If You're on Social Security, Do This Before Dec. 31

There's a reason so many older Americans end up relying heavily on Social Security for retirement income: Saving for your senior years is not an easy thing.

It's one thing to contribute a few hundred dollars a month to an IRA or 401(k) if you earn a six-figure salary. But if you earn a more modest wage, it's easy to see how retirement plan contributions might fall by the wayside.

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Still, living mostly on Social Security in retirement is not easy. So if you're on Social Security and it constitutes the bulk of your income, there's an important thing you should aim to do before Dec. 31.

Run those numbers now

When money is tight at any stage of life, it's important to put yourself on a budget. This holds true for retirees on Social Security.

At this point, we know that Social Security benefits are getting a 2.8% cost-of-living adjustment, or COLA, in 2026. Knowing that, you can apply that COLA to your current monthly benefit to see what it amounts to.

Of course, one thing you may need to account for is the cost of Medicare Part B. If you're on Medicare, you'll have to factor in any Part B premium hike you're subject to.

Otherwise, you can do the math and see what monthly benefit you're in line for in 2026. From there, you can set a monthly budget to better manage your finances.

That budget should account for recurring expenses like groceries and utility bills, as well as once-a-year bills, like your auto insurance payment (if you pay it annually). If possible, there should also be some wiggle room for surprise expenses like home repairs.

Do you need to make changes for 2026?

You may run the numbers on your upcoming Social Security benefits and come to the realization that money may be even tighter in 2026 than in 2025. If so, now's the time to make a plan to improve your financial picture.

One option may be to downsize your home if you have more square footage than you need. Even if your home is paid off, downsizing could lead to lower property taxes, utility bills, and homeowner's insurance premiums. Plus, if you're able to sell your home, use the proceeds to buy a replacement home, and pocket some money in the process, you can invest it and turn it into a retirement nest egg.

If you don't want to downsize out of a larger home -- say, you love your neighborhood and don't wish to leave -- you could try renting out a portion of your home instead. Or, if you have family you visit and stay with often and your home is in a desirable location, you could rent it out on a short-term basis when you're not there.

Another option for improving your financial picture is to work part-time. The good news is that you're allowed to collect a paycheck while receiving Social Security benefits. However, if you haven't yet reached full retirement age, know that you'll be subject to an earnings test.

If the idea of a traditional part-time job isn't appealing, look at the gig economy. You may find that there's a hobby you can monetize, like teaching an instrument you play or selling baked goods.

Finally, take the opportunity between now and Dec. 7 to review your Medicare plan choices. It could pay to switch to a Part D or Medicare Advantage plan that costs you less as a whole.

Getting your financial house in order this year could set you up for a more secure 2026. So take the time to calculate your new Social Security payments and see what that does for your budget. And if it doesn't do enough, take steps to improve your financial picture so you can spend more time enjoying retirement and less time worrying about money.

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