The average Social Security paycheck for retired workers is just over $2,000 monthly. If you’re living on a single income of roughly that amount, it might not be enough to make ends meet.
GOBankingRates spoke with financial experts to get their thoughts on how solo retirees can stretch their Social Security checks. Here’s what they said.
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Downsize, Downsize, Downsize
One of the biggest contributors to the high cost of living is housing, but you may be able to lower this cost.
“Your biggest bill is your biggest opportunity — housing. Downsizing or house sharing can stretch Social Security faster than clipping coupons,” said D’Andre Clayton, co-founder of Clayton Financial Solutions in Greensboro, North Carolina.
As per the Federal Reserve, the median monthly mortgage payment is $1,500. If you can pay off your loan before retiring, that’ll help substantially. But if you can’t, or if other costs like homeowners insurance or property taxes are dragging you down, downsizing could be a big money saver.
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Focus On Fixed Costs First
The Federal Reserve Bank of St. Louis found that the average person age 65 and up spends around $60,000 annually. That’s $5,000 a month. As a retiree, you might not spend nearly this much. But whatever your expenses, it helps to focus on the fixed ones first.
“Control the fixed costs, and the flexible ones will take care of themselves,” said Clayton.
Fixed costs are those that remain relatively consistent from month to month. They include things like housing, utilities, insurance and debt payments.
Shop Around for Healthcare Plans
Most people become eligible for Medicare at age 65. But depending on your health needs, you might benefit from having additional insurance — which can be costly.
The solution? Shop around for a more affordable plan.
“People depending on Social Security to fund their retirement will need to be especially thoughtful when it comes to their insurance options, as making strategic decisions can help them save money and maintain or improve access to care,” said Whitney Stidom, vice president of Medicare enablement at eHealth. “With a major shakeup coming for Medicare Advantage plans…comparing plans will be of the utmost importance during the fall’s enrollment season.”
You might not have to pay anything for Medicare Advantage, but even shaving off $10, $20 or $100 a month could be helpful when living on a tight budget.
Time Your Decisions Carefully
You could start collecting Social Security as soon as you turn 62. But waiting for a few extra years could mean a larger monthly payout.
“Some view waiting to claim Social Security as a gamble. Waiting to claim is like buying yourself a guaranteed raise for life. For many solo retirees, that $500 or $800 bump could mean a lot to a budget’s bottom line,” said Clayton.
Social Security isn’t the only thing that requires strategic timing.
“If you’re middle income but thinking about possibly downsizing and selling a home, depending on the time frame of the possible sale, it may be best to consider any possible ramifications that could have long-term effects on the Social Security check,” said Clayton.
High-income individuals may want to consult a financial professional.
Consider Government Programs
There are many programs — federal, state and local — available to help with the cost of living. They’re mostly available to low- and moderate-income individuals, but if you’re struggling financially, they’re worth checking out.
Check sites like benefits.gov or findhelp.org to see what’s out there. You might qualify for assistance with housing, utilities, food or other costs.
Get Rid of Debt Before Retiring
If at all possible, pay off your debts before retiring. High-interest debts, like credit cards, can eat into your income as a solo retiree. But any debt, including mortgage or auto loans, can still cause financial strain.
“Your debt will always compound higher and much faster than cost-of-living adjustment (COLA) raises,” said Clayton. “You have to get [debt] under control as soon as possible.”
Take advantage of budgeting tools and, if needed, consider using a reverse mortgage or home equity line of credit (HELOC) to help with costs. Just be sure to weigh the pros and cons first.
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This article originally appeared on GOBankingRates.com: 6 Tips for Solo Retirees To Stretch Their Social Security Checks
