According to a recent report, about 40.2 percent of retired American workers rely solely on their Social Security benefits in retirement — while around 6.8 percent receive money from Social Security, pensions, and retirement savings accounts. However, even those who receive money from all three sources can expect to earn a median annual income of just $37,440.
Whether you’re living on Social Security benefits alone or you’re fortunate enough to have other retirement savings like an IRA or 401(k), living on a fixed income can be a challenge — especially when you’re used to getting raises, promotions, and racking up overtime on occasion.
However, it’s possible to live on a fixed income without skimping out on your golden years — and we’ll tell you how to do it below!
Reduce Monthly Expenses
Within the first two years of retiring from the workforce, nearly 50 percent of households end up spending more money than they did before they retired — which isn’t ideal when you’re living on a fixed income. From entertainment and travel expenses to higher health insurance premiums, your retirement years can cost you a whole lot more than you’d expect. However, you can reduce spending in retirement while still filling your time with travel, entertainment, and other leisurely activities if you:
● Shop around for affordable health insurance coverage.
● Sell your vehicle or shop around for lower automobile insurance rates.
● Look for senior discounts whenever you shop, dine out, or pay for a service.
● Buy clothing, furniture, and home goods from local thrift stores.
To help you cut costs each month and save money while living on a fixed income, you’ll also want to create a retirement budget. The Balance has some practical tips on its website to help you get started.
Supplement Your Income
In addition to creating a budget and reducing your monthly expenses, you could supplement your retirement income with a side gig that allows you to work from home and set your own hours. If you pursue freelance work during retirement, for instance, you can use your skills to earn money from home — giving you the flexibility and cash you need to live your senior years
to the fullest. Moreover, freelance opportunities are available in a variety of industries — including writing, customer service, administrative support, and accounting. If you have writing experience, for instance, you could work as a freelance ghostwriter, copywriter, or web content writer. Or, you could use your customer service skills to work as a freelance customer service representative or phone support specialist. Before working in retirement, however, you’ll want to determine whether your earnings would affect your Social Security benefit amount.
Downsize Your Home
If you’re living on Social Security benefits alone, your current mortgage payment could easily exceed your retirement earnings. However, downsizing into something smaller, less expensive, and more manageable could save you money each month and reduce the amount you’re spending on home maintenance and emergency repairs. Plus, you could save even more in retirement if you move somewhere affordable like Wenatchee, WA, Summerville, SC, or Colorado Springs, CO.
Before downsizing your home in retirement, there are a few things you’ll need to consider. For instance, you’ll need to determine whether you’re going to sell your home or rent it out, buy a new house with a lower mortgage payment, or move into a residential care community.
At Vista Living, we feel that independent living and retirement communities are worthwhile options to consider when downsizing your home, but you’ll want to run the numbers before making any decisions.
Living on a fixed income can be a challenge after so many years of working and earning a living, especially if your sole source of retirement income is from Social Security. With some budgeting and financial tweaking, however, you can get by on a fixed income without skimping out on the many wonderful luxuries your retirement years have to offer.