Each year, IRAs and 401(k)s are subject to required minimum distributions (RMDs). Because the distributions start at just under 4% at age 72 and then slowly increase, many IRA and 401(k) plans earn more than those payouts and will continue to grow. While the distributions will become larger as the owner ages, most individuals will eventually pass away with an IRA or 401(k) balance reasonably close to the value of their plan at age 72.

For this reason, the eventual distribution options for an IRA or 401(k) are quite important. For many individuals, the IRA or 401(k) may be the largest asset in their estate.

IRAs and 401(k)s are transferred to a designated beneficiary that is selected on an IRA or 401(k) custodian's form. The five common choices for designated beneficiary are the surviving spouse, children, charity, a trust for children or a trust for spouse and children.

1. Spouse as Beneficiary

The most common choice for a married couple is to select the surviving spouse as the designated beneficiary of an IRA or 401(k). When the IRA or 401(k) owner passes away, the surviving spouse usually chooses to roll the decedent's IRA over into his or her IRA.

Assume that Harry Smith is the IRA owner and he passes away with Helen Smith as his designated beneficiary. Helen is age 68 when Harry passes away and she rolls over the IRA into her plan.

When Helen reaches age 72, she must start taking required minimum distributions. The initial minimum distribution must be taken by April 1 of the next year and is just under 4%. Her distribution will steadily increase as she becomes more senior.

Because Helen rolled over Harry's IRA into her IRA, she qualifies for the lower required minimum distributions under the uniform table. Helen often selects children or charities as designated beneficiaries.

If you are in a community property state and plan to leave your IRA to a trust or other beneficiary that is not your spouse, then it is essential to obtain a written consent from your spouse. In many states, attorneys who prepare estate plans will frequently use a waiver if the spouse is not the designated beneficiary of an IRA.

2. Children

For a surviving spouse or single person, an IRA or 401(k) may be transferred to children, nephews, nieces, other heirs or charity. Each child or other heir may take distributions for a period of up to ten years. With the exception of a spouse, a minor child, a child with a disability or chronic illness or an heir who is less than ten years younger than the IRA owner, the full IRA must be distributed within ten years of the death of the IRA owner.

Prior to 2020, a child was able to "stretch" the IRA payout over his or her life expectancy. A 60-year-old child of the IRA owner would have been able to start distributions at age 61 at approximately 4% and stretch those payouts over 26 years. Now, a child or other heir of the IRA owner must take all distributions within ten years. A child may choose to wait and take the full payout in the tenth year, but that may greatly increase the tax rate paid on the IRA.

Unfortunately, with many children the ten-year stretch plan will not be successful. CPAs report to the author that approximately one-half of children choose to take the traditional IRA distribution early, even though that means paying the income tax earlier and losing the benefit of the tax-free growth over the maximum distribution period.

3. Charity

For the IRA or 401(k) owner, the qualified plan is a wonderful benefit and a very good asset. However, when the owner passes away, a traditional IRA or 401(k) is often transferred to children with a large "you owe the IRS" tax bill attached (with the exception of a Roth IRA, which is income tax-free). For the vast majority of qualified plans, the child will pay income tax. Worse yet, the IRA or 401(k) distributions may even push the child into a higher tax bracket.

With income tax on the traditional IRA or 401(k) and no income tax paid on the home, land or stocks, the IRA or 401(k) is a less desirable asset for children. In fact, many heirs consider this a "bad asset" because of the income tax on most IRA payouts to children.

For this reason, children would prefer to receive a home, land or stock because there is no income tax bill attached. The wise planning decision is to transfer the home, stocks or land (the good assets) to children and save all the IRA income tax by transferring it to charity.

Because charities are tax exempt, there is no payment of income tax or estate tax on a traditional IRA or 401(k). The charity receives the full value tax free. By transferring the IRA or 401(k) to charity, it is possible to turn a bad asset into a good asset.

4. "Give It Twice" Trust

What plan could protect children from spending the IRA amounts and paying maximum income tax? Could a plan combine the tax-saving benefits of a stretch IRA with a term-of-years or life payout to children or other heirs? Could this plan also have the tax-free growth benefit of a stretch IRA?

A wonderful solution is an IRA to testamentary unitrust plan, which includes all of these benefits. A single person or surviving spouse may create an unfunded lifetime unitrust or testamentary unitrust in a will or living trust. The IRA beneficiary designation is to the trustee of that unitrust.

When the IRA owner passes away, the unitrust is funded with the traditional IRA. Because the unitrust is tax-exempt, there is a bypass of the income tax on the traditional IRA and any future growth. The children or other heirs receive new taxable income from the trust investments. The 5% unitrust payouts may last for a term of 20 years or for their lifetimes.

A very good plan for parents who have made lifetime gifts to charity is to combine a benefit to children with a future benefit to charity. This plan is called a "Give It Twice" trust.

For example, Mary Smith had an $800,000 estate. She lived in a home worth $200,000, had a CD for $200,000 and $400,000 in her traditional IRA. Her IRA was substantial because when her husband Bill passed away, she rolled over his IRA into her IRA. The combined IRA is now half of her estate.

Mary has two children and decides to transfer the home and CDs to the children in equal shares when she passes away. They each receive $200,000 in value from the home and CDs with no income or estate tax.

After Mary passes away, the $400,000 IRA is transferred into a charitable remainder trust. It receives the IRA proceeds and invests the full $400,000. The trust pays 5%, which is divided between the two children for a term of 20 years. At the end of 20 years, the trust principal plus growth is given to charity.

Mary was pleased with her plan because she had achieved several goals. First, she provided both principal and income to her children. This is a very good plan because some children will benefit from a period of time to improve their money management skills. Second, she saved all of the income tax on the traditional IRA. Because the unitrust is tax exempt, it receives the entire IRA tax free. The trust earns income for the children for a term of 20 years and is then transferred tax free to charity.

Because the trust benefits the children with more than $400,000 in income and then is given to charity, it truly may be called a "Give It Twice" trust.

5. Trust for Spouse and Children

For individuals with larger estates, it may make good sense to create a trust for surviving spouse and then a term of years for children. After the first person passes away, the IRA is transferred into the trust for the surviving spouse. The trust will distribute income for his or her lifetime and then to the children for a term of 20 years. Following the life of the spouse plus 20 years for the children, the trust remainder is distributed to charity.

This trust has several benefits. First, it may save very large income taxes because the trust is tax exempt. Second, the trust can be a "net plus makeup" plan that allows the spouse to choose to save taxes by taking reduced income during life. This will allow the trust principal to continue to grow and build up the trust so there is greater income to the children.

This plan is an excellent way to benefit the surviving spouse, children and charity.

I recently came across information regarding home sharing programs for homeowners and would like to learn more. I am in my late 60's and interested in renting out a room in my house for extra income. What information can you share?

Because of inflation and rising housing costs, a growing number of homeowners are opting to rent out a spare room in their house as a way to generate some extra income and increase companionship. To find a good fit, homeowners often turn to "home sharing programs" that will match them with someone needing affordable housing.

Be aware that home sharing is not for everyone. Carefully consider the pros and cons of renting out a spare room in your house and make a list of what you want and do not want in a housemate.

You may want to search for information on the internet to help develop your understanding of the home sharing concept. Many websites offer various articles, online lessons and books that can help determine if this is a good option for you.

Home Sharing Tools

If you decide to proceed in finding a renter, a good first step is to seek out a home sharing program in your area.

Home sharing programs, usually nonprofits, screen both homeowners and renters. They check references, handle background checks and consider lifestyle criteria when making matches. They can also help with the leasing agreement that the renter would sign which covers detailed issues such as smoking, pets, chores, overnight guests, use of common rooms and quiet hours.

Most home sharing programs are free to use, and some may charge the homeowner and potential renter a fee to use their services. Use your preferred search engine to locate home sharing programs in your area.

If you do not find a program that serves your area, you can also search for housemates through online home sharing services. Some of the house sharing websites cater to specific age demographics. You may want to find a program that matches young renters with older adults looking to supplement their incomes and share their space.

If you do not have any luck with home sharing sites, contact your Area Agency on Aging. Your local Agency may be able to offer assistance or refer you to local agencies or nonprofit organizations that offer shared housing help.

You can also check with your local community center or place of worship to see if you can post an ad on their bulletin board or in their newsletter. You may want to advertise in your local newspaper or in online rental sites.

If you find someone on your own that you are interested in renting to, have the prospective renter fill out a rental application and ask for references. You can find free rental applications online. It is recommended to run a tenant screening and background check and call the references prior to deciding.

Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living" book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization's official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.

While Social Security will provide approximately 40% of the average person's retirement income, an Individual Retirement Account (IRA) is an essential addition for a successful retirement. Your IRA has two main benefits—contributions to a regular IRA are from pre-tax income and there is tax-free growth. There is another version of an IRA called a Roth IRA, which is funded with after-tax income.

Linda is in her middle working years and anticipates receiving Social Security when she retires. But she has several questions about whether she should also start funding an IRA.

• How should I fund my IRA?
• Is it a good idea to do an IRA rollover?
• At what age should I start taking IRA distributions?
• Should I take the minimum required distribution or a larger amount?

Funding the IRA

If you are not actively participating in another type of qualified retirement plan and are within an adjusted gross income limit, you may qualify to transfer a substantial sum each year into an IRA. The IRA contribution amount is $6,000 this year. If you are over age 50, you may also make an additional $1,000 "catch-up" contribution. The maximum IRA contribution amounts are indexed for inflation in increments of $500. In future years, the contribution amount will increase.

Because Linda is over age 50, she is able to contribute $6,000 and her catch-up amount of $1,000, for a total of $7,000 to her IRA this year.

Linda considers the options to create a regular IRA or a Roth IRA. Because she wants to receive the income tax deduction, she transfers the funds into a regular IRA and deducts the $7,000 on her federal tax returns.

IRA Rollovers

The majority of larger IRAs are funded through rollovers from retirement plans through your employer. If you have a qualified plan through your employment, upon separation from service or reaching a specific age, such as 70, you will usually have an option to rollover to a self-directed IRA.

Normally, your qualified plan through a business has been funded with pretax income. The IRA account also benefits from tax free growth. Therefore, the rollover will be from the other qualified plan into a regular IRA. Your IRA will continue to grow tax free, but future distributions to you will be taxable.

IRAs may be rolled over to a new custodian. The preferred method is to have a custodian-to-custodian transfer. If the funds are transferred directly from one IRA custodian to the new custodian, there is no tax.

While it is permissible for your custodian to transfer funds to you and then for you to make the rollover, your IRA custodian will withhold 20%. Because of the 20% withholding requirement, virtually all IRA rollovers are completed with the custodian-to-custodian method.

An IRA to Roth IRA rollover may also be permissible for you. Generally speaking, people with any adjusted gross income are permitted to transfer a regular IRA to a Roth IRA. The value of the IRA will be included in your taxable income, so you may owe a substantial income tax for the conversion.

The primary benefit of the conversion to the Roth is that a Roth IRA does not have a mandatory distribution requirement at age 72. The funds may be permitted to grow tax free and, at the discretion of the owner, may be withdrawn tax free during retirement years. If the owner of a Roth IRA does not make withdrawals, then the Roth may be transferred to children, who may make tax-free withdrawals over their life expectancy.

IRA Distributions

For a regular IRA, there are specific rules on both contributions and withdrawals. Withdrawals for distributions are generally not taken before age 59½. With limited exceptions, such as uniform distributions over a lifetime, disability, separation from employment after age 55, or other exceptions there is a 10% excise tax in addition to the regular ordinary income tax on withdrawals before age 59½. Therefore, very few individuals take early withdrawals before age 59½.

Between ages 59½ and 72, there is an optional period for withdrawals. The withdrawals are not required, but you may take withdrawal of any amount. Of course, for a regular IRA the amount withdrawn is taxable to you and no longer grows tax free in the fund. Therefore, you may not want to take withdrawals unless you actually need the funds for living expenses.

After you reach age 72, there are required minimum distributions (RMDs). The distributions start at approximately 3.7% at age 72 but increase with age each year. The distribution is calculated using your balance on December 31 multiplied by the appropriate percentage, and must be taken by the end of the next year. If you fail to take your distribution, there is a 50% penalty, so an error or an intentional disregard of the RMD rules is quite rare.

Do you know of any car gadgets that help drivers with mobility issues? I have arthritis in my neck, back and knees which makes it difficult to get in and out of my car and look over my shoulder to backup.

There are a number of inexpensive products you can purchase for your vehicle to help with issues that come with limited mobility. Here are some popular auto aids to consider.

Entry and Exit Aids

For those who have a difficult time entering and exiting a vehicle, there are a variety of support handles and special seat cushions that can help.

One option is a portable support grab bar that inserts into the U-shaped striker plate on the doorframe to make entering and exiting a little easier. Another option is a support handle that straps around the top of the door window frame. A rotating or swiveling seat cushion may also help to pivot more easily in and out of vehicles.

Rear Vision Improvements

To help those with neck and back range of motion problems, which make looking over the shoulder to back-up or merge into traffic difficult, there are special mirrors and back-up cameras available for installation.

To widen rear visibility and eliminate blind spots, additional safety mirrors can clip on to existing rearview mirrors. You may find multiple types of mirrors, ranging from larger panoramic views to smaller mirrors meant to minimize blind spots by adding a small mirror in a corner of the sideview mirrors.

Many drivers find it helpful to add a backup camera. Finding a backup camera with features such as night vision is especially helpful. You may want to look for features such as night vision. The backup camera attaches to a rear license plate and comes with a small monitor that mounts to the dash or windshield. When the vehicle is in reverse, it sends live images wirelessly to the monitor so you can see what is behind you.

Seat Belt Extenders

Seat belt extension products can also make buckling up a little easier. You may need to find a specific extender for the make and model of your vehicle to ensure compatibility. Typically, the extender will fit into the seat belt buckle receiver to add a few inches of length, making it easier to fasten. Another option for seatbelt accessibility is adding an extension handle that attaches to the seat belt strap to make it easier to reach.

Gripping Devices

If you have hand arthritis that makes gripping difficult or painful, consider finding a steering wheel cover that fits over the steering wheel to make it larger, softer and easier to grip. For help twisting open gas caps, you may benefit from the use of a tool that works like a wrench to loosen and tighten caps.

Professional Help

If you need more assistance or specialized recommendations, consider contacting a driver rehabilitation specialist trained to evaluate drivers and provide safety and driving equipment suggestions.

In addition to the types of aids mentioned in this column, there is also a range of adaptive driving equipment that can be professionally installed on a vehicle – like swing-out swivel seats, pedal extenders, hand controls and more – to help people with various abilities. Search online for "driver rehabilitation specialist" to locate one in your area.

Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living" book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization's official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.

The 401(k) is rapidly becoming the most popular qualified retirement plan. More than 90% of large companies now offer a 401(k). With a 401(k), each employee has an individual account and is permitted to transfer a portion of his or her salary directly into the account each year.

Most 401(k) plans qualify for excluding the contribution from your taxable income each year. However, some employers have created a "Roth 401(k)" plan in which after-tax contributions are made.

To encourage employees to fund a 401(k), some employers also create a matching fund. The employer determines the amount of the match and the maximum. While many different plans are selected by employers, a fairly typical employer match is $1 for $2 of contribution up to 6% of the employee's salary. With this plan, an employee who contributes the full 6% would receive a 3% employer match. Therefore, the total 401(k) contribution that year would be equal to 9% of the employee's income.

Contribution Limits

There are several potential contribution limits for employees. In 2022, the voluntary contribution by the employee is limited to $20,500. However, employees over age 50 during the year are permitted to add a "catch up" contribution of $6,500. The total annual employee contribution for those over age 50 is $27,000 this year. Both limits are indexed for inflation and increase in $500 increments. Some companies also will add a match or other company contribution to that amount.

Most companies have highly compensated employees (HCE) who are subject to specific rules. To make certain that the contributions are fair, the employees with income above a certain threshold and owners of more than 5% of a business are limited in their contributions. There are various "safe harbor" provisions that allow the HCEs to contribute without worrying about the annual contribution tests. For example, if there is a non-elective contribution by the company of 3% or more for all employees, then the plan does not have to meet specific standards for highly compensated employees.

401(k) Investments

The employer will select a custodian of the 401(k) and typically there will be a group of mutual funds for the 401(k) investments. The employee will have opportunity to select from the various mutual funds. These mutual funds are usually in four general categories.

The first category is stock mutual funds. Stocks have a long-term return of approximately 10%. For investments of 20 years or more, a percentage of the 401(k) in stocks will usually be a good decision. Stock funds generally include large cap, medium cap and small capitalization companies. Some funds may favor domestic companies and some foreign.

Stock funds should be fairly diversified to minimize the risk of loss if a company were to fail. A portfolio of large, midsized and small company mutual funds may own shares in 1,000 or more companies.

Bonds are the second type of investment fund. Mid-term and long-term bonds have returned approximately 5.5% during the past 75 years. Because bond values change much more slowly than stock values, the bonds are a more stable investment than stocks and are appropriate for shorter timeframes before retirement. As 401(k) owners move into their 50s, 60s and 70s, the percentage of bonds normally increases and that of stocks decreases. Some advisors suggest that the percentage of bonds should match your age. For example, a person age 60 may choose to hold 60% in bonds and 40% in stocks.

Cash is the third investment option. Most 401(k) plans permit a money market fund or similar option. Returns on cash funds are frequently 1% to 3%, but these cash options preserve principal in a downturn.

Real estate is the fourth investment type. Some 401(k) plans permit real estate investment trust (REIT) investments. Real estate may be a good long-term investment, but also involves substantial potential risk.

401(k) Distributions

There are three general periods of time of importance to traditional 401(k) owners. Prior to age 59½, there is a 10% excise tax on distributions. For a regular 401(k), the owner who takes early distributions would pay both income tax plus the additional 10% excise tax. There are exceptions for disability, substantially equal payments over a lifetime or economic hardship, but most individuals attempt to avoid early withdrawals if possible.

Between age 59½ and age 72, there is a voluntary distribution option. As a 401(k) owner, you may choose to take distributions to cover living expenses. The distributions may be any amount from the regular 401(k), but will be reported by you as taxable income.

After age 72 (by April 1 of the following year), the plan owner must take at least the required minimum distribution (RMD). The required minimum distribution starts at approximately 3.7% at age 72 and increases to 8.3% by age 90. With one exception, the distributions by a 401(k) owner are governed by this schedule under the IRS Uniform Table. There is an exception when one spouse is more than 10 years younger than the other. A special table applies in that case.

401(k) Loans

A 401(k) plan document may permit the owner to take a loan from the account. Loans are limited to the lesser of 50% of your plan or $50,000, and must be repaid within five years (except for purchase of a primary residence). A reasonable rate of interest is charged. While the loan is repaid with after-tax dollars, your 401(k) account will grow by the amount of the loan interest.

401(k) Balances

Because the required initial withdrawal amount at age 72 is approximately 3.7%, many individuals with 401(k)s will find that their total fund balance increases until their early to mid-80s. Even with some reduction in balance between ages 85 and 95 because the withdrawal percentages continue to increase, many 401(k) owners will pass away with substantial balances.

Because there is likely to be a significant balance in your 401(k) when you pass away, careful selection of your designated beneficiaries is important. If you pass away with a substantial 401(k) balance, then a significant amount will be distributed to your designated primary or contingent beneficiary. In most cases, your designated beneficiary will have the option of taking distribution of your 401(k) over a term of ten years.

Can you recommend any good online hearing tests? My spouse has hearing loss, but I cannot get them to go in and get their hearing checked, so I thought a simple online test could help show there might be a problem. What are some suggestions?

Online and app-based hearing tests are available to allow individuals to check their hearing. These tests are a quick and convenient option for the millions of Americans that have mild to moderate hearing loss but often ignore it. While the best option is to visit an audiologist for a hearing exam, many individuals may be hesitant.

Who Should Test?

For most people, hearing loss develops gradually over many years, which is the reason many people do not realize they have a hearing problem.

Anyone who has difficulty hearing or understanding what people say, especially in noisier environments or over the phone should get tested. Additionally, those who need a higher volume of music or TV compared to others should take a few minutes to test their hearing.

Self-Hearing Tests

Online and app-based hearing tests can serve as an at home screening tool. They are not meant to be a diagnosis, but rather to give a rough idea if hearing loss exists. For most do-it-yourself hearing tests, wearing headphones or earbuds and sitting in a quiet spot is recommended.

There are two different types of at-home hearing tests available. The first is known as pure-tone testing, where tones are played in decreasing volumes to determine your specific level of hearing loss. The second type is known as speech-in-noise or digits-in-noise (DIN), which requires the individual to identify words, numbers, or phrases amid background noise.

Where to Test

For those who use a smartphone or tablet, your app store may provide options for at-home screening. The World Health Organization has its HearWHO app available and is based on validated digits-in-noise technology.

HearWHO allows users to check their hearing status and monitor it over time using a DIN test. Other apps may use pure-tone and masked threshold tests to give you a detailed picture of your hearing abilities. Look for the free HearWHO app or others available through your app store for your smartphone or tablet.

You can also search for a wide variety of online hearing tests using your preferred search engine. Many of the online hearing tests are completely free to use and take less than five minutes to complete.

What to do with Results

If the tests indicate hearing loss, it is best to think of that as a starting point. Results should be taken to your primary healthcare professional or an audiologist for further evaluation. Many insurance providers and Medicare Advantage plans cover routine hearing exams, however original Medicare does not.

If hearing loss is mild to moderate, over-the-counter (OTC) hearing aids can be a great solution. They can be found online and at popular retail stores near you. OTC hearing aids do not require a prescription or medical examination for purchase and are more affordable than the traditional hearing aids purchased through an audiologist or a licensed hearing instrument specialist, but are often less effective.

Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living" book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization's official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.

Linda asked, "When should I take my Social Security? I will turn 57 this year and have a strong earnings history, having paid into Social Security for nearly 35 years. Given the year I was born, my 'regular' retirement age for purposes of Social Security will be age 67 but I can take 'early' benefits starting at age 62 or even wait until age 70. Which is better for me?"

Social Security Benefits

The average American retires and receives Social Security to cover part of his or her retirement expenses. A typical Social Security payment replaces approximately 40% of your pre-retirement income. To qualify for Social Security, you need to have contributed to the fund for 40 quarters or 10 years. Your Social Security payout will be dependent on your highest earning years.

Full Payments at Age 67

In the 1980s, Congress decided to slowly increase the age for full Social Security benefits from 65 to 67. For anyone born after 1960, the full Social Security retirement benefit is available at age 67.

Based on the tables, at age 67 Linda would qualify for $3,345 per month (in current dollars). If she waits until that age to start payouts, she receives a larger amount than if she selects an early payout at age 62 and it will be adjusted for inflation.

The favorable news for Linda is that she would receive this larger amount plus cost-of-living increases for her lifetime. In addition, if she works after age 67, there's no reduction in her Social Security payment. She can continue to receive the full income of her work and the Social Security benefit. Of course, because both she and her employer are contributing to the Social Security system while she is working, her actual Social Security benefit is significantly reduced. Her Social Security payout will be taxed and her net after-tax benefit will be reduced.

Because Linda is still working, she is contributing about $600 per month of after-tax income to Social Security. Her employer is also contributing a similar sum. The net Social Security benefit to her, after payment of income taxes on her contribution and the contribution by her employer from her salary, is now approximately $300 to $600 of added after-tax monthly income.

Early Payout at Age 62

Linda could join many Americans and start taking payments when she is age 62. In the case of early retirement, a benefit is reduced 5/9 of one percent for each month before normal retirement age, up to 36 months. If the number of months exceeds 36, then the benefit is further reduced 5/12 of one percent per month. If the number of reduction months is 60 due to retirement at age 62 when normal retirement age is 67, then the benefit is reduced by 30 percent.

This amount will be adjusted every year based on the Social Security cost-of-living increase. While her benefit is adjusted for inflation, the actual value or purchasing power of this amount will not change. Linda's mother is still living and her grandmother lived to be 96, so she may be wise to plan for a fairly long retirement.

There is one other challenge for Linda. If she continues to work, and many individuals do work until their late 60s, she will lose part of her Social Security payment. For every $3 in income (over an indexed limit) she earns between age 62 and her full retirement age, she loses $1 in Social Security benefits. By taking her payment at age 62, she receives both a lower payout for her lifetime and reduced payments for the years until her full retirement age.

Delaying Payments to Age 70

If Linda continues with her present employment and does not need her Social Security income, she can receive an increased benefit by delaying the start of payments to age 70. The benefit starting at age 70 for Linda is currently 24% higher than what she would receive at age 67. With inflation adjustments, Linda's benefit could be even higher by the time she reaches age 70.

This represents a significant increase over her normal retirement amount. The amount increases by about 8% per year because the government has held her funds longer and she has a shorter period of time before beginning to receive her payments.

If Linda lives to her mid-80s, then she will have received a greater total Social Security benefit. If she joins her long-lived relatives who have survived to their mid-90s, her net economic benefit from Social Security by delaying the first payouts to age 70 is dramatically greater than her total payouts starting at age 62 or 67.

Tax-free Social Security Payouts

Individuals with lower incomes do not pay any federal tax on Social Security. Generally, single people with incomes under $25,000 per year do not pay tax.

50% of Social Security Taxable

For many Social Security recipients, their income is in the middle range and 50% is taxable. For example, a single person with taxable income of approximately $25,000 to $34,000 would pay tax on half of his or her Social Security. The taxable income is called the modified adjusted gross income and includes adjustments for some types of tax-free income.

Because Linda has a substantial IRA, she expects to have a higher level of income.

85% of Social Security Taxable

With other pension income and IRA income, Linda anticipates a modified adjusted gross income of over $36,000 per year. As a result, 85% of her Social Security is taxable.

Linda is not very pleased with this plan. Because she already paid tax on her half of the Social Security, she feels that this is a very substantial tax. However, with the increasing need to fund Social Security in the future, the high probability is that Linda will pay tax on 85% of her Social Security during her lifetime.

Social Security for Spouses

A spouse may have different options for receiving Social Security. First, if he or she qualifies based on employment, then the best choice may be to take his or her normal benefit at the selected retirement age.

However, a surviving spouse can receive a reduced spousal benefit starting at age 60. At a later date they may transition to a full benefit under their own qualification.

After taking a fall last month, my doctor suggested I start doing balance exercises. Do you have any tips for balance?

Most people do not think about practicing their balance, but it is a good idea to start doing so. The same way that you walk to strengthen your heart, lungs and overall health, you should practice maintaining your balance.

As we age, our ability to maintain balance declines, which can increase your risk of falling. More than one in three individuals aged 65 or older falls each year and the risk only increases with age. A simple fall can cause a serious fracture of the hip, pelvis, spine, arm, hand or ankle, which can lead to hospitalization, disability, loss of independence and potential fatalities.

How Balance Works

Balance is the physical ability to distribute your weight in a way that enables you to hold a steady position or move at will without falling. Balance is controlled by a complex combination of muscle strength, visual inputs, inner ear workings and specialized receptors in the nerves of your joints, muscles, ligaments and tendons which help with orientation. These factors are sorted out in the sensory cortex of your brain, which takes this information and gives you balance. Over time, these neurological pathways dull and causes individuals to gradually lose their balance.

Poor balance can lead to a vicious cycle of inactivity. Individuals who feel unsteady end up curtailing certain activities, which can lead to inactivity. If they are continuously inactive, they no longer challenge their balance systems or their muscles. As a result, both balance and strength decline and simple acts like strolling through a grocery store or getting up from a chair become trickier for these individuals. This can shake their confidence and cause them to become even less active.

Balance Exercises

If you have a balance problem that is not tied to illness, medication or some other cause, simple exercises may help preserve and improve your balance. Some basic exercises you can do include:

• One-legged stands: Stand on one foot for 30 seconds or longer, then switch to the other foot. You can do this while brushing your teeth or even while waiting in line somewhere. In the beginning, you might want to have a wall or chair to hold on to in case you lose your balance.
• Heel rises: While standing, rise up on your toes, lifting your heel as high as you can. Drop back to the starting position and repeat the process 10 to 20 times. You can make this more difficult by holding light hand weights.
• Heel-toe walk: Take 20 steps and with every step, touch your heel to your toe on your opposite foot. Keep your focus straight ahead instead of looking down at your feet.
• Sit-to-stand: Without using your hands, get up from a straight-backed chair and sit back down 10 to 20 times. This improves balance and leg strength.

For additional balance exercises visit go4life.nia.nih.gov, a resource created by the National Institute on Aging that offers free booklets that provide illustrated examples of many appropriate exercises. You can order your free copy online or by calling 800-222-2225.

Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living" book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization's official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.

I just turned 65 and would like to learn more about the stronger flu shots I see advertised for older adults. What can you tell me about them and how are they covered by Medicare?

There are three different types of flu shots that the CDC recommends for people aged 65 and older. These FDA-approved annual vaccines are designed to offer more protection than the standard flu shot, which may be important for older adults who have weaker immune defenses and those who may be at a greater risk of developing dangerous flu complications.

Fluzone High-Dose Quadrivalent: Approved in 2009 for use in the United States, the Fluzone High-Dose is a high-potency vaccine that contains four times the number of antigens as a regular flu shot, which creates a stronger immune response and results in better protection. According to a study published in the New England Journal of Medicine, the Fluzone High-Dose proved to be 24% more effective at preventing the flu in seniors than the regular dose.

Fluad Quadrivalent: Available in the United States as of 2016, this vaccine contains an added ingredient called adjuvant MF59, which helps create a stronger immune response. In a 2013 observational study, Fluad was 51% more effective in preventing flu-related hospitalizations for older patients than a standard flu shot.

Please note that both the Fluzone High-Dose and Fluad vaccines can cause more mild side effects than the standard-dose flu shot, including pain or tenderness at the injection site, muscle aches, headache or fatigue. Neither vaccine is recommended for seniors who are allergic to chicken eggs, or who have had severe reactions to a flu vaccine in the past.

The CDC does not recommend one vaccination over the other. Please talk to your healthcare professional to determine which vaccine is best for you.

FluBlok Quadrivalent: An alternative vaccine for individuals with egg allergies is FluBlok Quadrivalent, a vaccine that does not use chicken eggs in their manufacturing process. This vaccine was 30% more effective than a standard-dose influenza vaccine in preventing flu in people aged 50 and older in a clinic study.

All the above-mentioned vaccines are generally covered by Medicare Part B, but subject to Medicare payment limitations.

Pneumonia Vaccines

Other important vaccinations recommended to older adults by the CDC, especially this time of year, are the pneumococcal vaccines for pneumonia. Around 1.5 million Americans visit medical emergency departments each year because of pneumonia, and about 50,000 people pass away from contracting pneumonia.

The CDC recently updated their recommendations for the pneumococcal vaccine and recommends that that individuals ages 65 and older who have not previously received any pneumococcal vaccine should get PCV20 (Prevnar 20) or PCV15 (Vaxneuvance). If PCV15 is used, it should be followed by dose of PPSV23 (Pneumovax23) at least one year later.

Alternatively, if you have already received a PPSV23 shot, you should get one dose of PCV15 or PCV20 at least one year later.

Medicare Part B also covers the two pneumococcal shots – the first shot at any time and a different, second shot if it is administered at least one year after the first shot.

COVID Booster

If you have not already done so, you may also be a candidate to receive a COVID-19 booster shot this fall. Both Moderna and Pfizer have developed new bivalent booster vaccines that adds an Omicron BA 4/5 component to the old formula, providing better protection.

Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living" book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization's official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.

What kind of changes can Medicare beneficiaries expect to see from the Inflation Reduction Act that was recently signed into law? How will this reduce out-of-pocket spending for Medicare beneficiaries?

The climate, tax and health care bill known as the Inflation Reduction Act was signed into law last month. The bill includes significant changes to the Medicare program that will kick-in over the next few years.

These changes will lower prescription drug prices for millions of individuals with Medicare. The government will be allowed to negotiate drug prices and cap out-of-pocket drug costs at $2,000 annually. Other changes include free vaccinations, lower insulin costs and expanded subsidies for low-income beneficiaries.

The Inflation Reduction Act also extends subsidies for health insurance premiums under the Affordable Care Act for three years. The subsidies have helped millions of Americans pay for health insurance before they are eligible for Medicare. Here is a breakdown of the changes and when they will commence.

2023: All vaccines covered under Medicare Part D, including the shingles vaccine, will be free to beneficiaries. The cost of insulin will be capped at $35 per month for participants. This will be a significant savings for more than 3 million Medicare enrollees who currently use insulin to control their diabetes. Also, drug makers will be penalized in the form of "rebates" that would be assessed and paid to the government if a drug's price increase exceeds general inflation.

2024: Cost sharing for catastrophic coverage in Part D will be eliminated. Currently, once your out-of-pocket costs reach $7,050, you enter catastrophic coverage. Participants are still responsible for 5% of your prescription drug costs, with no limit.

In 2024, people with Part D coverage will no longer be responsible for any out-of-pocket drug costs once they enter catastrophic coverage. This is significant for those who use expensive medications for conditions like cancer or multiple sclerosis. Also starting in 2024 through 2029, Part D premiums can not be increase more than 6% per year.

For lower income Medicare beneficiaries, eligibility for the Part D Low Income Subsidy (also known as Extra Help) will be expanded to 150% of the federal poverty level, from today's limit of 135%. This change will allow about 500,000 additional people with Medicare will qualify for financial assistance to help pay some or all their prescription drug premiums and deductibles.

2025: One of the biggest cost reduction measures for Medicare beneficiaries will begin in 2025 when out-of-pocket spending on Part D prescription drugs will be capped at $2,000 per year. This will be a major savings for the more than 1.5 million beneficiaries who spend more than $2,000 out-of-pocket each year.

2026: When Medicare's Part D program was enacted in 2003, negotiating lower drug prices was forbidden. Starting in 2026 Medicare will be allowed to negotiate prices with drug companies for 10 of the most expensive drugs covered under Part D. In 2027 and 2028, 15 drugs will be eligible for negotiations. After 2029, another 20 drugs will be added each year.

Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living" book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization's official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.