As 2024 looms closer, retirees and prospective retirees question the viability of relying solely on Social Security for sustenance amidst the rising cost of living. Financial experts caution against this, pointing out the importance of diversified retirement savings, healthcare costs planning, and possibly part-time work income.
Social Security was crafted as an auxiliary financial resource post-retirement and not a main sustenance source. However, the changing economic climate has stirred concerns about the adequacy of these benefits in maintaining even a humble lifestyle during retirement.
Current figures reveal that the average Social Security check, at around $22,800 annually, falls vastly short of the estimated $72,967 needed for basic survival. The consequent financial strain forces many retirees to compromise on essentials, prompting a call for policy revisions to support seniors’ lifestyles post-retirement better.
While most households with single retirees rely on Social Security as their primary income, households with multiple retirees often have various income sources and, thus, more significant expenses. Such households require a robust budgeting strategy, but their income diversity also lends flexibility, enabling better lifestyle maintenance despite increased costs.
Despite many retirees owning their homes, managing all retirement costs on a modest budget is hard, especially for the roughly half of US citizens aged 55-66 with no retirement savings.
Diversified approaches to secure retirement funding
Among the alternative strategies proposed to maintain their standard of living is tapping home equity, perhaps through a reverse mortgage—an option to consider carefully due to potential complications and risks.
Opportunities to boost retirement funds still exist. Strategies include temporarily stopping and starting Social Security benefits for accrual, although this requires benefit repayments and another income source during the pause. Diversifying income, such as taking on part-time jobs or investments, could prove effective. Overall, successful retirement planning requires careful balance, urging people to remain proactive and vigilant.
For many, a practical solution might be to work beyond retirement. Though counterintuitive to a relaxed retirement period, additional income can offset the risk of further debts or losing homes. Work after retirement can also offer an opportunity to follow a desired career path or engage with passion projects. Though unorthodox, this method may serve as a practical response to today’s retirees’ financial challenges.
