I’ve spent years planning for retirement. Even when my husband and I were broke college students, I spent an inordinate amount of time considering how to make eventual retirement work. Although planning for retirement began as a college project, the habit stuck with me. And even though I’ve known for years that I don’t want to retire, I want my husband to be able to when the time comes.

The primary thing I’ve focused on is “money in, money out.” In other words, how much I expect we’ll have coming in each month and how much we’ll be able to spend without cutting ourselves short.

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Three additional (potential) sources of income

If my husband were to retire tomorrow, we’d have four sources of income: Social Security, a modest pension, withdrawals from two retirement accounts, and my income. Here’s how the non-Social Security income sources are earmarked:

• Pension: This is money that’s currently being put away for minor home and auto repairs. It’s not much, but could come in very handy in a pinch.
• My income: As much as I love my job and want to continue working, the decision may not be up to me. Whether artificial intelligence takes over or a health issue rears its ugly head, I know I can’t control the variables. For those reasons, I don’t count on my income when planning for retirement.
• Retirement accounts: In a move that would shock my college-age self, we’re going into retirement with a mortgage. I remember being sure we would have our mortgage paid off years before hitting retirement age, but a brain tumor, career opportunities, and 24 moves led to a change in plans. Due to the way I plan to spend Social Security, a mortgage is not going to fit into the budget. For that reason, I plan to use a portion of our required minimum distributions (RMDs) to make our monthly mortgage payments. I may also use money from our retirement accounts to recast our mortgage periodically, lowering the monthly payment without changing our current interest rate.

Social Security

I can’t remember a time when some corner of Congress wasn’t talking about cutting Social Security benefits. Today, because I plan to pay the entirety of our monthly bills (minus a mortgage) using Social Security benefits, I’m doing two things:

Planning for the worst

According to the Brookings Institution, if Congress doesn’t do something to shore up the Old-Age and Survivor Insurance (OASI) Trust Fund — the source of the SSA’s retirement benefits — beneficiaries can count on their checks shrinking by about 17% in eight years.

Recently, I checked my “my Social Security” account, a Social Security Administration (SSA) website that allows you to see your estimated retirement benefits, depending on when you plan to begin collecting. I realize that whether big cuts take place depends on another series of issues I can’t control, like who’s running the show when retirement comes, and whether Congress can work in a bipartisan manner.

And because it helps me sleep easier at night, I plan for the worst by anticipating payments being 17% lower than the estimated amount I’m seeing on my Social Security.

Budgeting as though benefit cuts are inevitable

Let’s face it. It would be tough to be in Congress and tell your constituents that you’ve voted to cut benefits they’ve worked their entire lives for. It’s possible that Congress will come up with a sensible plan to save Social Security, but just in case, here’s my plan.

I’m assuming they won’t be able to get it together and we’ll face lower-than-expected payments. To prepare for this, I’m months away from paying off any debt that’s not a mortgage. I’ve also created a post-retirement budget that accounts for everything, from taxes to Medicare premiums and utility payments. In other words, I’m ensuring that our budget fits our expected Social Security benefits rather than crossing my fingers and hoping things will work out.

The average Social Security check for retirees is right at $2,000 per month. No matter how masterfully you stretch a dollar, $2,000 doesn’t go nearly as far as it once did. If, like me, your plan is to cover your everyday expenses with Social Security benefits, now is a good time to create a budget that will allow you to do just that.

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