By Michael Keenan (GOBankingRates)
This article originally appeared on GOBankingRates.com: 15 Reasons Why Retirement’s Not as Scary as You Think
Although retirement is often referred to as your golden years, many people think it will be anything but relaxing. In fact, one in four Americans fear they will never be able to retire, found a GOBankingRates survey. Even if you haven’t done much retirement planning, you don’t have to fear that your senior years will be spent homeless and hungry.
Click through and see why retirement could be more comfortable than you think.
1. You Might Need Less Than You Think
It’s hard to make it through the day without hearing about the huge amount of money you need to make ends meet in retirement. You should find out how much you need to retire in your state, however.
According to a recent GOBankingRates study, four states — Mississippi, Arkansas, Oklahoma and Michigan — require less than $1 million to retire. And, you can retire in another 22 states with under $1.1 million. Plus, those figures don’t include income you could receive from Social Security.
2. Working Can Keep Your Benefits Intact
Though your ideal retirement might be not working at all, even part-time employment can help you make ends meet. Try finding a job that comes with benefits for senior citizens, and you might get insurance at a much lower price to stretch the dollars you have saved. Plus, if you have a 401k plan, you can delay required minimum distributions from your 401k plan to stretch out the amount of time you can keep your money growing tax-free.
3. Part-Time Benefits Go Beyond Your Paycheck
The benefits of working in retirement go beyond money. Retirement can be isolating and continuing to work part-time can provide social opportunities. In addition, continuing to work can provide both mental and physical challenges, depending on where you work. Plus, it will give you a reason to get out of the house — without a job, you could find yourself spending more and more time at home in front of the TV.
4. You Can Take Advantage of Senior Discounts
When you become a senior, many businesses, restaurants and services offer senior discounts.
You can find discounts at places like clothing stores, grocery stores, movie theaters and gyms. Plus, your utility companies might give you a break on monthly bills. The age to be eligible for senior discounts varies by business.
For example, a Senior Pass to the national parks requires that you be at least 62 years old, whereas Harris Teeter grocery stores and AMC Theaters give you a senior discount starting at age 60.
5. Your Average Spending Goes Down
Typically, retirees spend only about 80 percent of what they spent during their working years. Although healthcare costs typically increase, the cost of food, transportation, housing and amusement decline. Plus, you don’t have to save for retirement anymore.
For example, some retirees choose to have only one car — or none — which cuts not only gas costs but also insurance, maintenance and registration fees. Planning and sticking to a budget can help you live comfortably on a lot less than you were used to.
6. Social Security Isn’t Going Broke
Don’t fall for one of the many Social Security myths floating around. For example, you might have heard that Social Security is going broke by 2034.
Although it’s true that the Social Security trust fund is expected to be depleted by 2034, there will still be Social Security tax revenues to continue to pay benefits. Those taxes are projected to be able to pay about 77 percent of current benefits, and that assumes no changes are made to solidify the program.
7. Medicare Isn’t Going Broke, Either
Rumors of Medicare’s demise are also exaggerated. Medicare’s trust fund is expected to last until 2029, but like Social Security, that doesn’t include the annual revenues from the Medicare tax. Those taxes are expected to cover 88 percent of the benefits currently provided by Medicare Part A.
But there could be changes made to Medicare in the future that could increase or decrease benefits. Healthcare costs are typically higher in retirement, but utilizing health savings accounts can help you take advantage of big tax breaks and save for future medical expenses at the same time.
8. You Might Be Mortgage-Free
Many people strive to pay off their mortgage by retirement. In theory, if you take out a 30-year mortgage by age 30, you should have it paid off by age 60 — five years before the theoretical retirement age of 65. Even if you’re only paying 20 percent of your income for your mortgage, that’s still 20 percent of your budget that will be freed up once you pay off your mortgage.
9. You Could Generate Additional Cash Flow by Downsizing
Even if you won’t be completely mortgage-free by retirement, chances are you won’t need as big of a house as you did when you were raising children. Moving to a smaller home can reduce your mortgage payment, as well as costs for maintenance, landscaping, utilities and real estate taxes.
You might even be able to immediately gain equity, depending on how much you have to finance. Plus, you won’t have nearly as many household chores to do, giving you more time to do the things you love.
10. You Might Pay Less in Income Taxes
Once you aren’t working anymore, you don’t have to budget for paying Uncle Sam as much each year. Yes, distributions from traditional IRAs and 401ks — and potentially some of your Social Security benefits — count as taxable income. But that income isn’t subject to Social Security taxes and Medicare taxes.
Plus, if you’ve been saving for retirement with a Roth retirement account, your qualified distributions come out completely tax-free. And for retirees living in New Mexico who are lucky enough to make it to 100, no state taxes apply.
11. You Might Receive Additional Tax Breaks
Many states offer additional tax breaks to save seniors money on their real estate taxes. Your age might also qualify you for real estate tax breaks, depending on where you live and your income.
For example, in Texas, seniors receive an additional $10,000 homestead exemption for school taxes, but you must apply for the exemption to kick in. Similarly, Illinois also offers a real estate tax break for seniors, but you must apply for it each year.
Don’t Miss: 7 Hidden Tax Breaks for Retirees
12. You’ll Have Flexibility to Travel
When you’re working a full-time job, vacation travel is often limited to weekend and holiday flights, when ticket prices are most expensive. However, once you’re retired, you’re free to take vacations whenever you want, including when fares are the lowest. So, you can book that midweek flight to see your grandkids without wondering if you can get off work.
In addition, some airlines offer special senior discounts, including Southwest Airlines and United Airlines, for travelers age 65 and older.
13. Your Travel Discounts Aren’t Limited to Airfare
Flying isn’t the only mode of transportation that offers senior discounts. To see the country by train, Amtrak offers 15 percent off if you’re 65 or older.
To enjoy the open seas, Carnival offers special discounts on cruises if you’re over 55. In addition, cruise ships often have accommodations for people with special needs, including special rooms that are set up for people with limited mobility, which can be perfect for seniors.
Seasonal Savings: The Financial Perks of Off-Season Travel
14. Your Retirement Activities Don’t Have to Be Expensive
Though some people spend more in retirement, you don’t have to. With your newfound free time, you can enjoy all those books you never got around to reading. And by using a library card, you can check them all out for free. Or, you can take all the time you want to explore the museums in your area that you didn’t have time to visit when you were working. Plus, many museums offer free days or hours that you can take advantage of with your flexible schedule.
15. Your Hobbies Can Save You Money, Too
When you were busy with full-time work, you might have lacked the time to cook and bake with any sort of regularity. So you were likely stuck paying more to eat out on a regular basis. With more free time in your day, you might find that not only do you enjoy cooking, but you also save money in your budget.
Similarly, because you have more time, you can take on more do-it-yourself projects around your house and save even more money, which can potentially increase your home’s value.
Click through to learn how your hobbies can make you money in retirement.