Social Security, Summer Vacations, and Downsizing Your Home 🏠

This week I’m sharing the screwed up Social Security system, why you should plan your summer vacation now, and the benefits of downsizing your home

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Have you thought about downsizing in 2020?

Approximately 52 million or 16% of Americans are age 65 and over right now, so it is pretty easy to understand that some of them are thinking of downsizing their homes because they don’t need the same space they did in the past when they had a growing family. Is that you?

It can be very liberating to divest yourself of all the “things” that you have accumulated over the years, but now you no longer need, and that includes your large home. Moving to a less expensive home could provide savings for unanticipated expenditures or cash that could be invested for additional income or even just reducing your retirement expenses and allowing you to take real financial pressure off yourself.

Savings can be realized in areas like the lower premiums for insurances and lower property taxes, as well as the lower utility costs associated with a smaller home.

Typically, owners downsize to a home to 66% to 50% of their current home’s size. In some situations, it is not only economically beneficial, but their interests may have changed so that a different style of home, area, or city might actually fit the lifestyle better. Thinking about a warmer climate in retirement?

And some really good news is this: The sale of a home with a lot of profit in it for you will not necessarily trigger a tax liability. Homeowners are eligible for an exclusion of $250,000 of gain for single taxpayers and up to $500,000 for married taxpayers who have owned and used their home two out of the last five years and haven’t taken the exclusion in the previous 24 months.*

* Homeowners can exclude up to $250,000 of the gain on their principal residence if single and up to $500,000 if married filing jointly. During the five-year period ending on the date of the sale, the taxpayer must have:

Lived in the home as their main home for at least two years but ownership and use do not have to be continuous nor occur at the same time.
During the two-year period ending on the date of sale, the taxpayer is not eligible if they excluded the gain on sale of another home.
If the gain on the sales exceeds the exclusion amount, the balance is taxed at the long-term capital gains rate. Capital assets, such as a home, that are owned for more than twelve months are subject to the favorable long-term capital gains rate which is lower than the ordinary income rate or marginal tax bracket.

Based on what you earn throughout your lifetime, you become eligible for Social Security retirement benefits when the time comes. That time can vary from person to person for many reasons, because once you hit age 62 you become eligible to get it, but you can wait for years if you choose to, even up to age 70.

But despite the success and importance of the Social Security plan, the system suffers from problems and mistakes. Sometimes mistakes are made by the Social Security Administration (SSA). And sometimes you make them yourself. Why?

In cases where you don’t provide accurate information to the authorities so they can calculate your Social Security value properly, you could end up receiving smaller benefit payments. It does happen and that’s why you must periodically check your Social Security statements to make sure they are accurate!

Planning a Summer Vacation in the Dead of Winter

If you are anything like me, you are sitting and staring out your window at a very gray and cold afternoon, daydreaming about relaxing at the pool or beach soon, and the sooner the better! Assuming you don’t already live near a beach or the pool, I think we all can easily relate to taking a nice summer vacation to relax or to see the sights of some far-off exotic or romantic place. Heck, even a family vacation sounds pretty good when the snowflakes are piling up, doesn’t it? So, why not plan for that getaway right now. It makes perfect sense and you can save an awful lot if you do right now!

Why Now?

Let’s get the boring part out of the way: The best way to save for a fabulous summer trip is to start early—like six months early (so…like right now). Starting now lets you grow your vacation fund in small ways over a period of time.

Super Saving Tip of the Week:

Consumer fraud is a continuing threat these days and it seems like it keeps growing and growing. You get those “calls” about saving money on everything if you act now and you see and hear about them all the time. Here’s the best advice I can give you if you decide to act on any of them:

Consider how you pay. Never pay cash especially if a discount for it is offered. The safest way to purchase anything you are not 100% confident about is with a credit card. Cards have significant fraud protection built in, but some payment methods don’t.

Wiring money through services like Western Union or MoneyGram is very risky because it’s nearly impossible to get your money back. That’s also true for reloadable cards (like MoneyPak or Reloadit) and gift cards (like iTunes or Google Play). Government offices and honest companies won’t require you to use any of these payment methods.

The safest way is to get all the information about the seller before you act and find out how you can get a full refund if not satisfied to avoid any possible fraud!

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