My parents are in their early 60s with no savings, a mortgage, and $2,400 in Social Security – where can they afford to live?

A Reddit poster recently turned to the Internet to get some advice about his mom and dad. The poster is concerned about their retirement prospects as they have very little savings and are barely making it.

He's trying to figure out where they can live and what they should do in order to be able to have some semblance of security in retirement. Here's what the original poster (OP) had to say, along with some tips for his mom and dad to salvage a retirement with few assets.

Key Points

• A Reddit poster’s parents are struggling to live on $2,200 per month.

• They have equity in their home and probably need to sell.

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A disabling injury and a lack of investments have left parents in trouble

According to the OP, his parents had little education, and his dad damaged his back at his farming job and had to quit work. He got a $100K settlement, which wasn't really enough, and he and his wife lived off that money while they waited to become eligible for Social Security.

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They're now bringing in a combined $2,200 per month from Social Security, and his mom makes a small amount of extra income with babysitting but isn't in a position to earn much since they live in a small rural town and she was home with the kids without a career. They didn't understand retirement savings, so they have none, and no pension funds are available from Dad's job.

His parents have a mortgage that costs $1,500 per month, a $300 car payment, and can't make the bills with their $2,200 monthly checks or the amount Mom earns babysitting, so they have to figure out another solution. The poster is wondering if they should sell their home, and where they should live to stretch their limited income enough.

How to salvage retirement without investments

The OP believes his parents should sell their house, and that's probably the right move as a starting point, since he said they have around $500K in equity in the property and have an expensive mortgage. If they sell and get $500,000, they could invest the funds. This could produce around $18,500 in extra annual income at a safe 3.7% withdrawal rate. That would provide a lot more wiggle room in their budget -- especially if they could find a place to live for under the $1,500 a month they are currently paying.

However, a standard property sale is not the only avenue available. Because the parents are in their early 60s, they are facing a critical pre-Medicare healthcare funding gap where sudden portfolio income might impact eligibility for Affordable Care Act (ACA) premium tax credits. Alternatively, the family could explore utilizing a portion of the $500,000 equity to construct an Accessory Dwelling Unit (ADU) on a child's property to eliminate housing payments entirely, or look into a Home Equity Conversion Mortgage (HECM) to stop the monthly mortgage obligation without the disruption of relocating.