Retirement: Living on Less

By 2035, millions of baby boomers might well be living a meager existence. That’s because today close to half of the households in the United States have absolutely nothing saved for retirement. Over the past 25 years, pensions have rapidly died out and their replacements—defined contribution plans—have been woefully underfunded.

Combine this lack of savings with the rampant increase in healthcare expenses—which manages to keep us alive longer than any other time in history, resulting in a greater need for assisted living and long-term care—and many folks are looking at a more pared down retirement lifestyle than they expected. Many will live solely on Social Security benefits.

In fact, very few retirees these days get to travel the world and live out their dream retirement. Most folks—or at least those who survive to a ripe old age—settle into an existence that derives happiness from spending time with friends and family, fixing up and then puttering around in their homes, and working on small, day-to-day goals. 

One way to prepare for living on less money during retirement is to start living on less before then. Learning to live within (or under) your means is part skill, part art—but it doesn’t necessarily mean you have to live without. If you start early and learn to live lean, retiring won’t seem like such a big life change.

Better yet, the more you tighten the belt today, the more money you can save for tomorrow. The following are a few ideas for how to make your money last over the long haul.


Even once you pay off your mortgage, owning a home can be expensive during retirement. Consider the annual cost of maintenance, repairs, property taxes, insurance and utilities for a large family home. With this number in mind, consider what you might save by moving to another housing option, such as a smaller home, duplex (with rental income from the other unit), townhome or condominium. It also may be worth considering moving closer to family to benefit from a support network in your later years. Bear in mind that it will be easier and cheaper for everyone involved if you live closer to them than if they must care for you from hundreds of miles away.


You might have enjoyed home-cooked meals for a large family, but in retirement there will just be one or two people in your home. Start learning how to cut down recipes, prepare simpler meals, and discover good values for dining out (like early-bird dinners for seniors). On the other hand, you could start inviting friends over more often to share meals and/or host regular potluck dinners. Break out those cost-saving meals you planned when the children were young, such as slow cooker recipes, and freeze leftovers so you always have a meal on hand. Consider cultivating your own garden to grow fresh herbs and produce.

Frivolities and Entertainment

When you’re working, a little retail therapy to make yourself feel better is simply a small indulgence. However, when you’re living on a fixed income, this habit might actually cost you a few meals. If you have troubles brewing on your mind, look for less expensive destressing techniques, such as taking a brisk walk in nature or inviting a friend over for coffee.

While you’re at it, think about what types of hobbies and social engagements you can engage in that won’t cost a lot of money. Walk instead of playing golf. Read novels instead of going to the movies. When it comes to periodic vacations, visit friends and family to save money on lodging and meals.

Cost of Living Increases

This year, Social Security recipients will benefit from a 2 percent cost of living increase—the highest since 2012. Still, this increase is anything but large in reality, with the average beneficiary receiving an additional $25 per month. Whether still working or in retirement, think about a strategy for what to do with windfalls, no matter how small. For example:

  • Put them in a savings account earmarked for emergency expenses
  • Set them aside to use for co-pays, prescription drugs and other medical expenses
  • Save them in a Christmas account for gifts next holiday season
  • Pay for a vacation, season tickets or some other entertainment perk
  • Upgrade to a better phone or computer at year’s end during holiday sales