The retirement age for claiming Social Security benefits is scheduled to gradually increase starting in 2025. But less than ten years later, the program will run out of funds and benefits for recipients of all ages will be cut unless Congress acts.
Check out: Cutting spending for retirement? Here’s the #1 thing you should get rid of first
Learn more: 7 reasons you shouldn’t retire before speaking to a financial advisor
This isn’t the first time Social Security has faced a deficit. In the past, Congress has consistently passed laws to keep the country’s promises to retirees — but as investors say, past performance is no indicator of future results.
It’s better to be safe than sorry, especially when your future financial security is at stake. Follow these smart spending tips to avoid waste and have a financial cushion in case the worst happens.
Earning passive income doesn’t have to be difficult. You can start this week.
The wishes you don’t really want
Spending plans are based on needs and wants. There’s not much you can do about the needs – housing, utilities, insurance, etc. – and you shouldn’t eliminate the affordable wants that make life worth living.
But you can and should reduce financial surplus wherever you find it.
“I have advised numerous clients on their financial strategies,” said Jonathan Feniak, general counsel at LLC Attorney. “For retirees or people approaching retirement who need to prepare for possible Social Security cuts, I generally recommend some basic budgetary changes.”
“First of all, take a close look at spending on what you don’t absolutely need. High-end subscriptions, frequent dining out or extravagant vacations, while fun, may need to be scaled back. That doesn’t mean you have to forego the fun, just that you should opt for cost-effective alternatives.”
Read more: 2 things parents whose children have left home should stop investing in to improve their retirement savings
Your oversized home
If your home is too big and too expensive—or you’re still renting a house that’s worth more than your family—now would be a good time to trade it in for something smaller, cheaper, and more manageable, and invest the savings in ETFs, CDs, or whatever other type of investment you and your financial advisor see fit.
“Consider downsizing,” Feniak said. “Once your kids are out of the house, maintaining a large home can be a significant burden, both in terms of maintenance costs and property taxes. A smaller, potentially more energy efficient home can provide significant savings.”
Your overpriced health insurance
Many adults of all ages make the mistake of automatically re-enrolling in their existing health insurance because price-comparison and comparing policies during re-enrollment periods is tedious and time-consuming.
It’s a mistake.
If you’re not yet on Medicare—or even if you’ve turned 65 and applied for your benefits—take another look at what may be your most difficult monthly bill.
“Educate yourself on health insurance plans and alternatives,” Feniak said. “Medical costs can skyrocket in retirement, and finding cheaper insurance options or supplemental plans, taking steps to save money or even cost-sharing programs can help ease this financial burden.”
Your excessive car insurance
You must have basic auto insurance to drive, but depending on your plan and driving habits, you may end up dipping into your savings to overpay for additional coverage.
“Review your car insurance,” recommends Melanie Musson, finance and insurance expert at InsuranceProviders.com. “If you drive an old car but carry comprehensive coverage, you may be able to switch to liability-only coverage and save a few hundred dollars a year. You can also increase your deductible to pay lower premiums. A mileage-based policy can be a great way to save if you don’t drive much.”
Unplanned meals
If you eat out excessively, you probably already know that you need to cut back on your consumption—and you should.
“Instead of eating out, start preparing your own meals,” Musson said.
Still, Feniak’s point remains: If you enjoy the occasional meal out, don’t give it up, just do it less often and visit affordable restaurants. One way to make room for it in your budget is to streamline and strategically plan your eating habits at home.
“Meal planning (in the slow cooker) can be an easy way to ensure you eat healthy and easy meals,” Musson said.
According to Fresh Meal Plan, the average meal at home costs just $4. By taking an hour each week to plan your meals, shopping for only the ingredients you need for your weekly plan, storing your food properly, and staying consistent throughout the year, you can save thousands in avoidable food waste that you can then invest to prepare for potential retirement benefit cuts.
“All of these actions taken today can make your retirement significantly more comfortable, even in the face of Social Security fluctuations,” Feniak said.
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This article originally appeared on GOBankingRates.com: 5 Things to Cut Now If Social Security Runs Out
