We often remind our readers that Social Security was never meant to fully fund anyone’s retirement, but was intended as a supplement to other retirement income that you establish yourself. Unfortunately, 31 percent of Americans have accumulated zero retirement savings, and many others have inadequate savings.
So yes, many people are, or are planning to, live on Social Security benefits alone. While we don’t recommend that course of action, you might be wondering how it is even possible. Here’s how life on the average Social Security check could look…
First of all, how much is the average Social Security check? The average benefit is $1,543, or $18,516 a year. For a married couple, both drawing the average benefit, that would amount to $37,032 annually.
Of course, not everyone receives the average Social Security benefit. The highest amount possible (currently) is $2,324 for someone who files at age 62 and $3,895 for someone who files at age 70.
Waiting helps. We know that for each year that you wait beyond full retirement age, you can claim a higher benefit amount (up to age 70. So, if you know that you will be living mostly or entirely on Social Security income, waiting to retire later could help boost your income.
Share a home. The old sitcom “Golden Girls” featured four retired women who shared a home. Perhaps the show was a bit ahead of its time! This is indeed one way to lower your living expenses in retirement, as you would share not only the rent or mortgage payment, but also utilities, property taxes, HOA fees, and expenses related to home repairs.
Relocate. An area that offers a lower cost of living could be key to helping you stretch your budget. After all, your Social Security benefits go wherever you do. While you’re at it, choosing a temperate climate can help you to lower your energy bills.
Pay off debts first. If you enter retirement free of debts, all of your income can go toward current living expenses.
Cut back on transportation costs. Use public transportation whenever possible, or live in a location that allows you to walk or bike on a regular basis.
Choose your Medicare plan wisely. Healthcare can be a burden for many retirees, but evaluating your Medicare options carefully can help you to cut back on your out-of-pocket expenses.
Don’t be afraid to accept help. Many retirees who live on Social Security are also eligible for public assistance such as food stamps.
Again, we definitely do not recommend that you attempt to live on Social Security alone. But these ideas can help you understand what retirement could look like if you choose to go that route. Call us to schedule an appointment, and we will help you identify opportunities to build up a nest egg so that you don’t face such extreme limitations.