In a perfect world, everyone would retire with $1 million or more in the bank, and live a comfortable lifestyle after a lifetime of hard work. Unfortunately, that’s rarely the case. More and more seniors are discovering that their retirement funds aren’t nearly as good as they anticipated. Thanks to a government-run Social Security welfare program, however, those without an adequate pension can survive when the time comes for them to stop working.
The program has many benefits, but the budget will be tight. The average senior receives just $1,300 per month, which is the equivalent to working a minimum wage job. If the recipient has already paid off their home and has very few living expenses or medical bills, this income isn’t too bad, but that’s rarely the case. Approximately 30 percent of homeowners 65 and over still carry a mortgage, with a median price of $79,000. What’s more, one in every five senior citizens skip doctor’s visits because they don’t feel they can afford the costs.
Living on Social Security Income (SSI) alone is difficult, but it’s possible. You must stick to a strict budget and practice a certain amount of restraint to achieve your goal. If you or someone you love is trying to live on SSI, here are some essential financial tips to survive the low wage.
- Set Your Monthly Budget
There’s no getting around setting a budget when your income is this small. The simplest way to budget is to get an estimate of how much your Social Security payments will be each month, and then compare them to a summation of your expenses. If those expenses surpass or meet the amount of your monthly payments, consider removing non-essentials, like your monthly subscription to cable.
As you make your budget, leave credit cards out of the equation. At this point in your life, the concept of “I’ll pay it off later” becomes riskier than ever, and if you’re not bringing in enough monthly income to cover your expenses now, you won’t be able to deal with the payments later.
- Maximize Your Benefit
There’s no one-size-fits-all sum for Social Security payments, and there may be a few things you can do to maximize your benefit. Most of the flexibility starts before you stop working. Things such as getting a raise, working a second part-time job, or delaying retirement can increase your payouts later on. If possible, instead of retiring at 62, wait until 70 or even later to take your payouts so that you’ll receive higher increments.
- Minimize Living Expenses
Do your best to pay off your mortgage before going on Social Security in order to cut down on your largest living expense. You may also need to consider downsizing or renting in a subsidized income apartment complex to cut down on costs like utilities, maintenance, property tax, and monthly payments.
Switching to off-brands instead of brand names, limiting eating out, canceling subscriptions, turning your heat down or AC up, finding a cheaper cell phone plan, and eliminating shopping sprees can also help reduce your cost of living.
- Tap Into Hidden Equity
Tapping smartly into the equity of your home or other assets gives you an emergency fund to fall back on when things are particularly tight. Talk to your bank about using that equity to help you pay off major expenses like medical bills.
- Find Senior Discounts
There’s no shame in using the senior discounts offered in your community. They were created to help you live a more comfortable life. The best way to find out about these discounts is to visit the mayor’s office or City Hall to see if they have any discount cards or special discount programs for seniors. It also helps to join a chapter of a senior citizen’s center, so you can discover the best deals and learn more financial tips from others in your situation.
- Bring In Some Extra Income
There’s no rule that says you have to stop working when you retire. If you feel up to it, make a little extra income through side jobs and projects. You might teach a class, tutor, consult, write, or pick up a part-time job. Even increasing your income by $500 per month will make a huge difference in your comfort levels while receiving SSI.
- Participate in a Co-Pay Program
Co-pay and other assistance programs can alleviate some of the costs of medical visits and prescription medications. These programs lower your out-of-pocket costs. Usually, you can get these co-pay cards from your pharmacist, physician, or through an online program. Be sure to do your research first to make sure you’re getting the best deal and that it’s not a scam.
Living on SSI is difficult, but it’s not impossible. When you practice some discipline and use these income-maximizing tricks, much of the burden will be lifted.