Over 3 million workers were prompted to take a hike during the pandemic. The unprecedented mass exit coupled with a 2.7% weakened population growth resulted in 400,000 workers missing from the labor force. Rising wages amidst a tight labor market, soaring demand, and constrained supply plunged the economy into a 40-year high inflation at 8.5% in 2022. This inflation has further taken a dip in consumer spending and purchasing power. While 2023 is witnessing a material softening in inflation at 5.0% for the 12 months that ended March, persistent supply-side shortages still pose a risk to the economy. As such, retirees having fixed incomes are tolerating the hardest blow.
With this backdrop, it is safe to conclude that retirees may not be able to live comfortably on $1 million in the future. In fact, a report by Wealthcare Financial reveals that Millennials and Gen-Z will require $3 million in savings due to inflation. However, the same inflation is preventing Americans from saving more, and 42% of Americans are likely to retire broke. Having less than $10,000 in savings, these people are solely going to be reliant on social security benefits throughout their retirement period.
With the Federal Reserve raising interest rates six times the past year, the fourth consecutive 0.75 percentage point increase has also led consumers to become cash-strapped. To offset this rise, Social Security Administration has announced an 8.7% Cost-Of-Living Adjustment (COLA) in 2023. This increase has been the highest raise witnessed in 40 years. CNBC notes that consumer prices are comparatively high despite the COLA increase. In fact, the 2022 Social Security Loss of Buying Power Study reports that social security beneficiaries have been losing over 40% of buying power since 2000. The study further notes that rapidly increasing prices since March 2021 have eroded buying power by ten percentage points. All expenditure categories received a blow, with the highest impact felt in energy costs, food items, and Medicare Part-B premiums. With retirees aging, these losses are becoming cumulative.
While benefits increased by 64% due to Social Security COLAs, retirees' cost of goods and services got raised by 130%. This implies that retirees have been losing out their buying power over the years. Households can only buy $60 worth of groceries today, compared to $100 spent on groceries in 2000.
Complementing Social Security with I.R.A.s
Over 66 million residents have collected social security benefits as of February 2023. Data from the Social Security Administration reports that out of this figure, 15% of women and 12% of men rely on social security alone for 90% or more of their income. While these benefits are extremely valuable to retirees, not everyone patiently waits to achieve their maximum benefit.
As such, the size of social security benefits largely depends on how much an individual has contributed and earned during their 35 highest-paying years. Those who spent more years out of the workforce or contributed less to social security will receive lesser benefits than others. It should also be noted here that social security can be claimed for ages 62 and onwards. However, receiving benefits early on means retirees can receive permanently reduced benefits only. These benefits increase by 8% each year until they are maxed out at the full retirement age of 70.
In the US, relying on social security alone is challenging. At 62 years of age, the maximum social security an individual can receive is $2,572 per month. Since the average living expense for a single individual in the US is $3,405, the resultant income gap can make comfortable living challenging for retirees. For this reason, individuals must consider investing in I.R.A. plans or Individual Retirement Accounts. Bank of America Corporation (NYSE:BAC), The Charles Schwab Corporation (NYSE:SCHW), and Interactive Brokers Group, Inc. (NASDAQ:IBKR), are a few companies helping retirees thrive during their retirement period.
Companies like The Charles Schwab Corporation (NYSE:SCHW), and Interactive Brokers Group, Inc. (NASDAQ:IBKR) offer different types of retirement accounts so individuals can meet their retirement goals. Meanwhile, Bank of America Corporation (NYSE:BAC) offers savings I.R.A.s to help employees save for their golden years. Merrill Edge, an investment advisory service and subsidiary to Bank of America Corporation (NYSE:BAC) offers investment I.R.A.s where individuals can choose bonds, stocks, and even funds to save for the latter years of life.
For individuals looking for advice solutions and financial planning services, The Charles Schwab Corporation (NYSE:SCHW), and Interactive Brokers Group, Inc. (NASDAQ:IBKR), are good places to start. Nevertheless, if you have reached retirement age with social security as your only source of income, retire to other places to stretch your benefits as much as possible.
15 Best Places to Live on Social Security Check Only
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Methodology
To identify the 15 best places to live on social security check only, we have looked at seven (1,2,3,4,5,6,7) different sources. Each time a place appeared on a list, it was awarded a single point. We then ranked the places in our list in ascending order of high score. Portland was ranked number 3 in our list but was not included due to the ongoing housing crisis in the city.
The top 15 places to retire in the world on social security are listed below:
15. Omaha, Nebraska
Insider Monkey Score: 2
Omaha offers a continental climate to its residents, with dry winters and warm summers. The city also has a fairly impressive arts and culture scene. Retirees can enjoy a cost of living that is 8% lower than the national average. Moreover, housing is 16% cheaper than in the U.S, while the rent is $100 less than the national median. With clean air and water, the city is good for seniors to live in.
14. Dallas-Fort Worth, Texas
Insider Monkey Score: 2
Dallas-Fort Worth is home to some of the best retirement communities. The city's cost of living is 5% lower than the national average, while housing is 14% cheaper than the U.S. average. The 44 active adult communities within Dallas-Fort Worth provide many opportunities for seniors to live an active lifestyle. With a picturesque skyline and plenty of sunshine, retirees can enjoy indoor and outdoor activities.
13. Laredo, Texas
Insider Monkey Score: 2
Laredo is a city with a small-town feel. Its rich heritage, low cost of living, and affordable housing make it an attractive place for retirees. The average cost of living is $1,487, 14% lower than the state average. Housing is 33% cheaper than the national average. Moreover, average rents have fallen by 1% from the previous year, with one-room apartments costing $893 on average. Fine dining, ample parks, and good music are attractive features of the city.
12. Brownsville, Texas
Insider Monkey Score: 2
Brownsville has plenty of historical sites, monuments, and outdoor activities for seniors to enjoy. Cultural attractions, fine dining, and lively bars make the city an enjoyable place to live in. The cost of living in Brownsville is 15% cheaper ($1,627) than the national average. Moreover, utilities are 15% less pricey, and housing is 30% cheaper than the U.S. average. The average rent for a one-room apartment is $775, and the overall environment radiates a suburban feel.
11. Huntsville, Alabama
Insider Monkey Score: 2
Huntsville is another great place for retirees, with abundant parks, trails, and greenways. There are lots of attractions to explore, such as the U.S. Space & Rocket Centre, Huntsville Museum of Art, and Huntsville Botanical Garden, to name a few. The cost of living in the city is 8% lower than the national average, while housing is 25% cheaper than average U.S. house rents. The city is particularly popular for military retirees due to the large technology and defense sector. Summers are hot and humid, while winters bring relief to the heat.
10. Sioux Falls, South Dakota
Insider Monkey Score: 2
Sioux Falls is a good place for seniors, considering its tax-friendliness, high number of physicians, and good air quality. The cost of living in Sioux Falls is refreshingly low at $1,759. This figure is 8% less than the national average. Housing is also affordable, with the average rent for an apartment being $1,504. Moreover, the average house value stands at $320k, which makes it $102k cheaper than the national average. There are lots of parks, coffee shops, and bars to explore.
9. Des Moines, Iowa
Insider Monkey Score: 2
The friendly city of Des Moines is feasible for retirees to live in. The notable features of this city are that it does not tax social security, has low crime rates, and many opportunities for art and culture. The cost of living in Des Moines is 14% lower than the national average. Moreover, utilities are 15% cheaper, while housing is 32% cheaper than the U.S. average. The city is filled with extensive parks and trails, walkable town centers, and regular community events that retirees can enjoy.
8. Jacksonville, Florida
Insider Monkey Score: 2
Jacksonville, Florida, is ideal for retirees who wish to live near the beach and enjoy aquatic past times such as fishing and boating. Home to a large number of retirement communities, it boasts a 7% lower cost of living than the national average. Housing is also affordable, with the medium price of buying a home being $233,000. This figure is cheaper than $295,000, which is the national median. Apart from the low cost of living, retirees also get to enjoy the outdoors, the weather, and the high quality of life.
7. Toledo, Ohio
Insider Monkey Score: 2
Toledo's "Glass City" enjoys good weather and is close to metro areas like Cleveland and Detroit. The average cost of living in the city is $1,707, with lots of affordable houses and condos to rent or buy. While the cost of rent varies largely based on location and size, it amounts to $881 on average. Toledo is one of the cheapest cities to live in, in the States, with total annual costs of living amounting to $22,308 only.
6. Fort Wayne, Indiana
Insider Monkey Score: 2
Fort Wayne is a good place for retirees with its 86 public parks spanning 2,805 acres and a 25-mile walking and biking trail overlooking the St. Mary's River. The average monthly rent in Fort Wayne is $1,120, and retirees are left with $660 after paying the rent. The city also has a lot of farmer markets and breweries to explore. The cost of living in the city is 11% lower than the national average. Moreover, housing is 29% cheaper than the U.S. average. The median rent stands at $777, while the median home value is $121,600.
