Making your retirement savings last

Many Americans are concerned about their financial readiness for retirement, according to surveys. A recent survey of middle-class Americans found that 48 percent of respondents were not confident that they could save enough “to live the lifestyle they want” during retirement.

The median amount of retirement savings dropped from $25,000 in 2013 to $20,000 in 2014,  and one-third of middle-class respondents reported not saving anything for retirement. Even among those with substantial retirement savings of $50,000 to $250,000, a majority feared running out of money during retirement.

If you are concerned about your money running out in retirement, there are things you can do to help keep that from happening.

Take care of yourself. First, maintain good health. Healthcare costs are one of the top expenses during retirement, and a typical couple can expect to spend $250,000 on healthcare during retirement. Simple things like quitting smoking, moderate exercise on a regular basis, and eating healthy can go a long way to keeping medical expenses at a minimum.

Track your expenditures. You might also want to make a budget. Keep track of all of your spending and expenses for a month or two, and look at areas where you might cut back or eliminate altogether.

Despite their concern about retirement savings, many people don’t want to cut back on discretionary expenses to save for retirement: 33% weren’t willing to cut back on entertainment to save more, 30% didn’t want to cut back on meals out and 28% wouldn’t give up vacations, according to the survey results. Although 89% of people reported having a budget, 66% failed to live within it.

If your priority is to have sufficient savings for retirement, you may want to consider what expenses you can reduce now in order to save more for the future.

Examine your living circumstances. Home-related expenses such as maintenance and repairs constitute the bulk (43%) of costs for a those age 65 to 74. If your kids are independent and out of the house, you may no longer need as large a home. Although moving is expensive, it might be worth it in savings down the road. A smaller home may also enable you to save on property taxes and reduce stress.

You might even consider moving to a state where the taxes and cost of living are lower. Move to a cheaper state. This site can help you find a state with lower taxes. Of course, you should also consider whether you’ll like living there and whether it offer all of the amenities you desire.

If you’re adventurous, you might consider retiring in a foreign country. Thousands of Americans have done just that. Of course, you would need to take into account the expenses associated with relocating, the immigration process, and cultural change. But the cost of living, including food, transportation, entertainment, and healthcare, can be dramatically lower in other countries than in the U.S. with comparable quality. 

If you’re no longer commuting to work, you might also not need as many vehicles or may be able to switch to a smaller, more economical vehicle. You might also consider whether you can switch to a cheaper cell phone plan, cut back on the number of cable channels you receive, and even change your eating habits.

Eating at home is not only cheaper than dining out, it may be healthier. Many retirees are choosing to have most of their meals at home. When retirees do go out, an increasing number go to places where they can save on tipping. In 2006, 39% of restaurant meals taken by retirees were at places that had waiters or waitresses, but by 2014 that had dropped to 34%.

Look for savings. With the number of seniors in the U.S. growing rapidly, many businesses are offering discounts to retirees and those close to retirement. The largest expense for people age 65 to 74 was for home maintenance, followed by transportation, food, healthcare, entertainment, and clothing. There are ways to reduce costs in all of these areas. Seniors are often entitled to a  discount on apparel, dining, travel, and more. Groups like the AARP and sites like keep up-to-date information regarding the deals available for seniors, and many merchants have unadvertised discounts as well. It never hurts to ask.

Get cash from your assets. You can use your savings and other assets to produce an income stream. Annuities are an option, as are reverse mortgages if you own your home. Many retirees also look to bonds, real estate, and dividend stocks as a way to invest their savings for income. It’s important to consider the risks of any investments you consider, and also to make sure the investments are liquid enough to generate the cash you will need when you will need it.

How should you withdraw from your savings in retirement? This video gives some guidelines.

For additional information

This Vanguard calculator helps you estimate how long your retirement savings might last.

For discussions about savings withdrawal rates, see this Kiplinger article and this article by respected financial researcher and advisor Michael Kitces.

Saving money is a good way to stretch your savings. Visit the links page for leads to senior discounts and coupons.