Q. You asked a good question in a recent column. It was about how many people really needed Social Security. But I’d like to ask the question differently. What if these people are still working?

I know someone who is a millionaire and still working. His wife just retired this year. They are both collecting Social Security. She has been collecting for about three years. He just started collecting this year.

If they are affluent and still working, should they be receiving Social Security? I'm sure they feel they deserve it; they've both worked hard. He has his own company. She was a college professor. But it seems it could mean no benefits later for those who really need it. ---M.C., Austin, TX

A. If he’s still working, is well off, and is receiving Social Security there’s a good chance he is paying back a good deal of his Social Security benefits in taxes.

Consider this:

  • He pays employment taxes on his earned income
  • He and his wife may also pay additional Medicare premiums if income is over $170,000
  • They’ll pay income taxes on 85 percent of their Social Security benefits
  • He’ll pay income taxes on his earned income.

When you net it all out, the couple might actually be paying more in taxes than they are receiving in Social Security benefits. Every dollar of taxes they pay is a dollar that our government would otherwise be borrowing to pay the benefits of the less fortunate people who are already retired and paying little, or nothing, in taxes.

Bottom line: this couple is probably filling the cup, not draining it.

Q. My sixty-year-old brother has practically no assets aside from his car. He’s also in marginal health. He has a job that pays about $50,000 a year and has health benefits. The company is a bit shaky, so there’s it’s not a sure thing that he will have this job until he retires. He lives in an apartment.

We are about to come into an inheritance from our parent’s estate. He will net about $170,000. What is the best way for him to invest this money? Should he buy a house outright for cash? Should he put fifty percent down on a house/condo and pay less monthly than his current rent? Should he put it in a Couch Potato portfolio?

This money is critical to him. Outside of this inheritance, Social Security is all he will have to live on once he retires. ---J.L., San Antonio, TX

A. The first thing to remember is that your brother has lots of company. As the Social Security Administration regularly points out, 41 percent of all single retirees receive at least 90 percent of their income from Social Security. Among couples, 21 percent receive at least 90 percent of their income from Social Security. So millions of people are in the same boat.

Here are three major levers on retirement expenses:

  • The biggest single expense for retirees is shelter. That means wise use of some of the inheritance money can make the difference between getting by and going under. The best solution I’ve observed is to own a manufactured home in a resident-owned community. They are common in Florida and California, but relatively rare in the rest of the country. It is possible, however, to buy a unit and the land under it for less than $60,000 and have monthly ownership expenses under $300 a month.
  • Another opportunity is expense sharing. Two can’t live as cheaply as one, but there are big economies when two people share expenses, whether married or just friends. This suggestion usually brings cries of “yuck” from readers, but those without adequate retirement income can “create” income by developing their social skills and learning what it means to be amiable.
  • Then there is smart spending. Financial planners have suggested that one of the reasons our spending declines in retirement is that we finally have the time to become smart shoppers. In a society of relentless up selling, being a careful shopper can pay enormous dividends.

These three tools have one thing in common. They depend on individual initiative and flexibility.