According to recent statistics from a study by the National Institute on Retirement Security, those nearing retirement age have on average $14,500 in a retirement account. Younger Americans have even less, only $2,500 according to the study. As many as 45 percent of Americans report that they have not saved for retirement at all!
Social Security income is not very much
The average social security check was $1,234 as of this past June, 2016. Not very much money to carry you during your retirement years. Roughly 67 percent of retirees also receive Old-Age and Survivors Insurance benefits, making the monthly income around $1,685 per month, for an annual income of $20,220. A couple would receive a little more than $40,000. Still not very much.
How can you live on just social security?
It would be better to have retirement savings, but if all you have is social security income, it is not the end of the world. Here are a few things you can do to ease the situation and still enjoy life.
- Delay retirement. If at all possible delay your retirement until you reach the age where you can draw maximum benefits. Normal retirement age today is 66 and at this point you can draw 100% of your benefits. But if you wait, your benefits increase by 8% for each year that you delay, up to age 70 .
- Watch your health. Do everything you can to stay healthy. Eat healthy, exercise and go for regular checkups. Choose the best supplemental Medicare plan to avoid having your income eaten up by uncovered and out-of-pocket medical expenses.
- Retire your debt. If the amount of debt you are carrying is significant it may not be possible to pay off everything before retiring, but do the best you can. Collect all your credit card accounts and other revolving debt, make an assessment, and if you need to, apply for a debt consolidation loan to get things under control.
- Prioritize. Your retirement income is most likely not going to match your income from wages. Sit down and identify your priorities, what you must have and what you can live without. Be realistic.
- Keep track of your expenses. If you are computer savvy, make use of one of the many automatic income and expense platforms. If computers are not your thing, then keep a log of all your daily expenses. It is amazing how quickly they add up. Once you see where all your pocket money is going, you may want to re-evaluate if that daily latte, for instance, is really worth it.
- Find a cheaper place to live. If you own your home outright, then you are in a much better position than someone with a mortgage or a renter. However, it still might be worthwhile to sell your home, if the market is good, and move to a cheaper place. Here is a list of some of the more affordable cities for retirees living on social security income.
- Akron, Ohio. The median price for a home in Akron in August, 2015 was $120,450, according to property listings. The costs of utilities, commuting and housing are low, making Akron an affordable place.
- Albuquerque, New Mexico. According to MSN, the median rent is less than $690 per month.
- Johnstown, Pennsylvania. In Johnstown, average income from wages is not as much as your social security check, which means that the cost of living is very low. The average rent is less than $500 per month, according to the census data.
- Buffalo, New York. Average rent in Buffalo is $512. The cost of living is also low. It is colder though, so your winter utility bills are going to be higher.
- Bangor, Maine. While not top of the list of retiree cities, AARP recommends it because it has no state income tax on your social security benefits.
- Indianapolis, Indiana. Indianapolis officials have made a point of making the city affordable. The average sale price for a home is $130,000 which means that if you own your home in a more expensive housing market, you can sell, buy something in Indianapolis and have money left over to supplement your social security income.
If you are up for moving overseas, there are many international destinations where one can easily live on social security income alone, with no sacrifices in comfort.
Bottom line: with careful planning, creativity and focus you can enjoy your retirement years, even if you will have only your social security income.