Critter Corner: Can My Sister Retire on Social Security Alone?

Dear Commander Bun Bun,

My sister seems to think that she can live on Social Security alone. Do you think that is possible, and if so, do you have any tips I can share with her?

Thanks,

Nada Nuffmunney

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Dear Nada,

Millions of people count on Social Security as their primary source of retirement income. In fact, Social Security was at least 50% of income for 52% of beneficiary couples and 74% of single beneficiaries, and at least 90% of income for 22% of couples and 45% of singles. So it is possible to retire on Social Security alone, but it is less than ideal. Below are some tips you can suggest to your sister to make living on just her benefit check a little easier:

1. Wait to start Social Security: If she hasn’t started Social Security, the best thing she can is to wait to claim her benefits. When she reaches 66 (normal retirement age), she can access 100% of her benefits. For each year after that, up to age 70, her benefits will increase 8%, meaning she can access 32% more at age 70 than at age 66.

2. Share housing: Remember the Golden Girls sitcom from the 80’s? Similar to that, when two or more people share a house and household expenses, the money goes further, whether you’re renting or sharing a mortgage payment.

3. Prioritize: Living on Social Security without any other income may make it impossible to do everything you want. However, retirement is an excellent time to take stock of what you have and what you want, so you may just need to prioritize your wants. If your sister knows what is most important to her, she can set goals to live within her means.

4. Cut Expenses: Your sister should try keeping a record – in a notebook, a spreadsheet, a software program or on your phone – of EVERY dollar she spends. Many people are surprised to learn how much little things add up over the course of a month. Documenting expenses may also help her see things she can cut.

5. Plan: Your sister should consider her finances both now and well into the future to see what she needs to get by. The Retirement Estimator, on the Social Security website, can help.

6. Pay off debt before you retire: Before retirement arrives, she should pay off as much debt as she can. This will free up a lot of room in her budget for other expenses. This applies to credit cards as much as it does her home and vehicle.

7. If she is healthy, she should do her 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 she should do what she can to stay healthy.

8. Tap her home equity: Homeowners have a built-in emergency fund if unexpected expenses occur in retirement. Retirees who are at least age 62 may be eligible for a reverse mortgage, which can often be taken out even if there is an existing mortgage on the house, in which case the existing “forward” mortgage gets paid off by the reverse mortgage. This will eliminate a monthly mortgage payment, which will help make things more affordable for her. Read more here.

Hop these tips are helpful!

Commander Bun Bun