Do you depend on your Social Security benefits for the vast majority of your retirement income? If so, you aren’t alone. In June 2015, 22 percent of married beneficiaries and 47 percent of single beneficiaries depended on Social Security for 90 percent or more of their income. Living on Social Security is the reality for many retired Americans, but the average monthly payout for retired workers is only $1,335.
If you’re currently living on Social Security or you anticipate that these benefits will be your main source of income when you do retire, these tips can help you cut costs and maximize your quality of life within your means:
Delay Collecting if Possible
Currently, full retirement age is 66. If you wait until you’re 66 to collect Social Security, you will receive 100 percent of your benefits. However, every year you wait to collect, you’ll receive an 8 percent increase. If you wait until you’re 70 to collect, you will receive 32 percent more than if you’d retired at age 66. If you’re able to work full-time past age 66, consider delaying official retirement so you can receive an increased monthly stipend later on.
Consider a Roommate
If you’re single, think about finding a roommate to split housing costs with. Housing can eat up a large percentage of your budget and it could save you hundreds of dollars per month if you pool your resources with a friend.
Move to an Affordable Region
If the cost of living is disproportionately high where you live, consider moving to an area where you will be able to save money. Certain states are more tax-friendly towards Social Security recipients than others, such as Florida. Also, if you move to a comfortable, temperate climate, you won’t have high heating and cooling costs which results in further savings.
Follow a Structured Budget
Living on Social Security means that you will have to follow a budget. When you receive a fixed income every month, you must make sure your expenses don’t exceed your spending limits. Try to cut cable costs or cook more meals at home. A monthly budget can also help you save money for traveling and holiday gifts.
If you’re physically able, consider working part-time. As long as you don’t earn over a certain threshold, working won’t affect your retirement benefits. Even if you only earn a few hundred dollars per month, this could help you save funds for a rainy day and make a big difference in your financial outlook.
Use Medicare Advantage Plans to Control Healthcare Costs
Consider signing up for a Medicare Advantage plan, especially if you’d like to cap your out-of-pocket healthcare expenses for the year. Talk to My Senior Health Plan about your current insurance coverage and compare plans to see if a change could ease the strain on your budget if you’re living on Social Security.