Nest eggs don’t necessarily go as far as they should these days.  A few simple cut backs in your lifestyle can add a few years to your savings.  Speaking to a financial adviser is the best way to adapt these changes to your current financial plan.  Here are a few tips:

1) Exit expensive cities – Once you are no longer tied to your job, you are no longer tied to an expensive city with a high cost of living.  You should think about moving to a location where your retirement dollars will go further.  You should look for places with lower taxes, more affordable housing, and amenities for seniors.

2) Use your senior discount – AARP is available to anyone age 50 years and older.  They negotiate discounts for their members from hotel rooms to movie tickets.  Many businesses offer their own form of senior discounts, including Kohl’s Department Stores and Hyatt Hotels.  You just can’t be afraid to ask if they are available.

3) Get rid of your land line – Paying for both a cell phone and a land line is a redundant, unnecessary expense.  Pick the service with the most useful plan for your lifestyle and ditch the other.

4) Cut back your cable tv – Reduce the number of channels you pay for (there are hundreds of channels you never have or will watch).

5) Look for free entertainment – Retirees have an estimated 2,000 extra hours of free time to fill throughout the year;  you should come up with a plan to volunteer, garden, or play golf prior to retirement and not take up expensive new hobbies.

6) Buy used/almost new – Almost all consumer goods are available online at a fraction of the retail price.  Start checking out craigslist or Amazon when you are looking for items.  You may even be able to afford higher quality products on those sites.

CPA Rockville – High-income households will be paying more into Medicare as a result of the reform package.  What we do know for certain is that the Medicare payroll tax is going up for individuals making more than $200,000 in wages, and couples making more than $250,000.

Currently, the Medicare payroll tax is 2.9% on all wages, with the worker and his employer splitting the cost (1.45% each).  Under the new law, to begin in 2013, high-income individuals will pay an additional .9% points, making the workers share 2.35%.

In addition to this increase, if the reconciliation bill that passed the House Sunday is approved by the Senate, high-income households would also be subject to a new 3.8% Medicare tax on investment income starting in 2013.  This includes capital gains, dividends, interest, annuities, royalties, and rents.  Any investment income that had previously been characterized as “tax exempt”, however, would not be subject to the new tax.

Not all investment income may be taxable due to how the proposal is structured though.  Seeking advice from your financial adviser in Rockville, MD or certified public accountant (CPA) may help to prepare you for these upcoming changes.