Who does not want to have a happy retirement? One of the reasons why we work hard in our youth is because we want to reward our future self. Of course, our present needs played a primary role in influencing how we worked and the salary that we wanted to earn. But part of the reason why we are motivated to do well in our career and finances is to be able to enjoy our golden years.
While this is a general sentiment, not everyone is successful in reaching their retirement goals. That does not necessarily mean they had been irresponsible with their money. Sometimes, life throws an unexpected event that destroys their financial position and left them with hardly any money left for retirement. In fact, it could be so bad as to wipe out their assets and their retirement fund. When you are forced to depend on Social Security alone, do you really think it is possible to have a happy retirement?
That actually depends on how much you are expecting to receive. While the average Social Security benefit is at $1,341, this is the middle amount. There are people who receive less than this. According to an article published on WKYC.com, the range of Social Security benefits is currently at $700 to $1,800 per person. If you are a couple, that means you can get $1,400 to $3,600 a month between the two of you.
Obviously, if you are one of the retirees receiving $700 a month, it is hard to be happy about your retirement money. You really cannot live on this amount alone. You will be forced to pursue other sources of income – like getting a part-time job or opening a business.
But let us assume that you are getting $1,300 a month. What would your retirement be like living on your Social Security alone?
Is it possible to retire happily on your Social Security?
Let us start by asking if it is possible to live on your Social Security benefits alone. We can factor in the happiness later on.
According to an article published on BusinessInsider.com, a retired couple actually lives on their Social Security for some time now. The Barretts had to live on $2,393 each month and it has to be said that the budget that they provided seemed to cover most of the things that they need.
Their budget consisted of the following:
- Rent: $629
- Church and Charity: $100
- Savings: $135
- Cable/Internet: $73
- Utilities: $76
- Gasoline: $65
- Car Insurance: $80
- Discretionary Spending: $300
- Phones / Website: $80
- Credit Cards: $375
- Medical Out-Of-Pocket: $240
- Groceries: $240
As you can see, this budget includes the basic necessities like food, shelter, utilities, etc. It even has room for charity and savings.
So the question of whether you can survive on your Social Security benefits alone is possible. Of course, another question that we want to explore is how is it possible?
The article actually provided a couple of clues to give us an idea about how the couple managed to do this.
They had a budget.
First and foremost, they had a budget. From the very beginning, while they were still raising their kids, they lived with a budget. It was not the complex and tedious budget plans. It was the simple envelope system that worked for them. There was even a time when Mrs. Barrett did it mentally while keeping tabs on their account to make sure there was money left. The bottom line was, she consciously monitored their finances.
They were not afraid to change their lifestyle.
One thing that we notice from the couple is that they were willing to change their lifestyle. They moved to a new city just so they can find the resources that will help them pay off their expenses. Not only that, they chose a simple lifestyle that is according to what their budget can afford.
They got rid of the things that dragged them down.
One of the things that dragged them down is their debt. According to an article published on USNews.com, the elderly have a median debt of $24,500. If you want a happy retirement, this will not be possible if you have debt. So what the Barretts did was to get rid of their house and other financial obligations so their Social Security can focus on the expenses that they needed to survive. Although it did not really increase their cash on hand, they chose to just get rid of the property to focus on spending on what was necessary. In fact, this move made them lose their 401(k). Now, they have no choice but to rent and it seemed okay because at least, they are able to make ends meet.
They opened another source of income.
The Barretts also opened another source of income. Since Mrs. Barrett was a graphic designer, she started a website that helped add to their monthly source of income – which is great for emergencies. It gave them the extra resources.
The article mentioned that the key to their success in living on Social Security alone is writing everything down. According to the couple, if you know all your expenses, it is easier to make the decisions that will help you finance the important things in your life. What even more admirable is the fact that although they had a small income to depend on, they still found room for savings. They believed this is important for unexpected expenses in the future.
Now that we know that it is possible to live on Social Security alone, we have yet to determine if it will lead to a happy retirement.
The truth is, happiness is all in your mind. If you want to be happy, you have to learn to be content with what you have. The Barretts know what they have to spend on and they seemed content with the fact that they are able to meet their needs to survive. There are worries – but that is why they are preparing for the uncertainties of life.
If you are facing a retirement that will be reliant on your Social Security, you have to think about the important things and focus on that. You may not be rich materially, but if you are able to support the things that you love to do, then that should lead you to have a happy retirement.
What to do with debt if you are expecting to retire on your Social Security?
If you are facing retirement with debt, you need to focus your energy on getting rid of it before you retire. You do not want to have the debt add to the stress of retiring with a little money. Adjusting to a smaller budget is hard enough. It will be harder if you have to share your meager income with debts.
There are two things that you can do to deal with your debt.
Settle your unsecured debts.
The first thing you have to do is to settle your debts. There are two reasons why debt settlement is the best option. For one, it will help you get rid of the debt fast. While the time is not a guarantee, the usual time frame is 2 years or less. If you are retiring soon and you want to get rid of your debt fast, this is the best debt solution. The other reason to choose this is debt reduction. This is the only debt solution, next to bankruptcy, that will allow you to pay off only a portion of your debt. The less you have to pay, the more cash you have left for your retirement. If you do not want to burden yourself with the stress involved in negotiating with creditors and debt collectors, you can hire a debt settlement company to help you out.
Sell off your secured debts.
For the debts that you cannot settle, our suggestion is that you do what the Barretts din – sell it off. They still owe money on their house and instead of paying it off, they sold it. This should be a great way for you to downsize your life so you can also live on a smaller budget. If you live in a smaller house, your energy consumption will not be as big. Apart from the house, you can also choose to sell your car. If you have two cars, pick one that you like to keep and sell the other. That should help add money to your account.
Being debt free will bring you one step closer to a happy retirement. The sacrifices may be great but after you have adjusted to a simple lifestyle, you will realize that living on your Social Security alone is not too bad.