5 Tips to Retire on Only Social Security

You can potentially retire on only Social Security with the right strategy

Reviewed by Ebony HowardFact checked by Suzanne KvilhaugReviewed by Ebony HowardFact checked by Suzanne Kvilhaug

If you’re approaching retirement having saved less than you’d like, there’s a chance that you could live on Social Security alone—but you’ll need a game plan to make it work. That’s because Social Security was designed to be a supplement to your retirement savings, covering only 40% of your pre-retirement income.

Still, if you find yourself needing to rely on Social Security to fund most of your living expenses, you’re not alone. About 12% of men and 15% of women rely on Social Security for 90% or more of their income in retirement. (And 37% of men and 42% of women rely on for it to support over half of their living expenses in retirement.)

Relying on Social Security as your primary or only source of funds takes some strategizing. You will likely have to decrease your living expenses significantly and live frugally. Here are five tips to help you make that happen.

Key Takeaways

• Reducing your living expenses can help you live on Social Security alone.
• Waiting to take Social Security until age 70 will increase your benefit by 8% a year beyond your full retirement age.
• Medicare and Medicaid can help you pay healthcare costs in retirement.
• Relocating to a low-cost-of-living area may help your Social Security dollars go further.

1. Delay Taking Social Security

Your full retirement age is 67 if you were born in 1960 or later and 66 if you were born before 1960. You can begin taking your Social Security benefits as early as age 62, but your benefits will be reduced for each year you take them ahead of schedule.

On the other hand, if you can put off taking your benefits past your full retirement age, you’ll see your monthly benefit check increase up until age 70. For someone who was born in 1943 or later and waits until age 70 to apply for Social Security, the increase is about 8% per year. After age 70, there’s no benefit to continuing to delay.

Important

The Social Security system’s funds are predicted to run out of reserve money by 2033. At that point, if no changes are made, the system will only be able to pay out 79% of scheduled benefits.

2. Downsize Your Home

Moving to a less expensive home can have a significant impact on your monthly cash flow. Ideally, if you have a mortgage on your home, you will have it fully paid off before you start living on Social Security alone. However, you will still have other housing-related expenses like property taxes, utilities, and, in some cases, homeowner’s association fees.

Housing costs can easily demand most of your Social Security benefits if they are still a large part of your budget. The Bureau of Labor Statistics estimates that people ages 65 to 74 spend approximately 34% of their household income on housing each year. That amount climbs to 36.2% for those ages 75 and older. 

3. Relocate

Moving to a less expensive home in your current city can help free up cash for retirement. But in some cases, a more significant move—to a different state or even moving abroad—can be worth considering to lower other living costs.

If you live in a state with a high cost of living and high taxes, moving to a state with a lower cost of living and more favorable taxes can make your budget easier to work with. By relocating, you could lower your costs for food and gas, for example.

Relocating to a place where you don’t need a car, such as a city with mass transportation options, can help you save on car expenses like insurance, gas, and maintenance.

4. Streamline Your Other Expenses

If you’ve made your housing costs more affordable, the next step is reducing other line items in your budget, such as utility bills, transportation expenses, and food costs.

The key question that you must ask is: What can you live without? Consider what you need to have an enjoyable retirement. Could you ditch cable TV, for example, in favor of watching TV online? Could you swap an expensive hobby like golf for a low-budget one like gardening? If you own two cars, could you sell one? These kinds of decisions can be tough, but they can make your transition to retirement on Social Security benefits a much smoother one in the long run.

If you’ve got substantial debt obligations, such as credit card debt or a car loan, aim to get them paid off before retiring, if possible.

5. Keep Healthcare Costs Under Control

Healthcare in retirement can be extremely expensive, so you need a plan to pay for it, especially if you have an existing medical condition.

While Medicare can cover some of the costs once you turn 65, it doesn’t pay for everything. If you’ve retired and your income is exclusively coming from Social Security, you’ll need to look beyond Medicare to pay for your medical expenses.

Medicaid, for example, is available to low-income individuals. You can have this coverage along with Medicare. It’s designed to help pay for premiums and pick up the tab for things Medicare doesn’t cover, including long-term care.

What Is Full Retirement Age?

Your full retirement age is the age at which you can start taking your full Social Security benefits. You can take benefits as early as age 62, but your benefits will be reduced. You can also delay taking benefits to receive a larger benefit, up until age 70.

Can You Retire With No Savings?

To have a financially secure retirement, you should have some retirement savings, but some people retire with no savings. And many Americans end up more reliant on Social Security than they expect. In a Gallup poll, for example, 77% of respondents said they were not saving enough to live comfortably in retirement.

Living on Social Security alone is possible, but you will need to have a frugal lifestyle to make it work. You can also maximize your Social Security income by delaying retirement until age 70.

What Is the Average Social Security Check?

As of August 2024, the average monthly retirement benefit for a retired worker was $1,920.48, according to the Social Security Administration.

The Bottom Line

Living on Social Security alone is far from ideal. If you’ve still got time before you retire, consider looking for ways to build up your savings. Start by chipping in as much as you can to your employer’s retirement plan, if you have one, especially if your employer offers a matching contribution.

If you don’t have a 401(k) or similar plan at work, an individual retirement account (IRA) is another way to grow your savings. The more you set aside now, the less pressure you’ll feel to make your Social Security benefits stretch.

Nevertheless, if you do have to stretch your benefits, downsizing, relocating, cutting your overhead, controlling healthcare costs, and delaying taking Social Security can make a big difference in your budget.

Read the original article on Investopedia.