What to Do If Your Social Security Check Just Isn't Enough

The U.S. government recently announced there will be no Cost of Living Adjustment (COLA) for Social Security benefits in 2016. The decision, tied to a flat year over year for the Consumer Price Index, could make budgeting difficult for Americans who rely on Social Security as a major source of income.

Fortunately, the Bureau of Labor Statistics also recently released its Consumer Expenditure Survey, which highlights consumers’ average annual spending habits — and, more pointedly, provides some direction for what to do if your Social Security check isn’t covering your bills. According to the survey, housing, transportation and food constitute most Americans’ major expenses. Cutting back in these areas could help you stretch your Social Security or other pension benefits. Here are some tips on how to do so.

1. How to Limit Your Housing Costs

Housing is, on average, our most expensive expenditure, according to the survey. So how can we limit related expenses? You can start by asking yourself “do my current housing costs cover what I want or what I need?” Homeownership is part of the American dream — and paying off your mortgage is a wonderful goal and accomplishment. But property taxes, homeowners association fees and other fixed costs do not go away when the mortgage is paid off, and generally, the larger the home, the greater the cost.

It may be excruciating to think of downsizing, but the advantages, ease of stress and extra money at the end of the month might possibly make it all worth it. Renting may also be a great way for homeowners to lower their expenses, if you decide your current housing costs are putting too much of a strain on your budget.

Current renters may be able to take advantage of the following:

Renting may allow for more freedom to downsize and easier relocation.
Relocation options may allow for total expense reduction.
Rents for lower incomes may be subsidized in certain cases.
Renting in age-restricted areas may provide expense reductions.

If you decide to move, you may want to check your credit before searching for a new place. Good credit scores generally entitle consumers to the best terms and conditions on a mortgage and landlords are in the habit of pulling a version of your credit report when you fill out a lease application. (You can check your credit by pulling your credit reports for free each year at AnnualCreditReport.com and viewing your credit scores for free each month on Credit.com.)

2. Trimming Your Transportation Budget

To potentially cut back on transportation costs, you may want to ask, “Do I really need a car?” With the popularity of mass transit, and even new ride-sharing options, owning a car may not be the necessity it once was. If you do need a car, you still may be able to cut the costs associated with it by…

Owning what you need, not necessarily what you want. Expensive cars, just like expensive houses, will likely have greater insurance and operating costs.
Carrying a higher deductible in order to lower your monthly insurance costs. (Just be sure to review any new policies carefully to be sure you have the coverage you need.)
Driving that car forever. If you buy a new car every couple of years, depreciation is your enemy and most likely hurting your pocketbook.
Taking care of your car via regular maintenance. Do this and that car may take care of you, allowing for continued use.

3. Reducing Your Food Expenses

According to the 2014 BLS report, around 41% of our total food costs are incurred away from home. That’s a stunning number. Eating out is fun, but rarely a healthy or a cost effective way to spend your monthly income. Staying at home, planning in advance, eating healthy and spending time at family members’ or friends’ houses may be a great way to lower a bulging food budget. We will all go out once in a while, but limiting the high price associated with those visits (along with the frequency) may really add up by the end of the month.

Now you know the average American’s big three expenses. While you may not be able to directly attack each area, with planning and a little focus, you may be able to save enough to help your Social Security or other pension plan last a little longer.