Social Security recipients will be getting much bigger payments next year thanks to an 8.7% cost-of-living adjustment for 2023 that will boost the average monthly check by $146. But it still might not be enough to help many seniors pay their bills in a period of historically high inflation.
More than half of retired Americans (55%) say the Social Security 2023 COLA isn’t enough, according to a new Motley Fool survey of 750 U.S. retirees. Less than 40% say the adjustment is about right.
The vast majority of respondents (85%) say inflation is stretching their budgets, and nearly three-quarters say they rely heavily on Social Security benefits to pay their bills. More than one quarter (27%) describe their financial situations as a “daily struggle.”
Although healthcare costs typically take up a big chunk of seniors’ budgets, those costs have been rising at a slower rate than other expense categories, said Matthew Frankel, a certified financial planner and contributing analyst at The Motley Fool. That’s not the case with housing costs, which have been rising in double-digit rates for most of 2022, as GOBankingRates recently reported.
“Housing costs have increased dramatically,” Frankel noted in an email to GOBankingRates. “Seniors who rent their homes are getting hit especially hard, as rent prices have increased sharply compared with pre-pandemic times.”
Retirees who believe they’ll have a hard time making ends meet even with the 8.7% COLA do have options for getting help.
In terms of housing costs, the U.S. Department of Housing and Urban Development offers a Housing Choice Voucher Program that helps very-low-income seniors and others afford housing in the private market. Another HUD program, Supportive Housing for the Elderly Program, subsidizes independent living apartments for seniors.
Food assistance is available through the U.S. Department of Agriculture’s Supplemental Nutrition Assistance Program, which helps low-income seniors and others purchase food every month. Another USDA program, the Commodity Supplemental Food Program, works to improve the health of low-income persons at least 60 years old by supplementing their diets with healthy foods.
Beyond that, seniors can save money in myriad other ways to help make ends meet if the 2023 COLA isn’t enough. Here are a few ideas:
- Move to an area with comparatively low costs of living, such as Reno, Nevada or Tucson, Arizona.
- Relocate to a tax-friendly state like Alaska or New Hampshire, which have no sales or income taxes; or Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming, which don’t impose state income taxes or taxes on pension income.
- Research local restaurants and retailers that offer senior discounts that might save you up to 25% on meals and up to 10% on merchandise.
- Lower your prescription drug costs by buying generic whenever possible and enrolling in senior discount programs at pharmacy chains.
If you need immediate cash to cover unexpected expenses, one option is a reverse mortgage. This is similar to a home-equity line of credit except that you’ll never have to repay the money you receive for as long as you remain in your home, Frankel said. However, he warned that reverse mortgages “aren’t right for everyone,” so be sure to research the pros and cons before using this option.
Finally, you can boost your income by getting a side hustle. As GOBankingRates previously reported, choices for the best side hustles for seniors include becoming a notary signing agent, personal chef, management consultant, delivery driver or bookkeeper. These jobs typically pay anywhere from about $17 to $60 an hour.
As Frankel noted, side gigs aren’t ideal or even practical for every retiree. But, he added, “the reality is that there is an abundance of open part-time jobs right now. Plus, there has never been more opportunity to pick up side gigs that you can do on your own time, as much or as little as you want.”
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