Top Mistakes to Avoid with Your Social Security Money to Stay Financially Secure

According to , Lagradaonline , Social Security benefits are a vital source of support for around 72 million Americans, with a significant portion of retirees relying on it as their primary source of income. According to recent data, nearly half of individuals aged 65 and older rely on Social Security for at least 50% of their household income, and 25% of them depend on it for 90% or more of their monthly earnings. While these benefits help many, they often aren’t enough to cover the growing expenses that come with aging, creating a financial strain for retirees.

Steven Bosworth, a financial advisor and managing director of Bosworth Financial Group, points out that relying solely on Social Security during retirement can make it difficult to afford essential expenses. Here are some of the most common financial challenges faced by retirees who depend primarily on Social Security:

Medical Care Expenses

One of the biggest challenges retirees face is the high cost of medical care. The average American spends about $12,000 per year on health-related expenses, making the U.S. the most expensive country for healthcare. Retirees with chronic conditions often face even higher costs. While Medicare and Medicaid cover some of these expenses, out-of-pocket costs such as premiums, prescription medications, and co-pays still add up. According to T. Rowe Price, retirees with traditional Medicare, Medigap, and Medicare Part D spend, on average, $900 annually on healthcare, with 10% spending more than $4,200. Government programs do not cover long-term care, dental care, vision care, or other essential services, adding to the financial burden.

Vacations

Retirees living on Social Security often cannot afford vacations. Bosworth notes that the cost of taking a trip—whether domestic or international—can quickly surpass the monthly Social Security income. For example, a budget-friendly international vacation lasting 12 nights can cost around $3,251, while even a short domestic trip averages $581. Given that the average Social Security benefit in 2024 is $1,907 per month, most retirees simply cannot afford to travel without cutting back on other essentials.

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Car Maintenance

Maintaining a vehicle can be another significant expense for retirees on a fixed income. Bosworth emphasizes that the costs of car repairs and regular maintenance can quickly add up. The average annual cost for vehicle maintenance ranges from $1,200 to $1,800, with additional repair expenses, such as battery replacements or new tires, raising costs further. While newer, more reliable vehicles may require less upkeep, every car eventually needs repairs, which can strain a fixed income budget.

Homeowners and Car Insurance

Insurance premiums are another area where retirees may struggle. The cost of homeowners insurance can reach up to $2,600 per year for a home valued at $300,000, and car insurance can also be costly. These expenses tend to rise annually, often outpacing the modest increases in Social Security benefits. For retirees on fixed incomes, paying for comprehensive insurance coverage for their home and car can become an unaffordable burden.

In summary, Social Security benefits, while crucial for many retirees, often fall short of covering the full range of expenses that come with aging. Without additional savings or sources of income, many seniors are left facing financial challenges that limit their quality of life and ability to enjoy their retirement years.