The announcement regarding the 2025 Social Security cost-of-living adjustment (COLA) is just days away. This is particularly significant for seniors struggling with persistent inflation over the years. However, the anticipated COLA increase may not drastically change the financial landscape.

The Senior Citizens League predicts that the COLA will be approximately 2.5%. This increase would add around $48 to the average monthly Social Security benefit of $1,920 as of August.

If you’re on Social Security and find that this boost isn’t sufficient to maintain your lifestyle, exploring some of these four alternative retirement income sources might be necessary.

1. Personal savings

Consider personal savings as your primary resource, if available. You can withdraw just what you need to address various expenses, providing a great deal of flexibility. However, remember that savings are a limited resource.

To maximize the longevity of your savings, follow an effective retirement withdrawal strategy. This includes taking only what you need and selecting the appropriate accounts for withdrawals. For instance, withdrawals from tax-deferred accounts like traditional IRAs and 401(k)s are taxed, whereas funds from Roth accounts are typically tax-free during retirement. Additionally, if you’re over 73, be mindful of the implications of required minimum distributions.

Furthermore, monitor how you invest the remaining balance in your accounts. Consider keeping some funds in easily accessible bank accounts or certificates of deposit, while also allocating part to bonds and the stock market for potential growth. Just be cautious and prioritize the security of your accumulated savings.

2. Job income

If you’re in good health and able to work, consider obtaining a part-time or full-time job to supplement your finances. It doesn’t have to be in your previous profession; rather, you can opt for something more appealing based on your current interests.

The income from this job doesn’t need to be substantial, only enough to cover any shortfall left by your Social Security payments and personal savings. Depending on your circumstances, you might manage with just a few days of work each week. Remote positions can also make traveling during retirement more feasible.

Launching a business can be a gamble, involving initial expenses. If the venture fails, you may find yourself in a worse financial state than before. Be sure to fully understand the costs associated with starting a new business and weigh the risks before proceeding.

3. Rental income

Seniors who possess additional real estate may have the chance to generate income through renting. This can be particularly beneficial if the property is owned outright, although you still bear the responsibility for maintenance.

Long-term rentals could provide stability and predictability, while short-term vacation rentals might be lucrative, especially in tourist-heavy areas.

However, short-term rentals may require more oversight, as it involves cleaning and preparing the property between bookings, though you can hire help for these tasks.

4. Government assistance

This should be the last option to consider, but if you struggle to meet your expenses, look into potential eligibility for government assistance programs. These initiatives are typically managed at the state level, and local communities might also offer support.

Government aid can assist with necessities like food, housing, utilities, and healthcare. Keep in mind that there are income requirements, and you may need to periodically verify your eligibility.

Create a budget

Combining these four income sources might be necessary to ensure financial stability. After determining your Social Security income for 2025, you can start budgeting for any gaps. Reassess your budget after a month or two to ensure it meets your needs.

If your budget isn’t working, consider either trimming expenses or boosting your income to find a comfortable balance.

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