Today, Congressman Josh Gottheimer announced he would be introducing a new bipartisan bill to help families save for retirement. The Senior Housing Improvement and Retirement Accounts (IRA) Act would help Americans save for retirement and encourage increased savings by allowing seniors who sell their principle residence to avoid paying the capital gains tax on the proceeds from that sale if they are saved in a Roth IRA.
Congressman Gottheimer unveiled this bill at an event at a real estate office in Ridgewood where he was joined by a retired couple from Glen Rock who are in the process of selling their family home, local officials, and real estate experts.
More information on the Senior Housing Improvement and Retirement Accounts (IRA) Act is available HERE and the bill text in full is available online HERE
“It’s way too expensive to live and retire in New Jersey; we are turning our backs on families who have been here decades if not generations because they just can’t afford to stay here in their golden years,” said Congressman Josh Gottheimer. “We need to cut taxes for seniors and help them transition into and save for retirement so they can stay here in New Jersey. That’s why I’m proud to introduce the Senior Housing Improvement and Retirement Accounts Act to reduce the taxes paid from the sale of seniors’ homes and help put those dollars into their retirement savings.”
Video of Gottheimer announcing this bill is available HERE and his remarks as prepared for delivery are below:
Jonathan and Marcia’s story represents the best of our state.
Jonathan was born down Route Four in Dumont. And when Jonathan and Marcia met and married – like so many New Jerseyans – they decided to come back to Bergen County to raise their family and live near where they work.
Jonathan, a retired manufacturer out of Hoboken, and Marcia, a retired art director in Englewood Cliffs, closed on this house behind us on March 1st, 1991. They moved in and 18 days later, on March 19th, their daughter Jillian was born. Just in time.
Jonathan and Marcia raised Jillian and their English Springer Spaniel – Mia – in this house. They moved here knowing that the top-notch schools, parks, and community in North Jersey would help raise their family right, in such a safe and beautiful neighborhood, because, as we all know, it takes a village.
The numbers prove that raising a family here in New Jersey is a good investment – more than sixty percent of our children receive pre-k education, well above the national average of forty percent. High School graduates receive some of the highest Advanced Placement scores in the country, and rank second for high school graduation rate in the nation.
We consistently beat the national average in income, and out of the top forty best cities to live in America – New Jersey has five. To anyone looking to raise a family, New Jersey is one of the best places in the world to do it.
Jonathan grew his manufacturing business, which made lithographic printing ink, and Marcia became an artist known well throughout the community. She’s an award-winning watercolor painter. In retirement, she’s teaching drawing and painting at the Tenafly senior center.
Twenty-six years later, their daughter Jillian is a college graduate; she has moved out and is a public-school teacher, herself. Mia still enjoys being taken out for hikes at Ramapo Reservation and the Franklin Lakes Nature Preserve. And the home this family grew up in still stands strong.
But while the Rieffs moved here for a better quality of life, for good jobs and great public schools, they cannot afford to live here in retirement. And they’re not alone.
New Jersey imposes the second highest state, local income tax burdens on families; we have the second slowest job market in America – only Alaska ranked lower (Bureau of Labor Statistics). And our ROI for all of those dollars has slipped; our roads are eight worst in the nation and our transit system was number one worst on time in the country last year.
While the Reef’s story represents the best of our state, it also represents the worst part of New Jersey: it’s simply too expensive to live here. In New Jersey, we pay the highest property taxes of any state in the nation, according to the Tax Foundation. Not only that, New Jersey has the highest estate tax in the country.
Compound taxes with the high cost of commuting and health care, and families are encouraged to downsize and move out of state as soon as their children graduate high school simply to survive.
An economic study done by Rutgers ranked New Jersey as the ninth worse state to retire in, and fifth most expensive state to live in. People want to stay here, close to their friends and family, but it’s like we’re chasing them out of the state. We are letting go, and turning our backs, on countless families who have been here decades, if not generations, because they just can’t afford to stay. That’s unacceptable, and we are here today to talk about one way we plan to address that.
Like so many New Jerseyans, the Rieffs’ financial advisors told them “look, the only way you get to retire is if you cut expenses.” So, now they are selling their home, despite what they’ll have to pay in capital gains taxes, just so they can afford to live and have enough to retire on.
Unfortunately, this is not unusual. Fifty-two percent of American households may not be able to maintain their living standards in retirement, according to the Center for Retirement Research at Boston College
And the GAO reports that half of households age fifty-five and older have no retirement savings at all.
A retirement savings crisis clearly looms as many Americans, including an imminent wave of baby boomer retirees, have struggled to sufficiently save.
We should be making it easier for families like the Rieffs to retire. We should be encouraging those who have helped make our communities great to stay here and retire here.
We shouldn’t be slapping seniors with outrageous taxes for trying to downsize their homes, making it even less affordable to live here.
We need to be cutting taxes for seniors, helping them transition into and save for retirement so they can stay here in New Jersey — and that’s what my new bipartisan bill does.
The U.S. tax code includes retirement savings accounts such as 401(k)s and Individual Retirement Accounts (IRAs), but retirees are blocked from tapping one of their largest savings devices — the equity in their homes.
And we know that homes often grow in value; it’s often the place where we have made our greatest investments over the years.
My new bipartisan bill, The Senior Housing Improvement and Retirement Accounts (IRA) Act, will help seniors in retirement by reducing the taxes paid from the sale of their home and helping put those dollars into their retirement savings.
It allows seniors who sell their home to avoid paying the capital gains tax if they save gains into a Roth IRA. I’m hoping extra help toward retirement will help seniors in New Jersey afford to stay here in our state in their golden years, instead of packing up to go elsewhere.
We know Americans are not saving enough for retirement – many of the seniors who would need this legislation were deeply impacted by the 2008 recession and for many, their retirement account is not back to pre-2008 levels. My bill gives them the extra boost they need to feel secure.
The Senior Housing IRA Act will apply to homeowners who have owned their homes for twenty or more years and who are age fifty-five or older. It is a once in a lifetime credit for these seniors to use; allowing for a one-time exemption of the current Roth IRA contribution limits of $6,500.
Imagine being able to jump-start your retirement by $50,000 or more – that could that change where, when, and how you retire.
For our seniors, this is a bill to thank them for raising their families here, for growing their businesses here, for doing so much for their communities, churches, and temples, and for paying all of those property, state, and local taxes here over the years.
We want to keep Marcia and John here in our community, even after they retire, so they can continue to give back, and enjoy our safe and beautiful neighborhoods and their friends and family.
I’m hoping this legislation will be just what John, Marcia, and so many other families just like them need to stay put in the greatest state in the country, spending time with their families, listening to Bruce Springsteen and eating the best pizza in America.