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11 Ideas for Living on Social Security Alone

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Editor’s Note: This story originally appeared on NewRetirement.

Living on Social Security alone is not only possible, but many retirees already accomplish that very feat every year.

While the lifestyle associated with Social Security income isn’t exactly luxurious, it doesn’t have to equal rice and beans for the rest of your life, either.

How you make living on Social Security alone work for you will depend on a lot of factors, not the least of which is what you want out of life.

Living on Social Security alone is possible. Check out ways to make it work in the following.

Whoever came up with the crazy idea that we need $1 million to retire?

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The advice from many retirement financial experts is pretty clear. To have a reasonably comfortable life in retirement, you need about $1 million saved.

That’s the traditional guideline originated by financial planner Bill Bengen back in 1994, and one that’s still embraced today.

But, let’s face it, most people simply don’t have anything close to a million dollars for retirement. In fact, most Americans are closer to zero savings than $1 million

For most people, anything resembling $1 million is an unattainable goal. According to Federal Reserve SCF data, the average retirement savings for Americans ages 60 to 64 is $221,450.

Social Security Administration estimates that many people live mostly on benefits

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The Social Security Administration (SSA) estimates that 97% of older adults either receive Social Security or will receive it.

And, a significant percentage rely on Social Security as their sole source of income. Of the over 66 million Americans receiving Social Security retirement benefits:

  • Social Security benefits represent about 30% of the income of people over age 65.
  • Among Social Security beneficiaries age 65 and older, 37% of men and 42% of women receive 50% or more of their income from Social Security.
  • Among Social Security beneficiaries age 65 and older, 12% of men and 15% of women rely on Social Security for 90% or more of their income.

How much does Social Security pay to a household annually?

Benjamin Franklin peeking out from a $100 bill over Social Security cards
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Social Security income varies depending on work history and when you start receiving benefits. The Social Security Administration reports that the average monthly Social Security benefit in 2023 was $1,905.

And, for context, the highest benefit receivable for someone who files at 62 is approximately $2,300 and the highest benefit receivable for someone who files at age 70 is $4,900.

So, what does that mean for annual income for a single household?

The average monthly benefit of $1,905 translates to $22,860 a year. (So, a married couple, both getting the average Social Security benefit might receive $45,720.)

Social Security alone keeps you above the poverty threshold

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According to the most recent reports from the U.S. Department of Health and Human Services, the poverty threshold for an individual is $15,060 and for a couple is $20,440.

The poverty threshold is a guideline set by the U.S. government to indicate the least amount of income a person or family needs to meet their basic needs.

Ideas for how to retire on Social Security alone

Social Security website
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Depending on your lifestyle, living off the average benefit of $22,860 a year might seem impossible or entirely doable.

If it seems daunting, here are some ideas for how to retire on Social Security alone.

1. Wait to start Social Security

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If you have not yet started your Social Security benefits, the best thing you can do to live more comfortably on Social Security alone is to wait to claim your benefits.

Waiting means that your monthly payment will be bigger, giving you more money to spend.

If you have reached full retirement age, which is between 66 and 67 depending on the year you were born, you can access 100% of your benefits. For each year after that, up to age 70, your benefits increase 8% each year, meaning you can access 32% more at age 70 than at age 66. There is no further increase after 70.

If those benefits are tapped at a younger age than full retirement age, they will be reduced based on the number of months you receive benefits before you reach your full retirement age.

For example, if your full retirement age is 66, the reduction of your benefits at age 62 (the earliest you can claim) is 25%; at age 63, it is about 20%; at age 64, it is about 13.3%; and at age 65, it is about 6.7%, according to data from the Social Security Administration.

2. Share housing

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You’ve probably seen more than one episode of the popular 1980s TV show “The Golden Girls.” They had a great idea. When you pool your resources in retirement, you can live a whole lot better.

When two or more people share a house and household expenses, the money goes further, whether you’re renting or sharing a mortgage payment.

There are loads of options to share housing and cut this expense: rent out a room (or rooms) in your house, combine funds to buy a home with other people, or create some other kind of communal living.

Read more about the golden age of “Golden Girl”-style retirement living.

3. Consider relocating

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Where you live is important from the standpoint of cost of living and housing prices.

Housing: Experts say that you should not spend more than 1/3 of your income on housing. That means if you are earning the average of $22,860 a year in Social Security, you can only spend $635 a month on housing.

The sale of a valuable home in an expensive town or state could more than finance a much more modest home in a less expensive area, plus give you a little left over.

Cost of living: If you live in an area where goods and services are expensive, relocation to someplace where the cost of living is more comfortable is also worth consideration.

Where to go?

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U.S. News & World Report says that these 10 states have lower costs of living and home prices: Indiana, Michigan, Missouri, Tennessee, Georgia, Arkansas, Alabama, Oklahoma, Kansas, and Mississippi.

And, moving abroad can be another great way to really cut your expenses.

Here are 14 tips for downsizing and information about how to retire abroad.

4. Live somewhere with a temperate climate

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Heating and cooling can be expensive. Utility bills — especially in the heat of summer and the worst of winter — can be untenable on a tight budget.

Living in a more temperate area means less of a demand on one of the most expensive systems in any home, which is the HVAC unit.

5. Retire debt before you retire

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When you retire, the less debt you have the better. Paying off debt entirely before retirement isn’t possible for everyone, but the less you owe the more you’ll pay out. This applies to credit cards as much as it does to your home and vehicle.

The NewRetirement Planner will let you see what happens to your finances with and without debt. It can be pretty interesting to model your own situation and experiment with different debt repayment plans.

6. Cut transportation costs

Smiling Senior Male Passenger Looking Out Of Back Seat Car Window
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Transportation is purported to cost more than health care in retirement. According to the American Automobile Association, it costs, on average, $8,558 per year to own and operate an average sedan.

I don’t think I need to say that $8,558 is hardly affordable on Social Security alone.

To cut transportation costs, you can:

  • Walk or bike, if possible.
  • Rely on taxis, Uber, or public transportation.
  • Enroll in a carshare if available in your area.

Get ideas for cutting money spent on your car and getting around.

7. Prioritize

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Living on Social Security without any other income may make it impossible to do everything you want.

However, retirement is an excellent time to take stock of what you have and what you want — you may just need to prioritize your wants.

If you know what is most important to you, you can set goals and figure out a way to achieve your number one priority.

8. Plan

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It is very useful to get a clear understanding of exactly:

  • How much you earn or will be earning
  • How much you spend or will be spending in retirement
  • Any financial assets you have and how you might be able to use them for retirement

You will want to consider your finances both now and well into the future.

9. Cut expenses

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Try keeping a record — in a notebook, a spreadsheet, a software program, or on your phone — of EVERY dollar you spend. Many people are surprised to learn how many little things add up over the course of a month.

Documenting your expenses might also help you see services you can cut. Do you need all those cable channels? Can you add milk to plain coffee instead of ordering a latte?

Here are 20 more ways to cut retirement costs.

10. Consider assistance

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There are quite a few programs to help low-income seniors. Research indicates that only 25% of eligible seniors apply for benefits that are available.

Explore some of the low-income options.

11. Stay healthy and make good insurance choices

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Some retirees spend more in their lifetime on out-of-pocket health care costs than they earn in Social Security. You can do a lot to cut those costs by staying healthy and by choosing supplemental Medicare coverage carefully.

Shopping around for the best supplemental Medicare plan should be done every year. Plans change. Your health needs change.

You can make living on Social Security alone work

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Traditional retirement advice just isn’t feasible for a lot of Americans, but living off Social Security alone really is possible. It’s all in how you approach it. The overarching themes are cutting expenses and living modestly.

For some, that might mean living in a more communal setting with expenses shared among more than just one person or one couple, and perhaps taking a part-time job if necessary. For others, maybe a suite or apartment at the home of an adult child is the answer.

Or maybe the best thing to do is retire in place and whittle down on what you normally spend. Pay off debt and pinch pennies.

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