Retiring on Social Security Alone? Plan to Do This.

You'll often hear that Social Security won't pay you enough to maintain a comfortable lifestyle in retirement. And there's a fair amount of truth to that.

If you're an average earner, you can expect your monthly Social Security benefits to replace 40% of your pre-retirement wages. Most seniors, however, need roughly twice that much replacement income to cover their bills. Given the way inflation is soaring, it's easy to see why.

It's for this reason that workers are advised to start funding an IRA or 401(k) plan at a relatively young age and make steady contributions so they're able to retire with a healthy nest egg. But what if that ship has sailed?

If you're already in your 60s without any savings and right on the cusp of retirement, you may not have time to build up much of a nest egg. In that case, you may be looking at retiring on Social Security alone. But if those monthly benefits are your only expected income source going into retirement, you may need to make an adjustment to your plans.

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Get ready to work

The average senior on Social Security today collects a monthly benefit of $1,665. Even if your home is paid off in full, $1,665 a month isn't a lot to live on, especially when you account for things like Medicare premiums and the ever-rising cost of essentials like food, utilities, and gas. If you're entering retirement with no savings, you may need to get comfortable with the idea of working in some capacity to boost your income.

But that doesn't mean having to subject yourself to a job you hate. These days, the gig economy is thriving, so you have ample opportunity to take on part-time work that's flexible and even enjoyable.

In fact, working during retirement could benefit you in two ways. First, the added income could nicely supplement the limited income you're receiving from Social Security. But also, working is a great way to fill up your days. And if you're on a budget, that's important.

Sitting around bored at home all day could wreak havoc on your mental health — and possibly your physical health, too. It's important for retirees to stay busy and engaged, but if money is tight, your options for buying entertainment may be limited. If you take on a job, you'll have a means of filling some of the free time on your hands.

Will working impact your Social Security benefits?

You're allowed to work and collect Social Security at the same time. Once you reach full retirement age, your Social Security benefits won't be withheld no matter how much you earn. But if you claim Social Security and work before reaching full retirement age, you'll be subject to an earnings-test limit. If your earnings exceed that limit, you'll risk having some of your Social Security benefits withheld.

Withheld benefits, however, aren't forfeited completely. Rather, the sum that's withheld simply gets paid back to you later, once full retirement age kicks in.

You might think it's possible to retire on Social Security alone, but chances are, your monthly benefits won't really make for a comfortable lifestyle. If you're entering retirement without savings, it's good to plan on working to some degree — even if it's just a few hours a week from home.

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