I Live Comfortably in Iowa on Only a Social Security Check and $500: Here’s How I Do It

According to a recent AARP survey, 20% of adults ages 50 and over have no retirement savings. This means no IRA, no 401(k) and no investments. To make things even worse, 61% believe they aren’t going to have enough money at retirement.

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Social Security was created to provide financial backing for Americans as they age. Unfortunately, it was never designed to be an individual’s sole source of income. Instead, it was meant to supplement savings and provide a comfortable living. However, with Americans struggling to afford common expenses, retirement savings have been put on the back burner for many people.

Patrick H., who retired a few years ago, had very little income to rely on besides his monthly Social Security check. However, because of smart planning, he and his wife have been able to live comfortably even with inflation, which has caused many things to cost more.

“While I could have retired when I turned 62, I chose to continue working until I was 67,” Patrick said. “I live in a smaller town outside Des Moines, so the cost of living is more manageable than many other parts of the country.”

Even though he didn’t want to give out the exact amount, Patrick let me know his Social Security check is more than the average, which, according to the Social Security Administration, is $1,907 as of January 2024. In addition to his monthly check, he also has an individual retirement account (IRA) from which he withdraws $500 monthly.

I wanted to find out how Patrick and his wife manage to live off Social Security and a small IRA to help others who are worried about how they’re going to afford retirement if they’re significantly behind with their savings. I found out that Patrick did four major things that made it all possible .

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Paid Off Their Mortgage Before Retirement

Rent and mortgage payments are the biggest expenses most people have, eating up a significant part of their monthly budgets. However, owning your home and paying off your mortgage before you retire can significantly reduce your post-retirement expenses.

“My wife and I have lived in our current home for almost 40 years,” Patrick said. “About 10 before I retired, we decided we wanted to be mortgage-free during retirement so we didn’t have to worry about having a housing payment on a fixed income. While we didn’t have a significant amount of disposable income after bills, we put what we could toward our mortgage balance. This was probably the best decision we made.”

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Became a One Car Household

Like almost everything else, COVID-19 and inflation have significantly affected car prices. According to Edmunds, the average new and used car payments in the first quarter of 2024 were $735 and $546, respectively. For some people, this is the equivalent of a housing payment.

As a retiree, you no longer have to worry about the daily commute into the office and transporting kids around town, which gives you some flexibility.

“When my wife and I retired, we found that we weren’t driving our cars very often,” Patrick said. “There were weeks where one of our cars sat in the garage without being touched. That led us to consider whether we could share a single car.”

Patrick went on to talk about how the decision was pretty simple to make. He had an older truck without significant miles, and his wife had a newer car. The deciding factor for which car they would get rid of came down to the fact that his truck was paid off, but they still owed money a loan for her car.

“We sold my wife’s car, and today, we’re still sharing my truck when we need to go places. Each month, we set aside a small amount of money that goes into a savings account to pay for any maintenance needed.”

Held Off on Retirement

You can start collecting Social Security as soon as you reach age 62. However, your benefits will be reduced if you choose to collect at 62. You won’t receive 100% of your benefits until you reach your full retirement age. Below are the full retirement ages based on the year you were born.

• For anyone born between 1943 and 1954, the full retirement age is age 66.
• If you were born between 1955 and 1959, the full retirement age is between 66 and 67, depending on the year you were born.
• If you were born in 1960 or later, the full retirement age is 67.

“Even though I thought about collecting my [Social Security] benefits when I was 62, my brother talked me out of it,” Patrick said. “He explained that if I waited a few more years, my benefits would be significantly more.”

Patrick made a wise move by waiting until he was 67. His benefits increased by 8% each year. Had he waited until he was 70 to retire, his benefits would have increased even more.

Sticks To the Budget

While sticking to a budget is important no matter what stage of life you’re in, it becomes more crucial once you’re on a fixed income. Patrick credits being able to manage on mostly a Social Security income because he avoided debt for most of his life and understood the importance of budgeting.

“I always hated managing our finances, which is why my wife does most of the work,” Patrick added. “However, we both understand that if we want to live without a lot of financial stress, we need to keep our spending low. Some months, this means we have to give up certain things we enjoy.”

Patrick said he loves to play golf when the summer heat allows him to, but some months he might have to cut that out if they’re going to have added expenses from visiting their kids out of state.

Most financial advisors will tell you that you need to have ample savings before you can retire. While this is smart advice, people like Patrick have found out that with smart planning, you can live comfortably even if a majority of your income is from your Social Security benefits.

This article originally appeared on GOBankingRates.com : I Live Comfortably in Iowa on Only a Social Security Check and $500: Here’s How I Do It