8 Money Mistakes Virginia Homeowners Make Before They Retire

A couple in Roanoke pays off their mortgage, circles a retirement date on their calendar, and believes the hard part is behind them.

Three years later, the numbers they ran at their kitchen table stop matching what shows up on paper.

These are the money mistakes Virginia homeowners make before they retire.

Note: This is general information, not financial, tax, or insurance advice. Tax rules, dollar amounts, insurance terms, and Medicare figures are subject to change.

1. Assuming Pensions Are Tax-Free

Virginia never taxes your Social Security, which makes some retirees-to-be believe it won’t tax their pension either.

Your pension is fair game.

So are your 401(k) withdrawals, your traditional individual retirement account (IRA) distributions, and nearly every dollar of retirement income that isn’t Social Security.

Virginia taxes all of it as ordinary income, at rates that top out at 5.75% on anything over $17,000 of taxable income.

That’s the same rate the state charged your paycheck for 30 years.

A couple pulling $60,000 a year from retirement accounts can owe Richmond a few thousand dollars before a single federal dollar comes due.

The friends bragging about their move to Florida left for a state with no income tax at all.

Virginia isn’t one of them, and a budget built on that mistake comes up short every April.

2. Skipping the Senior Tax Break

Nearly every Virginia locality offers real estate tax relief for homeowners 65 and older, and most eligible owners never apply.

That’s money back.

Fairfax County wipes out part or all of the county real estate tax for owners 65 and up whose household income stays under $90,000 and whose net worth, minus the house, sits below $400,000.

Those limits are set locally, so Roanoke, Virginia Beach, and Loudoun each draw the lines a little differently.

The break can run to thousands of dollars a year on a paid-off home.

There’s a catch, and it’s the calendar.

Many localities make you file by a spring deadline, and plenty make you refile every year.

Miss the paperwork, and you pay the full bill on a house you already own outright.

3. Banking on the Age Deduction

Residents 65 and older get an age deduction worth up to $12,000 each off their Virginia taxable income.

Couples can double it.

But the break isn’t guaranteed.

The state claws it back as your income rises.

For anyone born after January 1, 1939, the deduction drops a dollar for every dollar of income above $50,000 as a single filer, or $75,000 as a married couple.

Go far enough past those lines, and the whole $12,000 disappears.

A retiree who takes one big IRA withdrawal to cover a new roof can wipe out the deduction for that year without ever seeing the trade.

So the timing of a large withdrawal matters as much as the size of it.

4. Leaving the Military Break Unclaimed

Few states are home to more military retirees than Virginia, and the state gives them a tax break many forget to take.

Retired veterans can subtract up to $40,000 of military retirement pay from their Virginia taxable income on a 2025 return.

The state removed the old age-55 requirement, so younger military retirees now qualify too.

On a full $40,000 subtraction at the top rate, that’s more than $2,000 kept every year.

Hampton Roads and Northern Virginia are full of retired sailors and soldiers who file the standard return and skip the subtraction line.

The break isn’t automatic.

You claim it, or you hand it back.

5. Claiming Social Security Too Early

The biggest Social Security decision is when to start, and Virginians who claim the day they qualify pay for the reflex.

File the moment you turn 62, and you lock in the smallest check you’ll ever get.

For anyone whose full retirement age is 67, claiming at 62 cuts the monthly benefit by 30%, and the cut is permanent.

That gap never closes.

A $2,000 benefit drops to $1,400, and it stays near there for the rest of your life.

Wait past full retirement age, and the check grows larger for every month you hold off, up to age 70.

For a homeowner with enough savings to bridge a few years, patience pays more than the early cash does.

6. Spiking Your Own Medicare Bill

Selling a house in a hot Loudoun or Arlington market can hand you a six-figure gain, and a surprise Medicare bill two years later.

It comes from the income-related monthly adjustment amount (IRMAA), a surcharge Medicare adds to your premiums when your income runs high.

The standard Part B premium in 2026 is $202.90 a month.

But cross $109,000 in income as a single filer, or $218,000 as a couple, and it jumps to $284.10.

Nearly $1,000 more a year.

Here’s the trap: Medicare sets your 2026 premium from your 2024 tax return.

So a house you sold in 2024, back when the market peaked, can raise the bill you pay today, long after the money’s spent.

One big year on paper follows you into the next.

7. Betting the House Against Floods

A standard Virginia homeowners policy covers a lot, but it doesn’t cover a flood.

Not an inch of it.

That surprises owners in Hampton Roads, where tidal flooding backs up storm drains in Norfolk and Virginia Beach on clear-sky days.

Flood damage needs a separate policy, through the federal program or a private insurer.

Homeowners who paid off the mortgage often drop the flood coverage the bank once required, then never pick it back up.

One storm surge later, the repair bill lands entirely on them.

Even a few inches of water can mean tens of thousands of dollars in damage.

Paying off the house doesn’t lower the flood risk.

8. Dragging the Mortgage Into Retirement

Many Virginians now carry a mortgage into retirement, part of a national shift that reshapes every other number in the budget.

About 41% of homeowners aged 65 to 79 still owe on a home loan.

That payment stays fixed whether or not the market dipped the month you planned to sell shares.

A mortgage is the one retirement expense you can’t trim by clipping coupons or eating in.

The math gets tight.

Some owners rush to tap home equity instead, through a line of credit or a cash-out refinance, and trade a paid-off house for a fresh monthly bill.