There are many steps you can take to trim your costs.
There’s a reason workers today are advised to save well for retirement rather than falling back on Social Security income alone. Those benefits will only replace about 40% of your pre-retirement wages if you’re an average earner. Most seniors inevitably end up needing more like 70% to 80% of their former paychecks — sometimes more — to cover their expenses in full.
But what if you’re already retired, or on the verge of it, and you therefore can’t go back in time and build yourself a larger nest egg? If that’s the case, and you’re concerned that your Social Security benefits will fall short in allowing you to cover your expenses, here are some moves worth making.
1. See if downsizing makes sense
It can pay to have a larger home when you’re raising kids and need the room to spread out. But if you’re about to retire or are a recent retiree, then chances are, your kids are adults and they’ve moved out on their own.
If that’s the case, you may be inclined to hang on to your home for sentimental reasons. But financially, that may not make sense — not when your home is costing you lots of money in property taxes and it’s expensive to maintain.
If you’re worried about your Social Security benefits falling short in covering your living costs, look into your options for downsizing your home. If you can shrink your housing costs significantly, your benefits are apt to go a lot further. And if you own your home outright and are able to walk away with a nice profit even after buying a new one, that’s money you can invest and use as a backup nest egg of sorts.
2. Evaluate your transportation needs
You may have needed a car when you had a daily commute to tackle. If you’re retired and are no longer working, a car may not be necessary, especially if you live in a walkable neighborhood and have no issues with mobility.
Even if you no longer have auto loan payments, not having a car could save you thousands of dollars a year by virtue of not having to pay for insurance and maintenance. You may also find that taking the bus when you need to is far cheaper than filling up your tank all the time.
3. Seek out free entertainment
It’s important to stay busy in retirement. But if you’re mostly limited to Social Security income, it pays to do what you can to keep your entertainment costs down.
To that end, see what free options are available in your neck of the woods. There may be no-cost programs at your local library or community center that help keep you occupied. Or start your own club based on your interests. Meeting with fellow retirees once a week to discuss news, books, or music is a good way to socialize without having to dip into your wallet.
Social Security just isn’t designed to sustain retirees in the absence of other income. But if you’re in the position of being heavily reliant on those benefits, know that there are likely steps you can take to at least limit your spending and make the best of that situation.
