While it's generally a good idea to supplement your Social Security income with a traditional pension or personal savings, millions of people count on Social Security as their primary source of retirement income. According to SocialSecurity.gov, benefits make up 90% or more of the income of 36% of the people receiving benefits. So it is possible to retire on Social Security alone, but it is less than ideal.
If you are nearing retirement age and looking at Social Security to make up almost all of your retirement income, there are some things you can do to make living on just your benefit check a little easier.
- Pay Off Home/No Debt - This will free up a lot of room in your budget for other expenses.
- Delay Retirement – Not retiring as soon as you reach the minimum age to draw Social Security benefits allows your monthly check to build up. This won’t be an option for everyone but if you are able to delay retirement you can reap the reward of larger monthly checks.
- Do what you can to remain in good health –If you are healthy, do your best to remain healthy by eating right and exercising. Health care can easily kill a monthly budget when you are only drawing Social Security, so do what you can to stay healthy.
· Take a look at the figures and try living on a smaller budget - Use this tool on the SocialSecurity.gov website to see how much your Social Security payments will be at the age you plan to retire, and practice living on that amount before you actually leave your job. To live on a smaller budget, you will need to eliminate as many expenses as possible. Discretionary spending, like entertainment expenses, may to need to be whittled as much as possible.
· Tap your home equity. Homeowners have a built-in emergency fund if unexpected expenses occur in retirement. Retirees who are at least age 62 with no mortgage or only a small mortgage left to pay off may be eligible for a reverse mortgage. Read more here.
What if you are living on social security alone and you or a loved one becomes incapacitated? It is a good idea when planning for retirement to plan for your future and for your loved ones. Every adult over the age of 18 should have an Incapacity Plan that includes a Financial Power of Attorney, an Advance Medical Directive, and an Advance Care Plan. Just as important is that you get special medical certifications in place in connection with your Power of Attorney so that your Agent under your POA will be able to obtain a Reverse Mortgage for you if you don’t have one in place while you’re still mentally competent. At the Fairfax Elder Law Firm of Evan H. Farr, P.C., we provide these special medical certification forms for all of our elderly clients as part of our Level 1 Incapacity Planing. If you don’t have an Incapacity Plan in place, now is the time to get started. Call us today at 703-691-1888 to set up an appointment for a no-cost consultation.