With just a few days remaining until the announcement of the 2025 Social Security cost-of-living adjustment (COLA), many seniors are watching closely. The projected increase of around 2.5% will add about $48 to the average monthly benefit of $1,920. However, for those whose expenses exceed this adjustment, additional income sources may be necessary to maintain their standard of living.
1. Personal Savings: Drawing from personal savings can offer flexibility to cover unexpected expenses. It’s crucial to have a thoughtful withdrawal strategy to extend the life of your savings. This involves taking only what you need and being strategic about which accounts to withdraw from. For example, withdrawals from tax-deferred accounts like traditional IRAs and 401(k)s incur taxes, whereas Roth IRA withdrawals typically don’t. It’s also wise to keep some funds in accessible accounts, while investing the rest in stocks and bonds for potential growth, ensuring you safeguard your hard-earned savings.
2. Employment Income: If your health permits, working part-time can supplement your income effectively. This doesn’t mean you have to return to your previous career; instead, consider jobs that align with your current interests. Depending on your financial situation, you may find that just a few days of work per week can significantly ease your financial burden. Furthermore, the rise of remote work options allows retirees to stay engaged while enjoying the freedom to travel.
3. Rental Income: For retirees owning extra properties, renting can provide a valuable income stream. This is especially advantageous if the property is mortgage-free. You can choose traditional long-term rentals for stability or explore short-term vacation rentals, particularly if your property is located in a popular tourist area. While managing short-term rentals may require more effort, including cleaning and maintenance, hiring a property management service can alleviate these tasks.
4. Government Assistance: Lastly, if you find it challenging to cover your living expenses, investigate available government assistance programs. These can help with necessities like food, housing, utilities, and healthcare. Be prepared to meet specific income criteria and to periodically recertify your eligibility.
As you approach the new year and the potential adjustments to your Social Security benefits, consider combining these income sources to achieve financial stability. Once you know the amount of your 2025 Social Security check, you can start drafting a budget to address any shortfalls. Regularly reviewing and adjusting your budget is key to ensuring it meets your needs, allowing for a comfortable and secure retirement.
