How to retire on $12,000 a year

By Scott Burns

"Please write an article telling people with less than $15,000 a year of retirement income how they are supposed to survive." -- R.S., by e-mail

Millions of people face this predicament. According to the Social Security Administration, Social Security benefits account for 90% of income for four of every 10 unmarried retirees and two of every 10 married couples.

Another report on the Social Security Web site tells us that the average Social Security benefit for a retired worker is now $1,158.10 a month. That's before the Medicare part B premium of $96.40.

The solution here isn't more money or another government program.

The solution is social. It is called sharing, having enough social skills to multiply your effective income to a level far greater than it could be made with ordinary cash.

The prosperity of the past 50 years has raised our expectations. We want to own our house, to have our own bedroom, our own bathroom, our own car, our own phone (preferably mobile) and our own TV, and we want to eat what we want for dinner, not what everyone else is having. That makes life very expensive.

The productive social alternative is sharing. Economists call it "economies of shared living." Most of us think about it in regard to marriage.

Though two people can't live for the price of one, the cost of living doesn't double when you get married. Divorce, on the other hand, involves returning to the dis-economies of nonshared living. That's why it's common for one ex-spouse, or both, to have a lower standard of living after divorce.

Now let's examine how economies of shared living can benefit a retiree.

Imagine a single retiree living in a 55-and-over trailer park. She has a monthly net Social Security benefit of $1,100. From that she has to pay $400 for land rent and $300 for the loan payment on the manufactured home. That leaves only $400 a month for food, clothing, transportation and everything else.

It's not a pretty picture.

Continued: The benefits of sharing expenses

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