Because of growing disparities in wealth distribution and increasing medical costs in the U.S., more and more Baby Boomers are finding that Social Security benefits provides the major portion of their retirement income, sometimes all of it.
A 2016 survey from the Insured Retirement Institute finds that 59% of Boomers expect Social Security to be a “major” form of income during their retirements, up from just 43% in 2014. Probably today, that translates to about two-thirds of Baby Boomers.
So what can these Boomers do? Can they still enjoy a comfortable retirement? The answer is “Yes.” But it likely requires a change in lifestyle, maybe a dramatic one.
What do You Have to Work with?
Determining a course of action first requires an accounting of your assets and debts. It doesn’t have to be exact, just good enough to to see what you’re working with. For example, do you have some home equity, a savings account, stocks, cars, etc….anything that could be sold for cash if necessary. In other words, this represents your potential retirement wealth and decision-making flexibility.
What’s Important to You?
Everyone has their priorities. Your retirement vision is likely unique in many aspects. Maybe you want to do more travel or simply spend more time with the family. Giving careful thought to this subject will help Boomers to assess what is important in their lives and what they want their retirement to offer.
What are your Options?
Depending on your net worth and retirement priorities, Baby Boomers retiring primarily on Social Security benefits could consider one or more of these actions:
- Determine whether your retirement income can be increased, possibly by starting a home-based business, working part-time or delaying taking Social Security benefits as long as possible to maximize monthly payments.
- Moving to a cheaper area….duh!
- Cutting expenses. For example, getting rid of standard cable TV packages in favor of streaming TV selections. Or downsizing to just one car and eating out less. Taking off-season vacations. You get the idea.
- Buying or renting a place with other Boomers on Social security to boost your financial capabilities and leverage a better lifestyle than going it alone.
- If you own a home, consider a reverse mortgage. It could get rid of your house payment and put some extra cash in your pocket every month too. Boomers can even buy a home using a reverse mortgage!
- Homeowners can also downsize and buy a smaller place, condo, RV, etc.
- Consider retiring south of the border where the dollar goes a lot further.
The Bottom Line for Boomers
No matter what cards a Boomer facing retirement has been dealt, there is usually an answer that will allow comfortable retirement. Work the situation to determine what options are available. Every Baby Boomer facing retirement primarily on Social Security can typically find an answer if they expand their thinking to include new possibilities.