While there are many factors that older Americans consider when deciding on when to retire, the size of their nest egg is typically top of mind.
One of the biggest fears on the minds of older Americans is the potential to run out of money in retirement. In fact, a survey from Allianz Life found that 64% of Americans are more worried about running out of cash in retirement than they are about death, according to CNBC (1).
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For older Americans who don’t have much savings and would like to retire sooner than later, choosing when to call it a career can be quite the dilemma.
Imagine Debbie, a 65-year-old homeowner in Oregon who’s grown tired of working nine to five. Debbie would love to retire, and since she’s old enough to claim Social Security benefits, she’s giving it serious consideration.
But there’s a catch. With just $15,000 saved, Debbie is concerned her savings won’t last very long. And while she’s aware that her Social Security benefits can supplement her income, she also knows that if she were to retire today, there’s a good chance she will be relying solely on her benefits within a year or two.
With the cost of living going up, living on Social Security alone is no easy feat, especially since Medicare premiums are on the rise. According to the Globe and Mail, the average monthly benefit payment for those who are 65 was $1,611 as of May, 2025 (2), which works out to roughly $19,300 per year.
With this in mind, Debbie can’t help but wonder: can she retire now and live comfortably with Social Security benefits as her sole source of income? The answer is yes, living on Social Security alone is doable. But to pull it off, Debbie may need to make a few sacrifices in order to stretch her benefit income as far as it can go.
Reduce housing costs by downsizing
Housing costs account for about 25% of expenses among Americans aged 65 and older, according to the National Council on Aging (3). Meanwhile, in 2021, 11.2 million older Americans were reportedly spending more than 30% of their income on housing.
If Debbie decides to retire while relying solely on Social Security for income, she may need to take steps to reduce her housing costs, and downsizing could be a great solution. As mentioned above, Debbie is a homeowner who paid off her mortgage more than a decade ago, but that doesn’t mean she won’t have any housing costs in retirement.
Downsizing could lead to cheaper property taxes and lower maintenance expenses. It also typically costs less to heat and cool a smaller home than a larger one, so there could be some decent savings there as well.
Debbie also has the potential to turn a profit if she were to sell her home and purchase a smaller one, and that profit could be added to her retirement savings. The National Council on Aging says homeowners aged 65 and over have a median of $250,000 in home equity, which means Debbie could be sitting on a larger nest egg than she had originally thought.
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Delay claiming Social Security
Debbie was eligible to claim Social Security benefits once she turned 62, but claiming her benefits at 65 gives her a larger monthly payment. However, if Debbie were to wait and claim her benefits at full retirement age — which is between 66 and 67, depending on her birth year — Debbie could receive an even larger monthly payment.
Social Security benefit payments grow larger and larger the longer you hold off on claiming your benefits, up until the age of 70. In order to get her maximum benefit payment, Debbie would have to delay her claim until she turns 70. But this likely wouldn’t work out for Debbie, since claiming benefits at 70 would mean her $15,000 savings would have to last for the next five years.
However, if Debbie could stretch her savings to cover expenses for the next year or so, she could then claim her benefits at full retirement age, which means she won’t receive a permanent reduction to her benefit payments.
Simply put, the longer Debbie can stretch her savings and avoid claiming her benefits, the larger her monthly benefit payments will eventually be, and a larger payment would make it a lot easier for Debbie to live comfortably on Social Security alone.
Scale back on living costs and create a budget
If Debbie’s retirement plan is to live on Social Security alone, she must be prepared to budget carefully and limit her spending on non-essential items.
That could mean doing most or all of her cooking at home instead of dining out, and limiting herself to free hobbies such as hiking or community events. Another great way to budget is to create a grocery list and stick to it, that way Debbie can avoid impulse buys while shopping at the grocery store.
Debbie could also benefit from keeping company with like-minded budgeters who are also trying to keep their spending down. With the right company, she can enjoy hiking, gardening or discussing her latest library finds over coffee rather than doing activities that force her to open up her wallet.
Debbie could also consider budgeting with the 50/30/20 rule, which stipulates that 50% of her income goes to needs (like housing), 30% goes to wants (like entertainment) and 20% goes to savings or paying off debt.
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Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
CNBC (1); The Globe and Mail (2); National Council on Aging (3)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.