Bridging the Social Security Gap: 5 Alternative Strategies To Supplement Your 2025 Income
Written by
Cynthia Measom
Edited by
Ashleigh Ray
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Depending on your lifestyle, living on Social Security alone may be doable. However, for most people, it’s not a realistic goal.
For January 2024, the average monthly Social Security benefit for a retired worker was only $1,907, according to the Social Security Administration.
At any rate, it’s likely a good idea to supplement your Social Security benefits — even if it’s only for a financial safety net. Here’s how.
Take on Part-Time Work
“Engaging in part-time employment can provide additional income without significantly impacting your Social Security benefits, especially if you’ve reached full retirement age,” said Reagan Bonlie, former J.P. Morgan wealth management executive and founder of Nudge Money.
According to the Social Security Administration, if you are under full retirement age — either 66 or 67 — for the entire year, $1 of your benefits will be deducted from every $2 you earn if your earnings exceed $22,320 for 2024.
Rent Out Your Property
If you own property, Bonlie said, renting out space can be a steady source of supplemental income.
“This could be a room in your home, a vacation property or an investment property,” he explained.
You also can rent out storage space in your home through platforms like Store At My House or rent out your empty driveway through Neighbor. Another option: If you have an extra car, you could rent it out through Turo.
Utilize Investment Income
“Dividends from stocks or withdrawals from retirement accounts like IRAs or 401(k)s can supplement Social Security,” Bonlie said. “Consider consulting a financial advisor to optimize your investment strategy for steady income.”
You don’t have to worry about your investment income being counted as earnings that will impact your Social Security benefits. The Social Security Administration does not consider such earnings in its income offset formula.
Invest In an Annuity
“Investing in an annuity can provide a guaranteed income stream in addition to Social Security, helping to cover essential expenses in retirement,” Bonlie said.
The Social Security Administration does not count annuities as earning either.
Consider a Reverse Mortgage
“For homeowners, a reverse mortgage can convert part of the equity in your home into cash without requiring monthly mortgage payments,” Bonlie said, “though this option requires careful consideration of the terms and conditions.”
For some, a reverse mortgage may be a good option, especially if the home you live in currently is your forever home. Payments on a reverse mortgage are not due until you move or die. However, proceed with caution.
Stretching Social Security Benefits and Supplemental Income
Here are some ways to make the most of your Social Security benefits and supplemental income.
Delay Claiming Benefits
Choosing to delay your Social Security benefits until age 70 can significantly increase your monthly benefit amount.
“This strategy can be particularly effective if you have other sources of income to cover expenses in the meantime,” Bonlie said.
According to the Social Security Administration, if you retire early at 62 in 2024, your maximum monthly benefit would be $2,710. However, if you retire at full retirement age — 66 or 67 — the maximum monthly benefit would be $3,822. And if you were to retire at age 70 this year, your maximum monthly benefit would be $4,873, which is $1,000 to $2,000 higher than retiring at an earlier age.
Practice Budgeting and Expense Management
Budgeting is key if you want to make the most of your money because it forces you to account for where your money is going each month.
“Creating a detailed budget and cutting unnecessary expenses can make your Social Security and supplemental income stretch further,” Bonlie said. “Consider downsizing, reducing discretionary spending and taking advantage of senior discounts.”
Engage in Healthcare Planning
Bonlie said healthcare costs can consume a significant portion of retirement income.
For example, according to Merrill Lynch, it’s likely that a healthy 65-year-old couple who retired in 2023 will use almost 70% of their lifetime Social Security benefits to cover medical costs.
“Consider supplemental health insurance policies like Medigap or Medicare Advantage plans to help cover out-of-pocket expenses not covered by Medicare,” Bonlie recommended.
Plan For Taxes
“Understanding how Social Security benefits are taxed and making smart withdrawal choices from retirement accounts can minimize tax liabilities and maximize income,” Bonlie explained.
Consult with a certified financial planner for advice about tax planning.
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