5 Things To Cut Now in Case Social Security Runs Out
Written by
Andrew Lisa
Edited by
Amber Barkley
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The full retirement age to claim Social Security benefits is going to rise incrementally starting in 2025 — but less than 10 years after that, the program’s trusts will run dry and recipients of all ages will have their benefits slashed if Congress doesn’t act.
It’s not the first time Social Security has faced a shortfall. In the past, Congress has always legislated to keep the country’s promises to seniors — but as investors say, past performance is no indication of future results.
It’s always better to be safe than sorry, especially when your future financial security is on the line. Follow these smart spending tips to eliminate budgetary waste, so you’ll have a cash cushion to lean on in case of the worst.
The Wants You Don’t Really Want
Spending plans come down to needs and wants. You can’t do much about the needs — housing, utilities, insurance, etc. — and you shouldn’t eliminate the affordable wants that make life worth living.
But you can and should trim the monetary fat wherever you find it.
“I’ve advised numerous clients on their financial strategies,” said Jonathan Feniak, general counsel at LLC Attorney. “For retirees or those close to retirement bracing for potential Social Security cuts, I generally recommend a few key budget alterations.
“Firstly, scrutinize discretionary spending. High-end subscriptions, dining out frequently or extravagant vacations, while enjoyable, might need to be pared down. This doesn’t mean eliminating fun, but rather opting for cost-effective alternatives.”
Your Oversized Home
If you own a house that’s too big and too expensive — or even if you’re still renting above your family size — now would be a good time to trade down for something smaller, cheaper and more manageable, and put the savings into ETFs, CDs or whatever other money-growing vehicle you and your financial advisor decide is right.
“Consider downsizing,” said Feniak. “If your children have left home, maintaining a large house can be a significant drain, both in terms of maintenance costs and property taxes. A smaller, possibly more energy-efficient home can bring substantial savings.”
Your Overpriced Health Coverage
Many adults of all ages make the mistake of automatically re-enrolling in their existing health insurance coverage, because shopping around and comparing policies during re-enrollment periods is tedious and time-consuming.
It’s a mistake.
If you’re not yet on Medicare — or even if you’ve reached 65 and claimed your benefits — reexamine what is likely one of your most challenging monthly bills.
“Look into healthcare plans and alternatives,” said Feniak. “Medical costs can surge during retirement, and exploring more affordable insurance options or supplemental plans, preventative care tactics or even cost-sharing programs can help ease this financial burden.”
Your Excessive Car Insurance
You have to have basic auto insurance to drive, but depending on your plan and your driving habits, you might be starving your savings to overpay for excess coverage.
“Reevaluate your car insurance,” said Melanie Musson, a finance and insurance expert with InsuranceProviders.com. “If you’re driving an old car but paying for full coverage, you may be able to switch to liability-only coverage and save a couple of hundred dollars a year. You can also increase your deductible to pay lower premiums. A mileage-based policy might be a great avenue of savings if you don’t drive much.”
Unplanned Meals
If you’re dining out excessively, you probably already know you need to cut back — and you should.
“Instead of going out to eat, start making your own meals,” said Musson.
That said, Feniak’s point remains — if the occasional dinner out brings you joy, don’t eliminate it, just do it less frequently and visit affordable restaurants. One way you can make room for that in your budget is by streamlining and strategizing about how you eat at home.
“Meal planning [slow cooker] meals can be an easy way to make sure you eat healthy and easy meals,” said Musson.
According to Fresh Meal Plan, the average meal at home costs just $4. If you take an hour to plan your meals every week, shop only for the ingredients your weekly plan requires, store your food properly and stay consistent throughout the year, you can save thousands in preventable food waste that you can then invest to brace for potential cuts to retirement benefits.
“All these actions taken today can make a huge difference in the comfort of your retirement, even in the face of Social Security fluctuations,” said Feniak.
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