For some people in their 20s, when they land that first great job and have some disposable income to spare, their attention — and money — turn to spending on a fun car or a stellar downtown apartment. But the experts say it’s actually time to start saving for something 40 years away: retirement.
But not everyone will — or can — make retirement saving a priority. If you won’t have a big chunk of retirement money put away, you could find yourself living just on your Social Security check. And that’s something to plan for, too.
The average monthly Social Security benefit for retired workers in May was $1,836.06, according to the Social Security Administration’s monthly statistical snapshot. While it isn’t a ton of money, it is possible to live on a limited budget with a big amount of planning, especially if you reside in a less expensive area of the country.
The Planning Starts With Debt Reduction
The key to living off your Social Security income is to keep your expenses to a minimum. You’ll have to pay the essentials, but you don’t want to divert your monthly benefits toward credit card bills or other debt.
“Debt can be particularly dangerous to people living on a fixed income,” said Jay Zigmont, PhD, CFP and founder of Childfree Wealth. “Debt allows you to steal from your future, and when your future is a fixed income, you don’t have room to steal from. Your goal should be to get completely out of debt before living off Social Security. Once you are out of debt, stay out.”
What’s Next? One Planner’s View
It takes planning to live just on Social Security. Adam Garcia, CEO of The Stock Dork, is also a financial consultant, and he shared his tips on how to maximize your monthly retirement benefit.
“Living off of Social Security can present its challenges, but with careful planning and a few key strategies, it’s possible to make the most of your benefits and enjoy a comfortable life,” Garcia said.
Create a Budget
“Start by assessing your expenses and income,” he said. “Determine your essential expenses, such as housing, utilities, food, and healthcare, and allocate a portion of your Social Security income toward these necessities. Be realistic and prioritize your spending to ensure you can cover your basic needs.”
Minimize Discretionary Spending
“Cut back on non-essential expenses to stretch your Social Security income further,” Garcia said. “Consider reducing entertainment, dining out and other discretionary expenses. Look for ways to enjoy leisure activities without breaking the bank, such as utilizing public parks, libraries and community centers.”
Take Advantage of Senior Discounts
If your local merchants or national retailers offer a senior discount, why not save a few dollars?
“Many businesses and organizations offer discounts for seniors,” Garcia said. “Research local establishments and services that provide discounts based on age, such as restaurants, transportation, entertainment venues and retail stores. These discounts can help you save money and make your budget go further.”
Explore Additional Income Sources
“While Social Security forms the foundation of your income, consider exploring supplemental income options to boost your financial situation,” Garcia advised. “Look for part-time employment opportunities, freelance work or consulting gigs that align with your skills and interests. Additionally, explore if you qualify for other government assistance programs that can provide additional support.”
Manage Healthcare Costs
Healthcare expenses can be a significant part of your budget as a retiree.
“Explore all available healthcare benefits, including Medicare and Medicaid, to ensure you receive the coverage you need,” Garcia said. “Compare Medicare plans to find the one that suits your healthcare needs and budget best. Utilize preventive care, such as regular check-ups and screenings, to catch potential health issues early and avoid costly treatments down the line.”
Seek Out Community Resources
Garcia said it’s worth the time to check within your community to see what resources are available for seniors.
“Look for local organizations that offer discounted or free services such as meal delivery, transportation and social activities,” Garcia said. “These resources can help you reduce costs and enhance your quality of life.”
Garcia said the key to living on Social Security only is making, and sticking to, the budget. And with your hard work in doing so, you potentially could sock something away at the end of each month to save for a goal or create a bigger rainy-day fund.
More From GOBankingRates