Dear Angel,
My mother is considering whether to take Social Security or to delay doing so, and if she does, she hopes to be able to live comfortably off it during inflation. Is this even possible and if so, how? Thanks for your help!
Liv Inoffit-Alonn
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Dear Liv,
Currently, nearly a quarter of seniors ages 65 and over live in families that depend on Social Security benefits for 90 percent or more of their income, according to the AARP Public Policy Institute. With the average monthly benefit at just over $1,500, retirees who rely on Social Security to pay for all of their living expenses are on very tight budgets, especially during inflation.
Please tell your mother not to despair though, if she chooses to take her Social Security soon. There are ways to stretch your benefits as far as possible and to live comfortably.
Before I explain, I just want to inform your mom that an official with the Social Security Administration recently said seniors and others who rely on the benefits program are likely to receive a cost-of-living adjustment “closer to 8%” at the end of 2022 due to the current rate of inflation, which would be the highest increase in four decades. The agency’s COLA takes effect in December, with the updated benefits paid out beginning in January 2023, so this should definitely help a bit!
Here are some additional tips:
Pay Off Debt Before Retiring
To make the most of her Social Security income, your mom should try to pay off all debts, including credit card bills and debt incurred for other people’s benefit, such as a child’s higher education, before retiring. This way, she can focus on putting her benefits toward what she needs day-to-day.
Splitting living expenses with a housemate is a great way to make dollars stretch further, plus it can help prevent loneliness. A SmartAsset study found that in some major cities, renters who split a two-bedroom with a roommate save more than $800 a month over those who rent a one-bedroom on their own. Even if your mom is not renting, having a housemate can lower the amount she spends on utilities, internet, cable, and energy.
If she has ample money in IRAs or a 401(k) plan, she can devise a sensible withdrawal strategy, understanding that she is not limited to taking required minimum distributions. As long as she is at least 59 1/2, it may make sense to make significant annual withdrawals for the next five years, given today’s low 22 percent and 24 percent income tax brackets that are scheduled to disappear in 2026.
Take Advantage of Free Entertainment
You don’t need to spend any of your Social Security check to stay busy and have fun. Your mom can go to museums with free admission, such as all of the Smithsonian museums, or check out library books to stay entertained during the day. Other free activities include attending book readings and attending free outdoor concerts.
Go To Restaurants That Offer Senior Discounts
Even if your mom is living on Social Security and on a pretty tight budget, it is okay to eat out every once in a while — especially if she goes to a restaurant that offers a senior discount. Many popular chains offer up to 25 percent discounts on meals for people 55 and older, even on takeout. Click here for a list.
Save While You Shop
Sprucing up your wardrobe doesn’t have to take a big chunk of your Social Security check. Many major retailers offer discounts to senior shoppers. See this list for more details.
Delay Taking Social Security Benefits
Although she is able to start collecting Social Security at age 62, your mother’s monthly benefits will be significantly higher if she waits until she reaches her full retirement age, which ranges from 65 to 67 depending on the year she was born. For example, if her full retirement age is 67, but she starts collecting Social Security at 62, her benefits will be 30 percent less than they would be if she waited the additional five years. If possible, she can wait to start collecting until even after she reaches her full retirement age. If she delays collecting Social Security until age 70, she will receive her maximum Social Security benefits.
Hope this is helpful,
Angel
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