There is a reason hard working people are warned to save for their retirement. Social Security usually fails to completely cover its seniors’ living expenses. And people who retire on SS benefits alone usually struggle financially.
The avg. monthly Social Security benefit in 2022 will come to about $1,657. If you combine this with withdrawals from your retirement plan, that is not necessarily bad. But on its own, it only amounts to about $20,000 a year.
If you are struggling in retirement because of relying too heavily on a Social Security check, you’re not alone. But it is also imperative that you take some steps to reduce your expenses and make them more manageable. Here are a few specific moves to consider making.
1. Downsize your house
Even if your home is paid off by the time you do retire, downsizing to a smaller home could result in larger savings. The bigger your home, the more money it is going to cost to heat, maintain and cool. Plus, a bigger home often means a bigger property tax bill.
If you own your home outright and you are willing to downsize, it is currently a great time to sell. During the third quarter of 2021, home prices in the United State were up 18.5% from the year before. That means if you sold your home soon, you are likely to get more money for it.
2. Sell a car
When you work and have to drive to an office every day, dumping a car might not work. But if you are retired and do not need to drive every day, it might pay to cut your costs by selling your car — especially if money is tight.
AAA reports that the avg. cost to own a vehicle is $805.50 each month, or $9,666 each year. Even if you were to spend $100 each week on a ride-hailing service, you would benefit financially by selling a car. And if you are part of a two-car household, selling one car and sharing the other one might also make a lot of sense.
3. Choose a different Medicare plan
Many seniors register for original Medicare, which contains Parts A, B, and D. But you might have better luck — and reduced costs — with a Medicare Advantage plan.
Medicare Advantage plans are provided by private insurers, and usually, they are less expensive than the original Medicare plan, all the while offering a broader scope of coverage. Original Medicare, for example, will not pay for eye exams, or hearing aids, dental care whereas a lot of Advantage plans will pay for these services.
To see if Medicare Advantage is a good fit for you, you will need to check prices of plans in your area. And you might need to wait until the fall open enrollment to swap plans if you are currently registered for original Medicare. But you are allowed to research any Advantage plans ahead of time.
There is nothing wrong with depending on Social Security as your main retirement income source. But those benefits might not come close to covering all of your living costs on their own. If you are struggling financially because you are mostly limited to Social Security, it could pay to consider these changes that might save you a lot of money.
Author: Scott Dowdy