Preparing for retirement can be a daunting task, especially when you add up your living expenses and compare them to your current fixed income. For many who are nearing retirement, Social Security seems to be their only source of income, yet many worry that the money won’t be enough to pay the bills and make ends meet.
Find out: I’m an economist: Here’s my prediction for Social Security if Kamala Harris wins the election
Read more: Cutting spending for retirement? Here’s the number 1 thing you should get rid of first
GOBankingRates reached out to several financial advisors to get their nine things you should do now if you’re worried Social Security won’t be enough. Here’s what they said about managing your money.
Earning passive income doesn’t have to be difficult. You can start this week.
Postpone retirement until 70
Marty Burbank of OC Elder Law has suggested that people who fear they won’t have enough money to live on in retirement maximize their Social Security benefits by waiting until age 70 to file.
“Your benefit increases by 8% every year you wait, which is thousands a month. Use other income to bridge the gap until age 70,” Burbank said.
Discover more: 8 states to move to if you don’t want to pay Social Security taxes
Explore affordable housing options
According to Andrew Latham, a certified financial planner at Super Money, housing costs are often the biggest expense in retirement.
“Consider moving to a less expensive area or explore senior living communities that offer lower costs and retiree-friendly amenities,” Latham said.
“For example, moving from an expensive urban area to a suburb or rural area with a lower cost of living can significantly reduce your monthly expenses,” Latham added.
Reduce running costs
It’s never too early to start saving or reducing your spending, even before you retire.
“There are resources like SNAP and utility rebates – see if you qualify,” said John Crist, founder of Prestizia Insurance. “Have your family contribute to household expenses and get reduced rent in return. With planning, cost management and leveraging resources, Social Security can do even more.”
“Cancel cable, eat out one less time a week, or get a part-time job and put the money into your retirement plan,” says Ben Klesinger, CEO of Reliant Insurance Group and Helping Hand Financial.
According to John F. Pace, CPA and tax manager at Pace & Associates CPAs, reducing unnecessary expenses and reevaluating everyday expenses can save $100 to $200 per month.
“I worked with a couple who reduced their grocery bill by $150 a month by clipping coupons and buying no-name products. They used the savings to fund an IRA,” Pace said.
“Small steps make a big difference in the long run. Now is the time to start planning and saving,” Klesinger added.
Use your home equity
If you own a home, Latham says you may want to consider leveraging your home equity through a reverse mortgage or home equity line of credit (HELOC).
“With a reverse mortgage, you can convert some of the equity in your home into cash that can supplement your Social Security benefits,” Latham said.
“However, relying on your home to cover living expenses during retirement is not ideal and should be avoided unless absolutely necessary,” Latham added.
Plan as far in advance as possible
“Increase your 401(k) contribution to at least 15% of your salary,” said David L. Blain, CFA and CEO at BlueSky Wealth Advisors.
“The more you can save now, the better,” Blain continued. “At 10%, you can barely keep up with inflation. Thanks to compound interest, every 1% increase makes a big difference over time.”
“One client contributed enough that her company received the match, bringing her account in at over $20,000 annually,” Pace said. “She invested the money and enjoyed solid growth over 20-plus years of saving. When she retired, she had over $500,000 – a result of consistent contributions and long-term growth.”
“Open an IRA in addition to your 401(k) account and maximize your contributions,” Blain advised. “IRAs offer tax advantages and more investment options.”
Blain added that retirees monitor their investments and make adjustments as needed.
“Focus on growth during the accumulation phase,” Blain said. “As you approach retirement, balance growth and income investments to provide lifetime income. Review fees and make changes to reduce costs.”
Looking for additional income
“The first step is to develop additional revenue streams,” says David Fritch of the Fritch law firm and CPA practice.
“For retirees, consider working part-time, driving for a rideshare service, or consulting in your previous field,” Fritch advises. “For those still working, invest as much as you can in a diversified portfolio. Real estate is also a great way to generate passive income.”
“An extra $500 to $1,000 a month will significantly improve your retirement savings and give you extra money now,” Blain agreed.
Prepare for the worst
“Plan ahead by calculating your needs and your deficit in retirement. Determine how much you will receive from Social Security and any pensions,” Fritch said, explaining that the gap is the amount you will need to fund through your own savings and investments.
“Save and invest as much as you can in tax-advantaged retirement accounts like 401(k)s and IRAs,” Fritch added. “These offer more opportunities for your money to grow over the long term. The sooner you start planning and saving, the better prepared you will be.”
“Increase your retirement contributions as much as possible, ideally at least 10-15% of your income. The more you contribute, the more you will benefit from compound interest and company matches,” Burbank said.
“One of my clients had a 2% increase and over $200,000 in gains on his 401(k) account in 15 years,” Burbank said.
Reduce healthcare costs
Fritch urges retirees struggling with high healthcare costs to look for ways to reduce costs.
“Look into Medicare Advantage or Medigap plans to find lower premiums and out-of-pocket costs. Look into drug assistance programs that offer discounts on medications,” Fritch said.
“Review medical bills for errors and negotiate lower prices for expensive treatments or procedures. Controlling health care costs is key to getting the most out of your Social Security income,” Fritch said.
Ask for professional help
According to Burbank, it’s never too late to take action.
“Meet with a financial advisor to develop a personalized plan, adjust it as needed, and find ways to generate income,” Burbank advised. “With planning, you can have a secure retirement, even if Social Security is your primary source of income. The key is to start now.”
More from GOBankingRates
This article originally appeared on GOBankingRates.com: I’m a Financial Advisor: 9 Things to Do Now If You’re Concerned Your Social Security Isn’t Enough
