It’s not a great situation, but all isn’t lost.
There’s a reason financial experts warn people not to retire on Social Security alone. Those benefits will generally replace about 40% of your pre-retirement wages if you’re an average earner. And most seniors need about twice that much income to live comfortably.
But what if you’re on the cusp of retirement and Social Security will be the only income source you’ll have available? It could be that you kept running into large expenses that prevented you from building a nest egg. And it may be that your job, like many, doesn’t give you a pension to fall back on.
It may be possible to pick up part-time work in retirement. But if you can’t, you might really be limited to the money Social Security pays you. And that, frankly, isn’t an optimal situation.
At the same time, it doesn’t mean you should resign yourself to being absolutely cash-strapped in retirement. If you’re careful with your money, you can stretch your Social Security income to maintain a decent lifestyle.
Make the most of your limited resources
People who only have Social Security to live on during retirement have to be very careful how they spend their benefits. If you’re not used to living frugally, you may have to adopt that mindset. But if you are used to living frugally or willing to do so, you may be able to manage, even if you’re limited to a single monthly benefit.
To start, though, map out a strict budget that prioritizes your essential expenses — things like housing, transportation, utilities, food, and healthcare. From there, allocate money to other expenses that might serve the very important purpose of helping you stay busy — things like cable or streaming services.
At the same time, though, you’ll want to make sure you’re taking advantage of any and all discounts that are available to you, whether it’s low-cost medications through a program your doctor helps you sign up for or senior rates for public buses and trains.
And don’t underestimate the value of free entertainment. Staying busy is an important thing to do in retirement, and it’s harder to do it when you don’t have a lot of money. But if you do your research, you may find that you’re able to occupy your days without spending much money by visiting local museums on days they’re free for seniors or taking advantage of programs run by your town community center or library.
Also look to volunteer. You may find that it’s a good way to maintain a schedule and routine without having to spend money at all.
Retiring on Social Security alone isn’t ideal. For the average wage earner, it will mean taking a 60% pay cut for life. But if that’s the situation you’re in, don’t panic or despair. Instead, think of the different ways you can make the most of your monthly benefits, and stretch your income so it serves your needs well.