If you're nearing retirement or are already retired and you've found your Social Security benefit is insufficient to provide the income you need, you aren't alone. The average benefit in 2021 will provide just $18,516 in annual income, which is not enough to make ends meet for most people.
The best way to cope with a small Social Security benefit is to make sure you have plenty of supplementary savings. After all, these benefits aren't intended to be your sole source of support.
But if you are already at or near retirement, you might not have a lot of time to grow a large investment account. If that's your situation and your Social Security checks aren't cutting it, the good news is that a few options could help you salvage some financial security in your later years. Here are three of them.
1. Look at relocating to a lower-cost area
In some parts of the country, Social Security checks stretch much further than in others. If you're in a state with a high cost of living, look into moving to one in which your monthly income will go further.
Moving to an area with a lower cost of living can help you in a number of ways. Most obviously, if the basic necessities cost less, you'll be more likely to be able to cover them even with a small Social Security check.
But there could be another big benefit. If you own a home in a high-cost-of-living area, moving could allow you to cash out the equity. If you buy a lower-priced home in your new state, you might be able to avoid a mortgage and perhaps even pad your retirement savings account with the proceeds from the sale of your home.
2. Determine if you can rescind your claim so you can raise your benefit later
In some cases, you might be able to undo your claim for Social Security benefits if you aren't happy with how small your checks are.
If you made your claim for benefits less than 12 months ago, you'll have one chance to withdraw it and get a do-over. You will, unfortunately, have to pay back all of the benefits you received in the interim. If you can do that, you'll wipe the slate clean. When you go to file later, you won't be subject to any early filing penalties that might have applied to your current claim, and you'll be eligible for delayed retirement credits if you've waited until after full retirement age to start your benefits the second time around.
3. Consider a part-time job
If you can't survive on Social Security alone, getting a job could bring more money in. There's a caveat, though. A retirement earnings test (RET) applies if you work while receiving Social Security and are under full retirement age when you do it.
If you exceed the threshold under the RET, you'll forfeit $1 in benefits for every $2 in wages you earn above $18,240 in 2020 or $18,960 in 2021 if you're under full retirement age for the entire year. If you're going to hit full retirement age during the course of the year, you'll forfeit $1 in benefits for every $3 you earn above a higher threshold of $48,600 in 2020 or $50,520 in 2021.
The RET might sound like a bad thing, and it is if you're counting on getting both your full Social Security check and your paycheck to help you cover the bills. But there's a possible benefit to forfeiting part of your checks now. Your benefit will be recalculated at full retirement age to account for the money that wasn't paid, and your Social Security checks will be higher later because of it.
If you're worried that your small Social Security benefit won't be enough in your later years, working more now could be just the ticket; you could use income from your job to pad your savings while also potentially increasing your future Social Security benefit so you'll get larger checks when you're older.