Retirement Tax and Spending Implications of the Stimulus Bill
Retirees and persons about to retire have been among those hit hardest by the economic downturn. The newly-passed American Recovery and Reinvestment Act of 2009 does provides some benefits for those who are retired. There are both tax implications and spending considerations for those who are retired and about to retire. In total, the bill has about $300 billion in tax cuts and credits and about $450 billion in new spending for investment in America.
Tax Implications of the Economic Stimulus Bill
If retirees are over 67 and receiving Social Security benefits, or are receiving SSI benefits, or are disabled veterans, they will receive a one-time $300 payment. If retirees are still working and making less than $75,000, they will receive a payment of $400 tax refund on the payroll taxes they have paid. If they make between $75,000 and $100,000, the $400 refund will be gradually reduced and phased out altogether if they make over $100,000.
If retirees are still working, the Alternative Minimum Tax has been adjusted so that it may not affect them.
If retirees would like to go back to school, they can get a tax credit for tuition, fees, and supplies if they make under $80,000. The credit ranges from $1,800 to $2,500.
Spending Implications of the Economic Stimulus Bill
If retirees wants to go back to work to try to salvage retirement savings, the legislation is supposed to create jobs and gradually strengthen the economy over the next two years. One in four retirees have said they have considered returning to work. There will be opportunities out there and they won’t have to be construction workers to take advantage of those opportunities. Retirees could work from home in the consulting field helping with some of these infrastructure projects that will start within the next two years.
The bill expands Medicaid, which is the health care program for the poor. If retirees have lost their health insurance, this is a program they can check into. It also expands the COBRA program, which is the health insurance program for the newly unemployed.
The bill also addresses energy concerns and expands the Low Income Home Energy Assistance Bill. Retirees could possibly qualify for assistance in making their homes more energy efficient and cheaper to heat and cool.
Perhaps the biggest benefit of the Economic Stimulus Bill is in its potential to restart economic activity. If the economy picks up, investors will gain more confidence and the stock market will benefit. If the stock market starts to climb, retirement accounts may make up some of the losses they have suffered.
