In case you didn’t see the news, those on Social Security won’t be getting a very generous raise this coming year. The annual cost-of-living adjustment, or COLA, for 2020 is a mere 1.6%, which is only slightly more than half of the 2.8% COLA seniors saw going into 2019.
For the average beneficiary, that translates into an extra $23.50 per month, and that’s without a Medicare Part B premium increase getting in the way.
Since monthly Part B premiums are expected to rise by $8.80, the typical senior could end up with just $14.70 more per month in benefits once 2020 rolls around.
Obviously, that’s not a very generous increase, especially in light of the fact that healthcare costs continue to climb for seniors, leaving many struggling to keep up.
If you’re unhappy with your meager Social Security raise, there are a few steps you can take to carve out more financial wiggle room for yourself — and perhaps stop relying on those benefits quite as heavily.
1. Rethink your budget
Just as it’s important to budget during your working years, so too should you stick to one in retirement. If your current level of spending means that you’re blowing through all of your available income month after month, then it’s time to implement changes. These could involve downsizing your home, going from a two-vehicle household to sharing a single automobile, or dining at home more often to slash your meal costs.
Furthermore, if you don’t already have a budget in retirement, take some time to set one up. By mapping out what your expenses look like, you’ll have an easier time identifying ways to cut corners and working with the limited income you have.
2. Find a part-time job
The tough thing about being retired is having lots of spare time on your hands. The more hours you need to fill, the more you’re apt to spend to keep yourself occupied. The great thing about getting a job during retirement is that instead of spending money, you’ll be earning money, which can help compensate for a lowly increase from Social Security.
Best of all, you don’t have to spend your working hours answering phones, bagging groceries, or dishing out food samples at your local warehouse club. Rather, you take a hobby you enjoy and turn it into an income source, whether it’s baking, gardening, or crafting. And if you’re in good shape and have a lot of energy, you can try your hand at babysitting or pet-sitting — both tend to be high in demand.
3. Relocate someplace less expensive
If you’re heavily reliant on your Social Security benefits to cover the bills, then it could pay to move to a part of the country that’s less expensive. Ideally, you’ll want to choose a state that doesn’t tax Social Security benefits and that offers a lower cost of living on a whole — meaning, inexpensive housing, low property taxes (if you’re planning to own a home), and a relatively low income tax rate.
That said, if you’re going to relocate, figure out how it might impact your Medicare benefits. Medicare Advantage and Part D plans vary from state to state, so make sure moving doesn’t cause you to incur added costs there. Also, if you have supplemental insurance through Medigap, know that your plan’s price could go up (or down) when moving from one state to another.
A 1.6% Social Security raise is hardly generous. If you’re worried about covering your expenses in light of it, it’s time to make some changes to your budget, look into part-time work, and think about relocating. Doing these things will help you stretch your benefits further, and lessen your stress load in the process.
— Maurie Backman
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Source: The Motley Fool