• RetireNowAmerica

Some Ways to Add More Dollars to Your Social Security Pension

The average federal Social Security pension paid to U.S. senior citizens is $1,294 per month. As is the case for all average figures, there are many people who receive less than that amount. Of the elderly, 22% of married couples and around 47% of unmarried Americans count on Social Security for 90% or more of their income. A lot of those pensioners may find it very difficult to get by financially.

Here’s how it works. The amount you receive depends on the contributions you have made during your working life. Unfortunately, the end result, depending on the age at which you opt to take your benefits, is that many people reach retirement without having enough income to pay for a reasonable lifestyle.

Obviously, the best situation is one where a person approaches retirement with an adequate private or occupational pension as their main income, with social security as an extra and a comfortable savings cushion as well. The mortgage should be all paid off and the children educated and independent. Sadly, that's not the situation for most Americans.

Particularly since the financial downturn, many people retire without having put in enough working years to receive the maximum benefit, forcing them to take their Social Security when they reach the age of 62 (rather than waiting until full retirement age). Each year you wait after 62, you receive an 8% increase in annual benefits. This deferred benefit increase maxes out at age 70.

Supplementary benefits are available, depending on which state you live in, to ease these problems. Seniors whose total income is somewhere around $1,500 per month may well be eligible, and should check out the benefits they could claim locally. The drawback is that the eligibility calculation will take into account not only your income, but also any savings or other capital you have. So you can't keep a sizable nest-egg aside for a rainy day. On the bright side, for homeowners at least, the value of your residence will be disregarded.

For those who retire early, with less than the maximum social security benefit, what are the other options to maximize their income? One way to do so is to downsize. If you are willing and able to sell your home and buy somewhere smaller in a cheaper area, maybe even abroad, then clearly that will free up some money to help eke out your Social Security pension, and you could use part of it for other purposes too, maybe to help out any of your adult children who are struggling to get by in the current climate. However, it can be hard to move to a different area late in life.

Working part-time in retirement can be an attractive option, providing a small income to add to Social Security. Being part of the workforce gives older people some routine social contacts, and may prevent some of the isolation that is often a problem for senior citizens. Bear in mind, though, that more than $15,000 per year in earnings will lead to the Social Security pension being reduced by 50 cents on the dollar.

That should be OK, though. Because the federal pension takes care of most true essentials, there's no need to earn more than a small part-time income to transform the situation from one where the retiree is struggling to survive, with no disposable income, to one where he or she can live fairly comfortably. -


Take Away: Down-size and combine that with working part time. That way, the isolation of moving to a different area is minimized by the social opportunities at work and income is comfortable. The proceeds of sale from the previous home are also there to help with unexpected expenses. The situation of a retiree dependent on Social Security retirement benefits can then become similar to a person with a higher pension and savings as well.

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