7 Ways Boomers Are Spending Their Social Security Checks in 2024
Written by
Angela Mae
Edited by
Molly Sullivan
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Born sometime between the years of 1946 and 1964, most baby boomers are 60 to 78 years old this year. That means most of them have reached the full retirement age of 66 (67 for younger boomers). And considering that people can start collecting Social Security benefits as early as 62 years old, many boomers have already started receiving their monthly paychecks.
If you’ve ever wondered how boomers are using their Social Security checks this year, here are the main expenses.
Main Source of Income
“Social Security is probably one of the most important pieces of a comprehensive financial plan for the majority of retirees due to the fact that it is a secured piece of retirement income that has built in COLAs, [isn’t] influenced by market risk, [and is] backed by the full faith and creditworthiness of the U.S. Government,” said Kevin Chancellor, financial planner and CEO of Black Lab Financial.
The average monthly Social Security check as of April 2024 is $1,915, according to the Social Security Administration. Originally, Social Security was designed to be used as supplemental income. However, many boomers are more reliant on their monthly check and use it as their main source of retirement income.
“[Social Security] provides the majority of retirement income for many,” Chancellor said. “However, the savings habits of individuals before they retire will ultimately determine if Social Security is ‘play money’ or if it is a vital piece of income in a retirement portfolio.”
For boomers who prepared well in advance for retirement, this is extra money for things that go beyond daily needs. For those with limited resources, the money is far more important to maintain their lifestyle during retirement.
Housing
More specifically, many boomer retirees use their Social Security checks to pay for housing. This can include rent or mortgage payments, repairs, maintenance and utilities.
Even those who own their home outright will still have to pay for things like annual property taxes and homeowners insurance. According to the U.S. Census Bureau, the median property tax in the U.S. is around $2,690 a year, or $224 a month. That’s a hefty chunk out of the typical Social Security check.
“Many retirees that don’t necessarily need all of their Social Security income for retirement use some or all of their benefit to keep their houses maintained, property taxes up to date, and their cash accounts replenished,” Chancellor said.
Other Financial Goals
For boomers who don’t rely solely on their Social Security income to cover the bills, some of that money can go toward other financial needs or goals. This could be saving or investing money. Or it could be paying off any remaining debts.
In some cases, the money might simply end up in a secure account somewhere to be used for any emergencies or surprise bills that might come up.
Travel or Other Interests
Retirees who want to travel and have other means of affording their lifestyle may use their Social Security check to fund their travels.
“Some of my super saver clients have used their Social Security deposits to fund their travel and vacations,” Chancellor said. “Since it is a guaranteed source of income, it is easy to plan for a travel date in the future and use the Social Security deposits to pay down the travel or save up and pay for it all at once.”
Not everyone wants to travel, though. For boomers with other interests, they may use some of their monthly checks to fund new or existing hobbies.
Helping Others or Giving Back
Some boomers will use part of their Social Security check to help others. This could mean giving back through donating to good causes or supporting the community. Or it could mean helping their families in some way.
“Some [boomers] use Social Security to support their adult children or grandchildren financially,” said Ben Klesinger of Reliant Insurance Group.
This can include helping with a younger relative’s college education or covering part of the costs for a family getaway — among other things.
Healthcare and Long-Term Care
After a certain age, Medicare kicks in.
Medicare Part A primarily covers inpatient hospital costs and, for most people, doesn’t come with a monthly premium. It does come with other out-of-pocket costs like a deductible.
Medicare Part B, which covers certain services like preventative care, medical supplies and outpatient care, has a monthly premium based on the individual’s income. It also has a deductible and other fees. Medicare Part D, meanwhile, covers prescription drugs but comes with its own out-of-pocket costs.
Unfortunately, Medicare doesn’t cover everything.
“As we age, more health issues may arise and many that rely heavily on Social Security may find themselves using those dollars for prescriptions, doctors visits and more since Medicare doesn’t always cover everything,” Chancellor said.
Many boomer retirees also dedicate at least a portion of their Social Security checks to long-term care.
“Long-term care is an essential part of a retirement plan because it insures your health as you get older and does so in a tax efficient manner,” Chancellor said.
Long-term care costs vary based on the level of care, the facility type and the location. In Louisiana, for example, the average long-term care cost is $54,105 a year — far more than the average Social Security payout.
But Social Security recipients can use some of their money to purchase a long-term care insurance premium. According to RetireGuide, these cost an average of $950.
Life Insurance
“Other people may buy a life insurance policy with their benefit to mitigate tax issues during a wealth transfer to their heirs,” Chancellor said.
This is primarily something those with more financial resources do, rather than those with limited funds.
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