Social Security, that safety net for millions of Americans is facing an insolvency crisis that could hit as early as 2033. If nothing is done to solve that problem, benefits could be cut by as much as 24% for everyone, leaving the average retired couple $18,400 short of expected annual benefits, according to the U.S. Committee for a Responsible Budget.
Find Out: 3 Little-Known Social Security Rules That Could Save You Thousands
Try This: The New Retirement Problem Boomers Are Facing
If you’re near retirement now, or even in it, what money moves or strategies should you adopt now to prepare? Experts offer the following tips.
Keep Liquid Funds Available
Many people head into retirement without having enough cash on hand, according to Devin Miller, CEO and co-founder at SecureSave.
“You can have a lot of money saved in your retirement account but what happens if something unexpected comes up like a car repair or medical bills?” he asked. Withdrawing too much from your retirement accounts can destroy your long-term savings faster than you think.
Thus, an emergency fund with several months’ worth of expenses is key to not having to tap into retirement accounts that are still invested in the market.
Learn More: Need To Cut Expenses While on Social Security? Here’s the First Thing To Get Rid Of
Make Lifestyle Changes
While it’s understandable to want to keep the same lifestyle as you did in your pre-retirement years, it’s not always financially tenable, especially if Social Security benefits are cut.
Start to make some lifestyle changes before retirement to prepare, whether that’s eating out less often or taking fewer trips, Miller said. Additionally, consider downsizing if small lifestyle changes aren’t enough.
“If you can find a cheaper place to rent or downsize to a smaller place to live with a smaller mortgage or paid off house, it can help you survive monthly on less,” according to Ashley Morgan, a debt and bankruptcy lawyer at Ashley F. Morgan Law, PC.
Delay Retirement or Work Part-Time
Next, see if you can delay retirement, Morgan said.
“If you can work for a few extra years and prevent drawing on any retirement savings to live, it can extend the [number] of years you can survive on any retirement savings,” Morgan noted.
A part-time job can also supplement Social Security and fill the gaps if you cannot survive otherwise, Morgan added. Of course, you do need to be careful to remain in the right tax bracket so you don’t reduce the amount of benefits you’re eligible for.
Understand Your Health Insurance
“Healthcare expenses are among the biggest financial concerns for Americans heading into retirement, yet 76% either underestimate or have no idea what those costs actually look like,” said Whitney Stidom, vice president of consumer enablement at eHealth. “If retirees want to make the most of their Social Security benefits, understanding their health insurance choices is crucial. Smart, informed decisions can lead to significant savings on medical costs in 2026 and in the coming years.”
Comparison Shop for Medicare Plans
A growing number of people are opting for Medicare Advantage, which provides coverage for 51% of Medicare beneficiaries as of today, Stidom said. But choosing a Medicare plan can be complex, given the average beneficiary has more than 40 Medicare Advantage plans to choose from in their local areas.
Be sure to take advantage of the fall annual enrollment period (Oct. 15 to Dec. 7) and select the optimal Medicare plan based on personal needs and budget.
“People who comparison shop for a Medicare Advantage plan can potentially save over $1,800 a year.”
Treat Chronic Health Conditions
If you’re diagnosed with, or at risk for, a chronic health condition like diabetes or other, evaluate a chronic special needs plan (C-SNP), Stidom urged.
“These plans, which are surging in popularity, can help lower prescription medication costs and can offer additional benefits specifically designed for people with qualifying chronic conditions,” she explained.
Save on Prescription Medications
Comparing plans can also translate into savings on prescription medications, Stidom said.
“While many Medicare Advantage and Part D plans provide prescription drug coverage, each has a different list of medications they will cover, and they may be covered at different cost sharing tiers,” she added.
Medicare Advantage beneficiaries who shop around can save over $800 per year on the cost of their prescription medications, she pointed out.
The Bottom Line
Miller said that while less income can sound scary, you probably don’t need to overhaul your retirement plan.
“Small changes… can go a long way in helping you stay financially stable and stress-free,” he noted.
More From GOBankingRates
- Here's What It Costs To Charge a Tesla Monthly vs. Using Gas for a Nissan Altima
- Why You Should Start Investing Now (Even If You Only Have $10)
- Here's the Minimum Salary Required To Be Considered Upper Class in 2025
- 7 Ways To Tell If You're Rich or Middle Class -- It's More Than Your Paycheck
This article originally appeared on GOBankingRates.com: Social Security Facing Serious Cuts: 7 Crucial Things To Do Now If You’re Near Retirement
