For a good portion of US pensioners, social benefits are a major source of income. About half of married recipients rely on social security for at least 50% of their income under the Social Security Administration, and around one in five couples depend on the benefits of more than 90% of their retirement income.
Despite the fact that so many people rely on their benefits to make ends meet, not to save something on their own and expect social security to cover all your retirement costs, not the best idea. The average beneficiary receives only about $ 1,400 per month, and most will need to pinch pennies to recover that amount.
Having said that, sometimes it has no choice but to make the most of social security in retirement because they do not I have much money to fall back on. While it is never too late to start saving, if your savings go dry for a couple of years in retirement, it may be best to find ways to live comfortably. Fortunately, there are a few things you can do to make sure you live your best life on a tight budget.
. Delay claims benefits to earn larger checks
Exactly how much you receive in social security depend on when you pick them up. The only way you will receive the full amount you are theoretically entitled to is to claim at full retirement age (FRA), which is 66, 67, or somewhere between, depending on when you were born. You can claim earlier than FRA (as early as 62 years), but doing so will reduce your benefits by up to 30%. On the other side of the coin, if you wait until after the FRA has claimed (to 70 years), you will receive extra cash on top of the entire amount you are entitled to – up to 32% more, in fact.
When you begin to claim benefits, you can technically change. But you only have one year to do it and you have to pay back the benefits you have already received. Once your decision is locked in, you are stuck with your benefit for the rest of your life (though annual lifetime adjustments will affect exactly how much you receive). That means if you require early and receive smaller checks, you get the smaller controls for life. But if you delay the benefits of earning the poorer controls, you get more money each month for the rest of your life.
The larger controls can go a long way if Social Security is your only source of income in retirement. Even an extra few hundred dollars a month can be the difference between just passing by and being comfortable.
2. Pay as much debt as possible before you retire
The fewer debt payments you have to make each month, the more money you have to spend on fun retirement. This is especially important if you are going to live on social security alone, since every dollar counts.
If you cannot pay your entire debt before retirement, focus first on the debt with the highest interest rate level. The longer it takes to pay high-interest debt, the more interest payments will be your snowball over time. Depending on how much debt you have, you can end up paying thousands of dollars in interest alone. Even if you make more than the minimum payment each month, if most of the money goes toward interest, it may take many years to pay the debt completely.
When you have repaid the highest debt, you must deal with the debt with the next highest interest rate, and so on until you are debt free.
If you are struggling to pay off debt and save on retirement at the same time, prioritize your priorities by looking at the type of debt you have and what you pay in interest. While it is always a good idea to set aside at least a small amount of money for retirement, if you carry thousands of dollars in debt and pay, say 18% in interest per year, put money in a retirement account that provides annual returns of 7% can Don't do as much good as paying your debt.
3. Think of your retirement expectations
You can dream of spending your pension traveling across the country or relaxing on the beach every day. But if you are going to live on social security, you may have to lower your expectations.
That is not to say that you cannot live an entirely pleasant pension on a budget. Wherever your interests lie, there are plenty of free and affordable activities to enjoy in retirement. You may not be able to travel the world and buckle on expensive hobbies, but that doesn't mean you have to use retirement stuck in front of the TV. Find a cause you care about and start volunteering with a local non-profit organization, write that short story you said you never had time to do, or take some friends and explore the city's parks and museums. There are many ways to enjoy retirement without spending a lot of money if you know where to look.
Using a pension on a tight budget is a great opportunity to stretch your creative muscles and find ways to cut costs without sacrificing the quality of life. For example, when you want to take a vacation, try to travel in the off season when airfares and hotel rooms are cheaper. Or if you always want to learn a new hobby, explore online online to find some free tutorials and train your skills at home before signing up for expensive classes.
While staying at social security benefits alone, it is not ideal if it is your only option, you can still get the most out of it. By being creative with your retirement age and making strategic financial decisions, you can still enjoy a comfortable retirement, even on a tight budget.