Throughout the years you work, you contribute a portion of your income to the Social Security program. When you’re 62 years old and have worked for at least 10 years, you’re eligible to retire and begin collecting Social Security benefits.
When you retire and begin to claim these benefits, you can use it as a source of retirement income to remain financially stable throughout retirement. The Social Security program is meant to ensure workers who retire have some source of income so they can live comfortably after they stop working.
The amount of Social Security benefits you receive depends on when you decide to begin claiming these benefits. In most cases, Social Security benefit payments don’t provide enough retirement income for you to live comfortably. However, if you take the time to prepare for retirement and implement certain financial strategies, you may be able to live on Social Security alone after you retire.
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If Possible, Delay Your Social Security Checks
You’re eligible to begin receiving Social Security benefits when you turn 62 and after you’ve been in the workforce for at least 10 years. While it’s tempting to retire as soon as you qualify to receive your benefits, it’s more beneficial to wait until you’re older to start claiming Social Security.
If you were born before 1937, your full retirement age to receive Social Security benefits is 65. If you were born after 1960, your full retirement age is 67. When you retire at full retirement age, the benefit amount you receive from the Social Security program is much higher than if you begin claiming these benefits at 62.
However, if you can wait to begin claiming benefits until you’re 70 years old, you’ll max out on the benefits you can receive. By delaying your retirement, you receive delayed retirement credits, which increases the percentage of your monthly Social Security benefit payment. A higher monthly Social Security payment is helpful if you don’t have other sources of retirement income.
Pay Off Debt Before Retirement
It can be tough to save money for retirement if you’re still paying off debt as you work. By paying down your debts, it’s easier to save money and ensure you can go into your retired life without recurring bills you’re responsible for paying.
There are several debts you may need to address before you head into retirement, including auto loans, your mortgage, credit card debt, or student loans. By paying off all your debt before retirement, you ensure that your entire Social Security benefit payment can be used for living expenses, necessities, and recreational activities when you stop working. Without other sources of retirement income, it’s crucial to be able to dedicate every Social Security dollar to maintaining financial stability in retirement.
Downsize Your Home
Your home is usually your largest investment and also your biggest expense. As you plan to retire, consider downsizing your home. With a smaller home, you’ll have fewer maintenance costs and hassles to deal with in retirement.
A home that’s smaller also allows for more affordable utility bills and is attributed to less expensive tax and insurance bills. With a downsized home, you may find it easier to pay off your mortgage completely before you stop working since smaller homes are generally less expensive than larger estates.
Consider Health Care Costs
Health care costs can be detrimental to your retirement plan if you aren’t adequately prepared. Remember that if you have health insurance through your current employer, you’ll no longer have this coverage once you retire. Private health insurance policies are usually expensive and may not provide full coverage for all your medical expenses.
Before retiring, look into other health insurance plans you may qualify for, such as the Medicare program. If you plan to live on Social Security benefits alone in retirement, it’s important that you have some type of coverage to help you pay for unexpected medical expenses and preventive healthcare.
Research Benefit Programs
When you retire and begin receiving Social Security benefits, you may also qualify for other financial assistance programs that will increase your retirement income. In addition to Social Security and Medicare benefits, you may qualify for:
- Medicaid: Medicaid offers free or low-cost health insurance coverage to low-income residents who qualify. When you retire on a low income, you may qualify for coverage through both Medicare and Medicaid to cover your medical expenses.
- Extra Help: The Extra Help program offers financial assistance to low-income seniors that qualify for Medicare Part D coverage. You may be eligible to receive an additional $5,000 to assist in covering prescription drug costs.
- Supplemental Security Income: The Supplemental Security Income program is federally funded and offers financial assistance to eligible low-income residents to cover basic necessities.
- Tax relief: As a low-income retiree, you may also qualify for tax relief on real estate property taxes, vehicle registration fees, and solid waste fees. You may need to consult with your state government about these tax relief programs and specific eligibility criteria.
- Supplemental Nutrition Assistance Program (SNAP): Also commonly referred to as food stamps, the SNAP program provides financial assistance for eligible food purchases. If you’re a low-income retiree, you may qualify to receive monthly benefits through this program to help pay for your groceries.
If you plan to only retire on your Social Security benefits, your income may be low enough to qualify for additional assistance programs. Review each program’s guidelines to learn whether you qualify for additional federal or state financial assistance.
Don’t Live Alone
When you live alone, you’re responsible for the full share of living expenses, including your mortgage or rent payment, utility bill, and maintenance costs. To reduce these expenses, consider getting a roommate to live with you. With another person in the house, you can split all these expenses in half, making it much easier to live only on your Social Security benefit payment each month.
While your Social Security benefits are meant to be a supplemental source of income in retirement, you may be able to solely live on this benefit payment when you stop working. If you carefully plan for retirement, eliminate your debt, and keep a conservative budget while reducing expenses, it may be possible to retire comfortably on Social Security benefits alone.
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