Living on social security alone is not ideal. If you’re about to retire and your nest egg is minimal or non-existent, you will have to plan very carefully to live on Social Security. When Social Security is your primary or only source of income on retirement, making your dollars stretch further can be a challenge. Here are some tips that may help you.
- Keep healthcare costs under control
Medicare will cover some of your healthcare costs after you turn 65 but it doesn’t cover all of them. Once you’re retired and you’re relying on Social Security, you will have to look beyond Medicare. Low-income seniors can apply for Medicaid which helps to cover the costs not covered by Medicare.
Some state-sponsored programs help with prescription drug costs and Medicare premium costs. However, you may not be eligible for such programs as they are based on factors like income and age.
You may need to think about a Medical Supplement plan that covers the gaps in Medicare coverage. Russell Noga, founder of Medisupps, offers expert advice to those seeking coverage and he advises comparing plans because rates may be different although plans offer the same coverage.
Mutual of Omaha Medicare supplement plan G is the company’s most popular plan as it covers all gaps in Medicare except the Medicare Part B deductible. The monthly rates are more affordable than the popular Plan F which can make up for having to pay the deductible.
- Delay taking Social Security for as long as you can
You can start taking Social Security benefits from age 62. However, if you start at that age, you see less money for every year you take them ahead of normal retirement age, which is 67 for those born in 1960 or later. If you put off taking your benefits for longer, your monthly check increases and those extra dollars can make a difference.
- Pay off your mortgage
Housing costs are significant and you need to make sure your mortgage is paid off before you retire. If you’re a married couple and you still have a mortgage, paying it will probably require nearly half of your joint Social Security monthly payments. If you have a paid-off house and don’t have any housing costs, your money will go much further.
- Downsize your home
The longer you stay on in a large house which you don’t need, the less money you have for retirement. According to the Bureau of Labor Statistics, those of 65 to 74 years of age spend about 30% of their household income on housing.
A reduction of even $100 in what you’re spending by trading in your house for something smaller could help you to maintain your lifestyle in retirement. You could even consider moving to another region or another country where costs are lower.
- Streamline your overheads
Once you’ve made your housing more affordable, it’s time to start cutting down your household expenses. If you have a car loan or credit card debt, you need to get rid of it as soon as you can. You can try to start reducing your food budget, transportation costs and utility bills.
It may be difficult to make decisions such as selling off one car if you have two but it could make your transition to retirement and living on Social Security a little easier. Saving for retirement should be a priority but it often falls through the cracks. Thinking that you can live on Social Security and some savings is not a substitute for building a solid base for retirement.