4 Things Retirees Must Do If Social Security Is a Big Part of Their Income, According To an Expert
Written by
Jamela Adam
Edited by
Levi Leidy
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According to a new report from the National Institute on Retirement Security (NIRS), a large portion (40%) of older Americans rely only on Social Security income in retirement. With the average monthly Social Security benefit being $1,907 as of January 2024, that means you’re surviving on a little more than $22,000 per year if Social Security is your only income source. Though that amount might work in lower-cost areas, it’s most likely not enough to support a comfortable retirement lifestyle in many parts of the country.
Here’s what certified financial planner Jason Ball suggests that you do if Social Security benefits are, or will be, a big piece of your income during your golden years so that you can make the most of your finances.
Get Really Serious About Budgeting
If Social Security is a major source of your income and you don’t plan on increasing your cash flow through other sources like starting a side hustle, then you’ll want to take budgeting seriously. “Start by prioritizing mandatory expenses like housing, healthcare and utilities. Once these are covered, see what’s left for discretionary spending,” Ball said.
If you haven’t officially retired yet but are nearing retirement age, it can be helpful to map out a spending plan after estimating your expenses, adjusting for lifestyle changes and factoring in future income streams. You may also want to test-drive your spending plans while you’re still working to see whether they’re realistic.
Budgeting apps like YNAB and EveryDollar can help simplify your budgeting process. But if you prefer to use pen and paper, you can find budgeting workbooks and planners on places like Amazon and Etsy.
Consider Working a Bit Longer If Possible
If you’re getting close to retirement but haven’t made the leap yet, you may want to postpone your plan a bit longer — especially if Social Security will be the majority of your retirement income.
“Social Security benefits are calculated based on your highest 35 earning years, so if you’re earning more now than you did earlier in your career, those extra years can increase your monthly check,” Ball said. “Plus, delaying retirement means you don’t have to dip into your savings as early.”
If you’ve already retired and are thinking about heading back into the workforce, know that It’s actually pretty common for retirees to “unretire.” According to a recent T. Rowe Price retirement study, around 20% of “retirees” are working either full time or part time. Half chose to return to work for financial reasons, while the other half chose to work for social and emotional benefits.
Most employers post open positions and accept resumes online on job boards like Indeed and Monster. You’ll also want to look into sites that specifically cater to older workers reentering the workforce, such as AARP Job Board, New Solutions and Retired Brains.
Take Advantage of Senior Discounts and Benefits
If Social Security is your main source of income in retirement, you’ll need to be strategic about managing your budget. Ball suggests taking advantage of senior discounts and exploring programs that can help stretch your Social Security dollars further. Here are some examples.
- Home Equity Conversion Mortgage (HECM): HECM is the most common type of reverse mortgage, which is a type of home loan only available to homeowners who are 62 and older. If you’re eligible, you could borrow against your home’s equity for tax-free payments.
- Travel discounts: Some Amtrak fares are discounted by 10% for passengers aged 65 and older. United Airlines also offers special senior fares to people 65 and older for certain flights.
- Grocery store discounts: American Discount Foods gives people 62 years and older 10% off every Monday. Fred Meyers also offers senior discounts of 10% off select items on the first Tuesday of every month for people 55 and up.
- Hotel discounts: Best Western offers 15% off for people 55 years and older. Choice Hotels also gives you 10% off advance reservations if you’re 60 and up or are an AARP member.
- Phone plan discounts: Consumer Cellular offers AARP members a 30% discount on eligible accessories and a 5% discount on monthly services.
Think About Downsizing or Moving
Housing is often the largest expense for retirees. A BLS report found that, on average, people 65 and older spend $18,872 annually for housing.
Ball believes that the most straightforward way to cut down the amount you spend on housing is by downsizing to a smaller home or moving to a more affordable area. “This usually means a smaller mortgage or rent and lower utility bills, which can really help free up some cash and reduce your monthly expenses,” he explained. He also recommends looking into states that are tax-friendly for retirees, where you might find lower property and sales taxes.
Some of these tax-friendly states include Florida, Alaska, Wyoming, Delaware, New Hampshire, South Dakota and North Dakota.
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