Here’s a word of warning before you receive your first Social Security check: Prepare to be a little disappointed.
More than one-third of today’s Social Security recipients — 36% — say they are getting less in benefits than they had expected to receive when working.
Unfortunately, things might get even worse. The Social Security Administration says that unless action is taken to shore up the nation’s retirement program, future retirees can expect their benefits to fall by 23%.
That message is getting through to today’s seniors. Recently, the Nationwide Retirement Institute surveyed 1,000 U.S. consumers ages 60 to 65 — including both retirees and pre-retirees — and asked them for their opinion about the future of Social Security.
Among respondents, only 41% said they expect Social Security to exist in its current form throughout their retirement. The rest don’t expect Social Security to last that long or were unsure whether it will last.
Among those who don’t expect Social Security to outlive them, here is how they most commonly plan to get by (not counting those who said they “don’t know”).
1. Find a side job for additional income
Share of respondents who don’t expect Social Security to last who plan to do this: 46%
When your nest egg suddenly shrinks, the best way to build it back up is to find a source of new income.
Retirees should not despair if they need money but loathe the idea of returning to full-time work. Even a part-time job or side hustle might provide enough income to fill the hole if the government reduces your Social Security benefit.
For ideas, check out “20 Great Part-Time Jobs for Retirees.”
2. Create a budget to reduce spending
Share of respondents who don’t expect Social Security to last who plan to do this: 34%
A budget can be invaluable when your income suddenly decreases and you need to be much more careful about how much you spend.
Money Talks News’ partner YNAB (short for You Need a Budget) can guide you through the process of making a budget — and help you stick to it.
3. Use savings or other investments
Share of respondents who don’t expect Social Security to last who plan to do this: 31%
Those who diligently saved for retirement during their working years will be especially glad they did so if the government sharply cuts their Social Security benefit.
Crafting the optimal withdrawal strategy is a major key to making sure savings and investments last throughout retirement. If the task sounds daunting, consider speaking with a financial advisor who has a fiduciary duty to act in your best interest.
4. Move somewhere with a lower cost of living
Share of respondents who don’t expect Social Security to last who plan to do this: 29%
The cost of living — especially of buying and owning a home — has skyrocketed in many parts of the U.S. Finding a new, more affordable place to call home can give retirees breathing room if their Social Security benefit shrinks.
5. Downsize my home
Share of respondents who don’t expect Social Security to last who plan to do this: 22%
Downsizing to a smaller home is a tried-and-true way to reduce expenses in retirement.
This is an especially effective technique if you live in a large home in a market where real estate is rapidly appreciating. When this is the case, you can sell your home and consider moving to an area where you can buy something smaller at a much more affordable price.
For more suggestions on how to pull this off successfully, check out “15 Tips to Successfully Downsize in Retirement.”
6. Leave a smaller inheritance than planned
Share of respondents who don’t expect Social Security to last who plan to do this: 21%
We’ve all heard the statement on airplanes: “Secure your own oxygen mask before helping those around you.”
The same logic applies to your nest egg. While it is great to want to help loved ones by leaving an inheritance, it is more important to take care of yourself first.
Remember, if you don’t spend your own money to cover your expenses, someone else will have to come up with the cash for you — and that someone could very well be one or more of the beneficiaries of your estate.
Rather than asking loved ones to dip into their savings today to help you out, use your own money to pay bills and simply accept that you might leave behind less than you had planned.
7. Move in with my children
Share of respondents who don’t expect Social Security to last who plan to do this: 10%
Nobody wants to spend their retirement years as a burden on their children’s lives. However, families pull together during a crisis.
So, you might have accept living with your children — at least for a period — should your Social Security benefit receive a haircut.
Add a Comment