markdown may be limited, but it is still a way to save some bucks.
Several big-name shopping stores offer shopping perks to seniors aged 55 and above. It generally depends on the day of the week as many stores offer senior discounts on specific days of the week. We recommend that you stay updated on when these perks are available.
Restaurant Senior Discounts
Almost 90% of restaurants in the United States offer numerous senior discounts, especially on holidays and special days. While many restaurants will advertise these senior discounts, be sure to ask for the available senior discounts just in case they’re not announced publicly.
The list of restaurants includes but is not limited to Taco Bell, Burger King, Dunkin Donuts, McDonald’s, Subway, Dairy Queen, and many more.
Entertainment Senior Discounts
As you age and approach retirement age, entertainment becomes an essential part of life. In most cases, older adults have a lot of time to indulge in various forms of entertainment, and companies out there are utilizing the opportunity to drive in customers with an exciting senior discount. Some of the establishments that do so are Cinemark, AMC, Regal Cinemas, Disneyland, and Disney World.
Again, these may not be announced publicly, just make sure that you ask if there are discounts meant for senior citizens when you shop around for a product or service.
Tax Deduction on Charitable Contributions
Many senior citizens often look for ways to give back to society, especially when they feel that they have more than enough to live on for the rest of their lives. If you are thinking of a great way of reducing your taxes, give back to society in the form of charity.
If you donate property other than cash to a qualified organization, you are allowed to deduct the fair market value of the property. You may have to work out some adjustments if the property has appreciated value.
Tax Breaks on Medical and Dental Expenses
Aging often comes with various health complications that can lead to higher healthcare spending. Luckily, seniors who are dealing with excessive medical costs due to expensive prescription drugs and other health care costs can get tax breaks.
If your medical expenses are more than 7.5% of your Annual Gross Income, you can get tax breaks. Similarly, senior citizens aged 55 or older with high-deductible health plans (HDHPs), as well as Health Savings Account can avail an increased tax deduction.
Tax-Free Social Security Income
Depending on the amount of taxable income you generate as a senior citizen, some of your Social Security benefits may be tax-free. For example, your Social Security income will not be deducted if it’s below $25,000.
There are many tax-free benefits related to a retirement benefit and SSI that being 55 or older can bring to your basket. We recommend that you do thorough research and get to know the available tax breaks.
One of the leisurely things that senior citizens can indulge in is traveling. We know that many seniors are planning to travel the world after retiring as it’s a perfect chance to finally see the world in their retirement years. Whether you’re looking to travel the world or just domestic travel, there are a lot of discounts and deals that can be beneficial to senior citizens aged 55 and above.
Travel and Hotel Reservation Discounts
Travel is another activity that seniors have time for after retirement. Even if you have not retired, and use public transport to get to work, you could save a substantial amount of money by taking advantage of travel discounts available to people over 55.
Also, when it comes to air travel, airlines that offer some of the best deals to seniors include American Airlines, Alaska Airlines, United Airlines, Delta, Southwest Airlines, and many more. We suggest that you ask whether or not your chosen airline offers senior discounts before booking a flight.
You can also get incredible discounts, depending on the time of year. Some of the hotels that offer senior discounts include Candlewood Suites, Best Western, Days Inn, Hilton Hotels, Four Seasons, Holiday Inn Hotels, etc.
Exemption From Early Withdrawal Penalties
If you retire at 55, you’ll be permitted to access and withdraw from your 401(k) account without attracting penalties that are often associated with early withdrawals. If you get terminated from your job and you are 55 or older, you are not penalized for taking the money out. So in effect, the 10 percent penalty is waived off, but you are still paying tax on the withdrawal.
Now, if you only retire at 59, you’ll be happy not to pay the 10% withdrawal penalty from any of your IRA accounts.
Note: Penalties that are associated with early withdrawals were not enforced in 2020 due to the Coronavirus relief bill.
National Park Discounts
Have you been putting off visits to national parks across the country? We say not anymore; because at 55, you have access to incredible discounts.
Senior citizens are offered lifetime entrance passes to all various national parks across the country at $10. There are also huge discounts for other activities such as boating, campgrounds, and many more. We say that 55 has never looked better!
Free Legal Advice
As an older person with an AARP card, which you can get if you’re a member and aged 50 or older, you can take advantage of free legal advice from a real lawyer to help them solve your legal problems.
AARP has a legal service network in almost every area in the U.S. to help AARP members who need legal assistance, free of cost.
Lower Property Taxes
Now, this is a big deal, but it features last on our list because as a 55-year-old, you are not quite eligible to avail of this benefit. The Senior Citizens’ Exemption applies to low-income seniors who are aged 65 and above. So if you’re aged 65 or older but have an annual income of less than $29,000, you can be permitted to deduct up to 50% of property taxes that you should be paying on your primary residence.
Now, we hope that you have enjoyed the perks associated with turning 55 in America!
We would love to hear your thoughts on the subject. Do let us know whether you have any suggestions or recommendations for us.