Friday, January 12, 2024

Here’s What It’s Like to Retire on Almost Nothing but Social Security: Four Retirees with Limited Incomes Open Up About How They Make It Work; 10 Tips to Live Well on Social Security Alone

Cassidy Araiza for The Wall Street Journal
WSJ: Here’s What It’s Like to Retire on Almost Nothing but Social Security
Four retirees with limited incomes open up about how they make it work
Many Americans reach retirement with almost no savings. No 401(k). Few investments. And almost no income aside from a monthly Social Security check.
Roughly one in seven Social Security recipients ages 65 and older depend on their benefits for nearly all their income, according to an AARP analysis. Unable to maintain the lifestyle of their working years, they trim their already trim budgets, move into smaller homes, or rely on the kindness of relatives to get by.
Social Security was never intended to fully support retirees, said Anqi Chen, assistant director of savings research at Boston College’s Center for Retirement Research.
In 1940, when the program was new, Social Security replaced just over 20% of a typical worker’s income at age 65. As Congress enhanced benefits, the figure rose to about 50% in the early 1980s. It stands at under 40% today, according to Chen.
The average monthly Social Security check is about $1,900. That doesn’t go as far as it once did, said Sandy Markwood, CEO of USAging, adding that inflation and rising rents have led more older adults to seek help from her nonprofit’s Eldercare Locator tool and other organizations that provide support to seniors.
We spoke in depth with four retirees who rely mostly on Social Security benefits about their fears, joys and financial challenges. Though they don’t live as comfortably as those fortunate enough to have amassed $2 million or $5 million nest eggs, they say they have found ways to build fulfilling lives in retirement.
Eric Miller never wanted to leave the kitchen. The professional chef thrived on the intensity of restaurant life, often working 12-hour days six to seven days a week.
A heart condition landed him in the hospital about seven years ago. After that, he had no choice but to hang up his knives.
Now 70, Miller said he was unprepared for sudden retirement, financially or otherwise, in part because he never planned to stop working, he said.
At the height of his career he earned about $2,000 a week; now, his monthly Social Security check brings in about $1,400.
He rents the basement of his sister’s home for about $500 a month including electricity. His other main expenses include food, gas and insurance. His six heart medications are largely covered by social services.
About 17 years ago, he moved to Arizona to care for his aging mother as her dementia and Alzheimer’s worsened. When she had a stroke, he took a nearly two-year career break to help care for her full-time until she died. He eventually moved back to Virginia, where he worked for a few more years.
Though money is tighter than he would like, Miller is proudly debt free. He paid off more than $12,000 in credit-card debt this summer with the help of nonprofit financial counseling agency GreenPath Financial Wellness. He also got relief from his roughly $100,000 in medical bills for his four heart procedures, thanks to the hospital’s charity.
“I feel a lot less stressed,” he said. --->READ MORE HERE (or HERE)
10 Tips to Live Well on Social Security Alone:
Social Security is a game-changer for American workers. Created in 1935, it does more to lift people out of poverty than any other program in the country, according to the nonpartisan Center on Budget and Policy Priorities. Their analysis of 2022 data finds that Social Security payments keep 21.7 million people out of poverty, 15.4 million of whom are age 65 or older.
Still, the program was never intended to replace all of a retiree’s income, and trying to live off Social Security payments alone is a tall order.
“Frankly, it’s a little concerning,” says Antwone Harris, chief planning strategist at Platinum Bridge Wealth Strategies in Washington D.C. “It’s not something I would advise.”
However, the reality is that some older Americans will spend their golden years relying on Social Security payments to make ends meet. If you’ll be one of them, here’s how to live well on a modest amount of money.
  • Pay off your debt. 
  • Delay claiming Social Security as long as possible. 
  • Coordinate with your spouse. 
  • Beware taxes on Social Security income. 
  • Lower your housing costs. 
  • Consider relocating to reduce your cost of living. 
  • Make healthy living a priority. 
  • Trim your expenses. 
  • Apply for assistance. 
  • Look for ways to create new cashflow.
Pay Off Your Debt
Living off Social Security alone will be more comfortable if you have fewer expenses. Whether you are still working or already retired, make eliminating debt a priority. Likewise, don’t be tempted to try to bridge any gaps in your retirement budget by using debt.
“You don’t want to use your credit cards,” says Krisstin Petersmarck, an investment advisor representative with Bridgeriver Advisors in Bloomfield Hills, Michigan. “You want to live within your means.”
Charging purchases to a credit card may seem like an easy way to pay for the things you want right now, but as interest charges add up, you’ll find it increasingly difficult to make ends meet financially.
Delay Claiming Social Security as Long as Possible --->READ MORE HERE
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