How to survive on $15,000 a year

"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 percent 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 $1,082.30 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 skill to multiply your effective income to a level far greater than it could be made with ordinary cash.

One of the benefits of the last 50 years is that prosperity has raised our expectations. We expect to own our house, to have our own bedroom, our own bathroom, our own car, our own phone (preferably mobile), our own TV set, 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. While 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 non-shared living. That's why one spouse, or both, suffers 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 $1,000. From that she has to pay $400 for land rent and $300 for the loan payment on the manufactured home. That leaves only $300 a month for food, clothing, transportation and everything else.

It's not a pretty picture.

Now let's imagine the same person as she creates a "family" of retirees. She has a 1,400-square-foot doublewide with four bedrooms and two bathrooms. Let's see how things change as she builds her "family" and they pool their income to share their expenses.

• With one roommate with the same net income, the household income doubles to $2,000. That leaves $1,300 after shelter expenses. That's tight, but two people can eat and buy other necessities with $1,300 a month. In effect, each person has $650 a month to live on after shelter expenses, simply by living together.

• Add a second roommate and income triples to $3,000. That leaves $2,300 after shelter expenses. Each person now has $767 a month for living expenses beyond shelter.

• Have a third roommate and income quadruples to $4,000. This leaves $3,300 after shelter expenses. With this much shared income, each person has now has $825 a month.

There are limits to this, of course, but the cost of shelter is the beginning of communal sharing, not the end. The same group of four could share meals, share a car and anything else they can agree on. Suppose, for instance, the group decides to share a car that costs an average of $300 a month. And suppose food costs $400 a month for the first person and $200 a month for each additional person. What happens?

Do that and the single person living alone goes from a deficit of $400 a month to a surplus of $200 a month -- just by sharing with one person. Build the community to four people and each will have a monthly cash surplus of $450 a month. That's $450 a month after food, shelter and transportation. These four retirees would have group income of $48,000 a year, on which they pay no taxes. While their individual income was at the poverty level, their collective income is about the median pre-tax income of all American households -- $48,201 in 2006.

Note that this is not a utopian commune or a spiritual community. It's just four retirees figuring out how to get along in a trailer park. Some readers -- perhaps R.S. -- will say that making such arrangements isn't that easy.

They'd be right. But sharing offers a major "return" for being creative and flexible. Cooperation is a wonderful but generally overlooked substitute for money.