How Do We Beat the System and Live Well Alone in Old Age?
Balancing income and expenses when you depend on Social Security
How do you make a paycheck that isn’t nearly enough stretch to cover everything you need? It’s not easy.
In my last post, I talked about how many seniors are trying to survive on just Social Security. It’s rarely enough to live a comfortable life. People well past retirement age are forced to keep working or live a poverty lifestyle that dishonors their years of life and work. It’s not fair, but it’s happening.
I have written here before about ways to cut expenses. Specifically, take a look at Sept. 3, 2024’s “Nitty Gritty Ways to Live Alone More Cheaply.” You can find a lot of useful advice there. You’d be surprised how many things a person can get for free.
Social Security was never meant to be our only means of support. It is supposed to cover no more than 40 percent of our expenses, providing a minimal income that we supplement with pensions and savings. It’s a system that can work very well, especially for couples with combined income.
But for all kinds of reasons, we may reach retirement age with no partner, no savings, and no pension. AARP (American Association of Retired Persons) reports that only one in two workers, including those who work part-time or are self-employed, have access to any job-related retirement plan. Sometimes widows can collect some or all of their husband’s pension, but that’s not guaranteed.
The average payment Social Security payment is $1,975 a month. How do we live on that?
Frugally, my friends.
If you are not old enough to collect yet, the best thing you can do is plan ahead. Make two lists. For the first one, write down all sources of funds you expect to have in your later years. Include any pensions, 401k’s, savings, royalties, or income from continuing work. It sounds ghoulish but also consider inheritances that you know will be coming your way. Leave off any pie-in-the-sky items that begin with “if” as in “if Oprah makes my novel into a movie” or “if I win the lottery.” This list is for money you can count on, as much as anyone can count on anything.
Go to the Social Security website to look at your Statement of Earnings and calculate how much you are likely to receive per month if you retire at age 62, 67, or 70.
Add it all up and see what you have.
For the second list, list all your expenses. Go through recent bank and credit card statements to see how much you spend in an average month. Include housing, utilities, phone, food, car, entertainment, travel, recurring donations, gifts, etc. How much for new shoes or the calcium supplements you buy in those big pink bottles?
Compare income to expenses. If expenses exceed income, you will need to make some adjustments.
The longer you wait to collect Social Security, the more you will receive. If you take your retirement benefit at 62, you will receive considerably less per month for the rest of your life. There are situations where a person just can’t wait. They need the money now. But do wait if you can.
How much you get is based on your 35 highest paying years. Some people push to earn as much as possible in their last working years to increase their Social Security benefits. Others can’t do that because they have lost their job, can’t find a job, or have health problems that make them unable to work. At some point, you have to work with what you have.
Armed with the numbers, it’s time to have a long talk with yourself. Do you take the lesser amount now or wait? What can you change to make it work? Are you willing to live somewhere less expensive? Where can you cut back? Are you dreaming of lavish cruises and trips to Europe or is camping more your style? Do you have an ongoing health problem? How much do you spend on medications and treatments? What will you do if you need long-term care? How much do you spend on the hobbies that make your life worth living? Can you handle extra expenses like new tires for the car or an emergency visit from the plumber?
You may want to speak to a financial planner. Your bank or credit union probably offers free consultations about ways to stretch the money you have. For example, I had no idea that changing from a basic savings account to a money market account would increase my interest earnings by a lot. Putting some money in CDs earns me even more. I had no idea how to do that stuff on my own.
If you have no money, just bills, a financial advisor can help you deal with that, too. A payment plan or even a reverse mortgage on your house might help you get solvent. You might also find free help at your local senior center. If you’re not a financial wizard, don’t try to do it alone.
If you have not retired yet, the best thing you can do for yourself is pay off all your debts. Easier said than done, I know. I sure didn’t do it. I did not plan ahead. In my 50s and 60s, immersed in caregiving and early widowhood, I was too busy just trying to survive the present to think about the future. That happens to a lot of us. BUT if you can enter retirement with the house paid off, no other unpaid loans, and no credit card debt, you might be able to live very comfortably on a small income.
If you just can’t get out of debt, or you have already retired, try as hard as you can not to incur any more debt. Stop visiting Amazon.com. Put the credit cards away. Always pay more than the minimum payment. Even $5 more will help.
Take every senior discount you can find. Only pay full price when there’s no other option. Grow your own, make your own, barter, share, shop at thrift stores. Think about every expense. If you live in a city with good public transportation, do you need a car?
For many of us, our budget is a puzzle that’s missing a few pieces. We may be forced to lean on charity or government assistance. That’s a whole other post. But there are options.
God, I sound holier than thou. Who am I to give you advice? My house is not paid off. I spend a ridiculous amount at Amazon.com, mostly for books. I still pay for cable TV and a landline in addition to several video streaming services and my cell phone. I buy stuff I don’t need just because I want it. I just spent a fortune traveling through the Southwest.
I’m not the best example. I have always been too busy writing and singing to pay attention to money. Left on my own, I’d probably be living in my Honda.
I am incredibly lucky. After years of never having enough money, I’m financially comfortable because of the careful planning of my father, who didn’t spend a dime he didn’t have to, and my late husband, who set things up so I would be cared for after he died. Fred worked two jobs most of his life, so we could have nice vacations. He planned every expense, down to meals and gas for every trip. Those planning sessions over his yellow legal pad drove me nuts, but they kept us financially healthy.
My husband’s money paid for this house, and my inheritance from my father paid for my car, my gas fireplace, and my hearing aids.
I’m alone now, but if I had been alone all my life, my financial situation would be very scary.
Anyone can wind up alone with no one to rescue them. Social Security isn’t enough, but it’s something. I hope what I have written helps a little.
Can we do it alone? It’s not always easy, but yes, with persistence, creativity, and a little help from our friends, we can.
Let’s Talk. What is the one piece of advice you would offer people living alone who are trying to make it on a small income?
Resources:
“Social Security Basics: 12 Things You Must Know to Maximize Your Benefits,” Kiplinger Institute.
Many books discuss Social Security, but I think AARP’s Social Security for Dummies provides the clearest and most comprehensive guide to social security, Medicare and all government retirement options. Get the 2025 edition. I found a copy at my library.
AARP calculator of benefits and expenses
https://financeoverfifty.com/how-to-live-below-your-means
How to Start Living Below Your Means (kindafrugal.com)
I’m sad to report that my dog friend Winnie, the Corgi I visited on my walks, has passed away. When I walked down her street, she would see me, bark hello, and come running. She couldn’t get enough petting and sometimes rolled over in the middle of the road so I could pet her belly. She had the sweetest brown eyes. Winnie leaves behind a large human family and her dog brother Bobo, the best chocolate Lab in the world.
Yes, I know I need to get my own dog. I’m working on it. Everybody needs a warm-blooded friend to hug.
This Sunday, May 18, would have been my 40th wedding anniversary with Fred. We only got 26 years, and he didn’t know who I was at the end, but the time we did have together was wonderful. You can read our story in my memoir No Way Out of This: Loving a Partner with Alzheimer’s, available now at your favorite bookseller. Visit https://www.suelick.com for information on all of my books.
Yes to CDs or treasury bonds or TIPS. Let that money make money. Some stocks that provide dividends are a good option, too if you can handle some volatility. A good dividend ETF with a low expense ratio makes it easy.
The biggest mistake we all make is assuming we won't need care. Most of us will if we live long enough and planning for that is important. Sometimes it's long-term care insurance, sometimes it's just knowing what your options are in your area, including which places take Medicaid.
One thing I tell people that they don't think about is the hidden cost of their stuff. I've seen people who are still renting a storage facility they can't afford, or have a larger place than they need because of their belongings. Keep the things that matter, donate, give away, or sell the rest, and if possible, let the process feel like getting lighter, less tethered.
Super useful. I’m awful with money!