Need To Cut Expenses While on Social Security? Here’s the First Thing To Axe
Written by
Daisy Carrington
Edited by
Kristen Mae
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Retirement brings new financial challenges, particularly when Social Security makes up all or most of your income. To ensure a good quality of life later on, it’s vital to cut spending now.
But where’s the best place to start? Housing. By eliminating or reducing mortgage payments and other homeowning costs retirees can fund a better lifestyle as they age.
Reducing Mortgage Payments
Housing costs represent the biggest expense for retirees. They amount to roughly 36% of spending for Americans 65 years and older. The situation has grown more challenging in recent years. In 2023, over a third (34%) of older households were cost burdened, paying more than 30% of their income on housing. For the more than 10.5 million older homeowners who still have mortgages, that percentage is usually far higher.
The average retiree household spends $21,445 annually on housing — approximately $1,787 monthly. This includes mortgage payments, property taxes, insurance, maintenance, and repairs. The financial burden is particularly steep for those still paying off their homes: 43% of older owners with mortgages are cost burdened, compared to just 19% of those who own their homes free and clear. This is why it makes sense for retirees and soon-to-be retirees to downsize their homes, or even consider relocating to less-expensive regions.
By minimizing or eliminating mortgage payments, those on a fixed income can save for expenses that are likely to increase as they age: namely, healthcare costs. Fidelity’s 2025 estimate reveals that a 65-year-old retiring this year can expect to spend an average of $172,500 on health care and medical expenses throughout retirement — and that assumes enrollment in Medicare Parts A, B, and D, but doesn’t even include long-term care expenses.
Fewer Home Repairs
Not only does owning a cheaper house reduce mortgage payments, but it also means spending less on maintenance. Home repairs are retirees’ single most common unexpected expense, according to the Society of Actuaries, though this financial surprise can be mitigated by having less house to upkeep.
A Boost to Retirement Savings
Downsizing to a cheaper home can also translate into more retirement savings. According to research by Vanguard, those aged between 60 and 69 have the highest potential to unlock home equity through relocation, which can be used to inject more money in a retirement nest egg — a useful source of cash for those on a limited income.
A Lower Cost of Living
A smart relocation can also mean mitigating other major expenses that can eat up social security earnings. For example, moving somewhere with good access to public transport can eliminate the need to own a car — another major expense for retirees. The American Automobile Association puts the yearly estimate of owning a car at over $11,577, or about $965 per month — a prohibitive expense for many retirees relying on fixed incomes.
That’s no small concern when you consider how many Americans rely heavily on Social Security. Research shows that 52.5% of baby boomers will rely primarily on Social Security for income in retirement, while more than 40% of Social Security recipients age 65 and over depend on these payments for at least half their income, according to the Social Security Administration.
“Driving can become more challenging with age,” noted Anna Annecca, Senior Care Expert and Clinical Operations Leader with Assured Allies, adding that retirees should look to live in towns that provide easy access to reliable transportation. “Choose locations that are well-connected to major transportation lines,” she said.
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