Retirees with a paid-off mortgage may have a better chance of living comfortably on Social Security alone. Without housing debt, retirees can manage their budget for basic living expenses more easily.
A new report by Realtor.com reveals that Social Security benefits alone are now enough to cover the cost of living in only 10 states. Retirees face shortfalls of thousands of dollars each year in all other states.
The analysis is based on median Social Security benefits in each state and the Elder Economic Security Standard Index, which measures the income older adults need to meet basic needs. Realtor.com found that homeownership costs have increased by 26% over the past five years, with hidden costs such as property taxes, homeowners’ insurance, and maintenance being the primary drivers.
Are Social Security benefits enough to live without a mortgage?
Most retirees cannot rely on Social Security alone, even with no mortgage payments. Benefits alone can only cover living expenses in 10 states, while the others face an average annual shortfall of approximately $2,762, or $230 per month, according to the report.
Living expenses often exceed what Social Security can realistically cover. A recent study from The Senior Citizens League estimated that nearly 22 million seniors rely solely on Social Security for their income. Additionally, three-quarters of all seniors depend on Social Security for at least half of their income.
Where Social Security could cover all your living expenses
Delaware leads the nation as mortgage free retirees have an annual surplus of $1,764, or about $147 per month. Michigan barely makes the surplus list with just $132 annually above living expenses.
Housing costs are the primary factor separating surplus from shortfall states. Retirees in surplus states spend about $510 on housing per month, with many falling below $550. In shortfall states, retirees spend more than $900 for housing.
Delaware
Annual surplus: +$1,764Total monthly costs: $1,992Monthly housing costs: $555Median monthly benefit: $2,139
Indiana
Annual surplus: +1,392Total monthly costs: $1,900Monthly housing costs: $555Median monthly benefit: $2,139
Arizona
Annual surplus: +$1,224Total monthly costs: $1,874Monthly housing costs: $531Median monthly benefit: $1,976
Utah
Annual surplus: +$888Total monthly costs: $1,933Monthly housing costs: $530Median monthly benefit: $2,007
South Carolina
Annual surplus: +$828Total monthly costs: $1,860Monthly housing costs: $486Median monthly benefit: $1,929
West Virginia
Annual surplus: +$660Total monthly costs: $1,806Monthly housing costs: $398Median monthly benefit: $1,861
Alabama
Annual surplus: +$576Total monthly costs: $1,805Monthly housing costs: $419Median monthly benefit: $1,853
Nevada
Annual surplus: +$432Total monthly costs: $1,805Monthly housing costs: $423Median monthly benefit: $1,841
Tennessee
Annual surplus: +$156Total monthly costs: $1,870Monthly housing costs: $474Median monthly benefit: $1,883
Michigan
Annual surplus: +$132Total monthly costs: $2,056Monthly housing costs: $531Median monthly benefit: $2,067
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