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Living Only on Social Security

Millions of people approaching retirement age have lost their savings or could never set money aside; here’s how they plan to cope

By Rosie Wolf Williams

Editor’s note: This is an installment of the “Retirement for the Rest of Us” series, a Next Avenue initiative.

Allen R. Smith says that he never planned to retire. Holding degrees in exercise physiology, he spent a decade in the wellness industry and worked as a ski instructor in Colorado. As he moved into retirement age, he planned to shift into a second career as an author and columnist.

A close up of a social security check. Next Avenue
Among older beneficiaries, 37% of men and 42% of women receive 50% or more of their income from Social Security.  |  Credit: Getty

"Years ago, I vowed never to be in the situation I'm in," says Smith, who lives in Oceanside, California. "My goal was to work until the day I dropped out. What I wasn't prepared for was reality. I lost my home, went through my 401(k), and nearly all my savings in 2008 during the economic crash."

"My goal was to work until the day I dropped out. What I wasn't prepared for was reality."

"COVID-19 hit," he continues, "and since then it has been difficult to find the type of work I enjoy. I live a modest life primarily on Social Security benefits, but not necessarily out of choice."

Smith is just one of approximately 51 million Americans aged 65 or older receiving monthly Social Security benefits. A percentage of those beneficiaries depend on Social Security for 90% or more of their income, according to the Social Security Administration.

Many recipients experience "more month at the end of the money" and have to postpone or pay only part of some bills. A recent study by Madelaine L'Esperance, now an assistant professor at the University of Alabama, discovered that financial problems build as days pass since the last check.

Social Security benefits are dispensed according to each recipient's birthdate: those born in the first 10 days of a month receive their benefit on the second Wednesday of each month; those born in the second 10 days receive benefits on the third Wednesday of each month; the remaining beneficiaries are paid on the fourth Wednesday.

Cash Flow Mismatch

Retirees who receive their benefits on or about the time the rent or mortgage payment is due are likely to use that money to pay for housing. If their benefit comes earlier in the month, they are likely to use the money for utilities, food or other bills, and may run short when rent or mortgage payments come due.

Teresa Johnson (not her real name), 63, plans to live on Social Security benefits in a few years. She recently transferred her retirement savings from a 401(k) to a regular savings account so she would easy access to cash in case of emergencies. She had to pay income tax on the transferred savings, but her peace of mind was worth it.

"It removed the anxiety about what would happen if I went without freelance work. Fortunately, that has never happened," Johnson says. "I also knew that if I made only the regular payments, my house would be paid off by the time I'm 66 years and 10 months old, my full retirement age."

Johnson, who lives in a modest, 900-square-foot home in Kansas City, Missouri, calls herself "naturally frugal." Her retirement plan includes reducing her expenses by paying off her car loan, enrolling in Medicare and remaining free of credit card debt.

One Person's Plan

"I plan to live on $2,400 per month Social Security payments," she says. "I live in the Midwest, which is considerably less expensive than other regions of the United States. I'm also growing my emergency savings — there's only about $1,000 in there now. I have had some financial emergencies, medical bills for an ER visit, a $1,000 vet bill and about $5,000 in home repairs in 2022."

Johnson can boost her benefits by maximizing her income before applying for Social Security, says Chuck Czajka, founder of Macro Money Concepts in Stuart, Florida, and holder of a Certified in Social Security Claiming Strategies (CSSCS) designation.

"For every year you delay past your full retirement age, your benefits will increase 8%."

"Social Security benefits are calculated based off your top 35 years of earnings, indexed for inflation," Czajka adds. "However, you can maximize by delaying. For every year you delay past your full retirement age, your benefits will increase 8%. This can be done until you reach age 70."

After Social Security benefits begin to arrive, recipients can work part-time, but there may be earned-income limits depending on the recipient's age or the amount of additional income.

Johnson says she plans to continue freelancing after retirement. She also pet sits through a national pet-sitting service, currently making $500 to $1,000 per month additional income. "I'll continue to pet sit as long as I am able," she says.


A recent study from Edward Jones mapped out ways for older adults to navigate retirement, even if they have not saved and are relying on Social Security:

  • Stay fit. Exercise, mental stimulation and a healthy diet can improve the quality of life and prevent financial strain from medical bills.
  • Set financial boundaries. The study finds that pre-retirees are more willing to limit financial support to family members and bequests to organizations and heirs.
  • Expand social circles. Isolation can cause physical and medical issues as we age, so spending quality time with loved ones and building up your personal community is important.
  • Tighten your belt. Seek advice from trusted individuals about ways to increase savings, decrease spending and reduce debt.

Pursue Free Money

Smith says he researches discounts for older adults in his area so that he can spend less. "California is an expensive place to live, but I take advantage of savings on food, cell phone service, utilities, internet and more," he says. "The Veterans Administration takes care of all of my health care. It's tough, but I am making it."

The National Council on Aging offers an online tool, BenefitsCheckUp, to help older adults learn about benefits they may qualify to receive, including food, utilities and transportation.

"I'll enroll in Medicare and can afford the low Medigap or Medicare Advantage plans," says Johnson. "I'll have to set aside money for homeowner's insurance and property taxes, too."

"I've always lived within my means, so I don't have to have every possible luxury when I retire," she adds. "I have a cute house in a nice neighborhood and I have good friends. That's what's important to me."

Rosie Wolf Williams
Rosie Wolf Williams is a freelance writer whose work has appeared in USA Weekend, Woman's Day, AARP the Magazine and elsewhere. Read More
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