Years ago, it was common to work for the same employer for decades, collect a pension, and retire comfortably. But those days are largely gone, especially in the private sector. Today, many retirees are left with little choice but to retire on Social Security alone, making it a financial challenge.
The average Social Security recipient collects less than $2,000 per month, which comes to under $24,000 per year. If that’s your only source of income, you may have to make major sacrifices in retirement. Here are three key things you might need to give up.
1. A Comfortable Home
Having a secure and comfortable place to live is crucial in retirement, especially since you’ll likely spend more time at home without a job to go to. Additionally, as you age, you may face mobility challenges or other health issues that require a suitable living space.
However, if you retire on Social Security alone, affording a comfortable home could be a struggle. Even if you’ve paid off your mortgage, expenses like property taxes, homeowners insurance, and maintenance costs can add up quickly. Without additional savings, keeping up with these costs might become difficult, potentially forcing you to downsize or move to a less desirable living situation.
2. Travel and Leisure Activities
Many people dream of traveling in retirement, but if you retire on Social Security alone, vacations may be out of reach. Leisure activities like dining out, hobbies, and entertainment may also have to take a backseat.
Without savings, you may have to rely on free or low-cost entertainment options, limiting your ability to enjoy retirement the way you envisioned.
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3. Essential Healthcare and Medications
Healthcare is one of the biggest expenses in retirement, and Social Security alone may not cover all your medical needs. Fidelity estimates that a 65-year-old retiree will need around $165,000 for healthcare expenses in retirement.
If your budget is tight, you may have to make tough choices—such as skipping medications, delaying treatments, or settling for lower-quality care.
Secure Your Retirement with Savings
Living on Social Security alone is far from ideal. To avoid these sacrifices, start saving in an IRA or 401(k) as early as possible. Even small contributions over time can make a big difference. A financial advisor can help you create an investment plan that ensures a more comfortable and secure retirement.
FAQs
Can I retire on Social Security alone without savings?
Yes, but it can be challenging. The average benefit is around $24,000 per year, which may not be enough to cover housing, healthcare, and other expenses.
What are the biggest expenses retirees face?
Housing, healthcare, and daily living costs are the most significant expenses for retirees.
How can I supplement my Social Security income?
You can save in a 401(k) or IRA, work part-time, or explore other passive income sources to supplement your Social Security benefits.