1. Money
You can opt-out at any time. Please refer to our privacy policy for contact information.

How to Retire on Less

Enjoying Retirement on Far Less than a Million Dollars


Although many experts imply you can't retire with much less than a million dollars saved, each year many people retire with far less. While, of course, your first choice may still be to get that $1,000,000, your age and savings to date may dictate that such a goal is no longer achievable. Here are some tips to help you retire on far less than the experts claim you need.

Retire With Less Saved Tip 1 - Move Somewhere Cheap

If you live in a high-cost area like a big city or affluent suburb, trading down to a lower-cost area could save you a bundle. Real estate taxes and home prices tend to be much higher in some parts of the country than in others. Simply moving away from the coasts is another way to save some money, since most of the interior United States are far less costly places in which to live.

Moving out of the U.S. upon retirement has become increasingly more common as well. You can move to places like Mexico, Costa Rica, and other western hemisphere locales at a significant cost savings over staying domestic. Your new location might be just a bit warmer, too.

Retire With Less Saved Tip 2 - Delay Retirement and Receive a Higher Social Security Benefit

By delaying your retirement, you increase your Social Security benefit. While your normal retirement age varies based on the year you were born, your benefit rises each month you delay until age 70. Such a delayed retirement means you will need that much less saved when you ultimately decide to stop working, for two reasons. First, your monthly Social Security Benefit check will be bigger than an earlier retirement would have produced. Second, you will have that many years less to spend down your funds.

Retire With Less Saved Tip 3 - Pay Off Your House

If you get to retirement with no mortgage, one of the largest expenses during your working career - housing - disappears. During your final working years, consider focusing on eliminating all your debt, including your mortgage. It's amazing what you can afford on a fixed income if you don't have that big monthly payment taking a huge chunk of your cash every 30 days.

Retire With Less Saved Tip 4 - Get Rid of Car Payments

By the same logic, unless you're paying cash, don't buy a new car a year before you retire. Properly maintained, a car can last for many years after your payments cease. To follow this tip successfully, you'll need to buy - not lease - a car and not replace it every three years, as you might have done during your working years. Sure, you might not get a new toy as often as you once did, but I reckon most people in their seventies would rather drive a 8-year old car than begin a job search to pay for a 2-year old one.

Retire With Less Saved Tip 5 - Be Healthy

Medical expenses can eat up an enormous amount of your retirement savings - even if you're fortunate enough to have good insurance. If you retire before you qualify for Medicare, your previous health will be a major factor in the health insurance rates you pay. While proper eating and exercise habits do not guarantee good health, they do increase your chances of not needing expensive medical procedures. Give yourself the best chance to save some money and live a more productive retirement by following healthy habits.

Retire With Less Saved Tip 6 - Have a Pension

Increasingly rare in the private sector, defined benefit pensions remain common for many government workers. The existence of a meaningful pension benefit alters the entire calculation of how much you need to retire, allowing you to stop working with far less money, since you'll receive a pension check every month during retirement.

  1. About.com
  2. Money
  3. Retirement Planning
  4. Planning by the Decade
  5. How to Retire With Less Saved

©2014 About.com. All rights reserved.