Strategies for Lower Income Retirement

Let's say you don't reach retirement with all the money that you're supposed to have saved and end up with a low income in retirement. Though the stock market has been very successful for many, the last few decades haven't exactly been without financial shocks.

Many households felt the effects of the 2007-2008 financial crisis and the Great Recession. People reaching retirement age thought they were set until financial markets crashed, wiping out much of their retirement funds. Many had recovered, but for others the timing was disastrous. Now, the world is facing a new crisis. The economic crisis and lockdown has rocked the stock market, thrown millions out of work, and isolated many Americans, especially older people who are more vulnerable to serious consequences if they get the illness.

Understanding Low Income in Retirement

How many people get to retirement with low income? The National Council on Aging tracks economic security for seniors and finds that 15 million Americans over the age of 65 live below the poverty level of $25,760 per year. Millions of seniors are economically insecure as they struggle with issues such as inadequate nutrition and soaring healthcare costs.

If you or a loved one does not have enough money to meet basic needs, you need to know about programs that can provide retirement assistance. At the same time, when the most immediate needs have been filled, it also makes sense to stand back and think about the next steps.

The Programs You Know

You’re probably familiar with a number of the following programs that help lower-income retirees.

Social Security

Throughout your working years, you paid into Social Security. The average retiree received $1,437.55 in benefits as of August 2021. If your spouse passed away or you’re disabled, you may qualify for benefits too. For many, Social Security is the cornerstone of their income, but it’s not meant to be the primary income source.

Medicare

You paid into Medicare during your working years, just as you did with Social Security. You should receive Part A benefits at zero cost. Premiums for Part B and C will vary. Part D, better known as the prescription coverage part, has a low-income subsidy called Extra Help. 

Extra Help

Older people receiving Medicare Part D coverage may receive assistance from the Extra Help plan worth about $5,000 annually. Married couples living together must have a combined worth of $29,520 or less, and single people must have $14,790 or less, to qualify for this plan.

Medicaid

Medicaid, not Medicare, is where you go if you need assistance with medical costs. The program provides coverage for “children, pregnant women, parents, seniors, and individuals with disabilities,” providing you are under certain income limits. You can receive Medicare and Medicaid benefits at the same time.

Food Stamps

Older adults are eligible for the food stamp program, which is now titled the Supplemental Nutrition Assistance Program (SNAP). You must apply in the state in which you live and meet specific income and resources criteria.

Supplemental Security Income (SSI)

SSI is not Social Security. Instead, it’s a public assistance program that provides aid to the aged, blind, or disabled intended to meet basic needs such as food, clothing, and shelter.

Other Programs for Retirees

Benefitscheckup.org is a website sponsored by the National Council on Aging that includes information on more than 2,500 public and private assistance programs for adults over 55, including nutrition, legal, housing, and education. Complete the short form, and the site will list any programs that may apply to you.

The U.S. Department of Health and Human Services sponsors Eldercare, a website similar to the above. Enter your city or zip code, and the site returns local assistance programs available to you.

The U.S. Department of Agriculture administers the Commodity Supplemental Food Program (CSFP). Similar to food stamps, this program is available to people at least 60 years old and is administered at the state level.

There are also a number of programs that help seniors afford internet services, if they are priced out of reach, as can be the case especially in rural areas. Your local provider may even offer one of these plans.

Tax Relief

Older adults may be eligible for tax relief—often property or real estate taxes, vehicle license fees, and solid waste fees. Certain income caps may apply, and each state has varying laws and eligibility requirements. You may also apply for a federal tax credit if your income falls below certain levels.

Legal Services

Many attorneys and practices will provide legal services to older people for free or at a discounted rate.

Job Training

The United States Department of Labor administers the Senior Community Service Employment Program (SCSEP), a program that provides training and part-time job placement for people age 55 and up under certain income limits. Jobs pay minimum wage but serve as a way to provide training that may lead to a better job in the future.

Housing

The Housing Choice Voucher Program (HCVP) offers assistance for anybody living in certain properties run by local public housing agencies. Vouchers are income-based and often have a long waiting list (two to five years). Your local government office has all the details.

Utilities

Many utility companies around the nation provide assistance programs to older people who can’t afford to pay their utility bills. Contact your utility company and ask if it has an assistance program. If not, the company might suggest other ways to lower your utility bills.

Low-Cost Lifestyle 

Spending less isn’t just about government or private programs, and you can build in a lot of fun. You now have time to smell the roses and even grow some—in your own garden or a community garden, if your town has one, along with vegetables, of course. And those vegetables can replace some of what you buy at the supermarket.

Certified nutritional therapist Jenny McGruther helpfully explains on her blog, NourishedKitchen.com, how she gets four family meals for the price of one broiler chicken. So set to work polishing your cooking skills or learning some new ones, because cutting back on takeout and restaurant meals can save you a lot of money.

If you live near a university, you have time to go to the free concerts every music student has to give in order to graduate. That’s a lot of music. Some volunteer programs include lunch for the volunteers—and they’re a good way to meet new people in your community, even if you didn’t move after you retired.

The best exercise, if you can manage it, is walking, and all you need are adequate shoes. Speaking of which, look into the Silver Sneakers fitness programs, sponsored through many Medicare health plans in more than 17,000 locations.

Controlling Your Finances

If you haven’t done so already, take control of your retirement finances. If you’re married, make sure both spouses are involved, because one of you will probably have to take the primary role at some point. It’s important to discuss everything thoroughly, especially when money is tight and there isn’t much room to recover from mistakes.

This is also the time to discuss whether you plan to stay where you are or relocate to a smaller home or less expensive community. The factors to consider are too numerous to list, but try to discuss them as fully and early in your retirement as possible.

The Bottom Line

With a little bit of digging, older adults can find a host of targeted programs designed to assist with living expenses. Many of these programs are administered by your state or local government. Contact the appropriate government offices for more information or go to their websites. And remember, if your computer’s not working well, many public libraries have extensive computer facilities and staff trained to help you learn about new equipment.