There's a reason workers are warned to save diligently for retirement. Social Security often fails to cover seniors' living expenses in full. And those who retire on those benefits alone often struggle financially.
The average monthly Social Security benefit in 2022 comes to $1,657. Combined with withdrawals from a retirement plan, that's not necessarily terrible. But on its own, it amounts to just under $20,000 a year.
If you're struggling in retirement due to a heavy reliance on Social Security, you're not alone. But it's also imperative that you take steps to cut your costs to make your expenses more manageable. Here are three specific moves to consider making.
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1. Downsize your home
Even if your home is fully paid off by the time retirement rolls around, downsizing to a smaller space could result in big savings. The larger your home, the more money it's apt to cost to heat, cool, and maintain. Plus, a larger home often means a larger property tax bill.
If you own your home outright and are willing to downsize, it's currently a pretty good time to sell. During 2021's third quarter, U.S. home prices were up 18.5% from the previous year, according to the Federal Housing Finance Agency's House Price Index. That means that if you list your home in the near term, you're likely to get top dollar for it.
2. Get rid of a car
When you work and have to commute to an office regularly, dumping a car may not work. But if you're retired and don't need to drive every day, it could pay to cut your costs by getting rid of a car -- especially if money is tight.
AAA reports that the average cost to own a car is $805.50 per month, or $9,666 a year. Even if you were to spend $100 a week on a ride-hailing service, you'd still come out ahead financially by getting rid of a vehicle. And if you're part of a two-vehicle household, shedding one car and sharing your remaining one could also make a lot of sense.
3. Choose different Medicare coverage
Many seniors sign up for original Medicare, which consists of Parts A, B, and D. But you may have better luck -- and lower costs -- with a Medicare Advantage plan.
Medicare Advantage plans are those offered by private insurers, and often, they're less expensive than original Medicare, all the while offering a wider scope of coverage. Original Medicare, for example, won't pay for dental care, eye exams, or hearing aids, whereas many Advantage plans will pick up the tab for these services.
To see if Medicare Advantage makes sense for you, you'll need to price out plans in your area. And you may need to wait until Medicare's fall open enrollment to make the switch if you're currently signed up for original Medicare. But you are allowed to research Advantage plans ahead of time to know what options you may be looking at.
There's nothing wrong with counting on Social Security as a major retirement income source. But those benefits may not come close to covering your living costs on their own. If you're struggling financially because you're mostly limited to Social Security, it pays to consider these changes that could save you a lot of money.
