How to Play Defense with Retirement Savings

Want to win in retirement? Think like a head coach.

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Winning teams are built on offense and defense. If you equate your retirement planning to a sports team, you would most likely consider your investment portfolio as your offense. Scoring goals and making money are similar. But very few winning teams are built on offense alone.

That is where your defense comes into play. When it comes to retirement planning, your defense is finding ways to reduce your expenses. Three large expenses that affect many retirees are housing, taxes, and debt. Here is how you can reign in those expenses to better plan for a long retirement.

[See America's Best Affordable Places to Retire.]

Reduce your housing expenses. Housing expenses are the largest monthly bill for most people. Finding ways to scale back on your housing costs can go a long way toward improving your standard of living both now and in retirement. There are several ways you can go about reducing your housing expenses. One is to downsize to a smaller and less expensive home. This should result in lower property taxes, less maintenance, and a nice check if your house is paid for or a lower mortgage payment.

Another way to reduce housing expenses is to refinance your mortgage to a lower interest rate. Mortgage rates are currently near all time lows, which makes this a good time to refinance. Refinancing can save you hundreds of dollars each month and thousands over the duration of your loan.

Minimize your tax bill. It's almost impossible to avoid paying all taxes, but there are several ways to reduce or defer taxes. If you aren't tied to one location you can move to a state that doesn't tax pension or Social Security income. Don't want to move? Used tax advantaged retirement plans such as a 401(k) or IRA. Opening a Roth IRA can be a great move if you are eligible because you pay taxes on the income now, and you can make tax free withdrawals when you reach retirement age.

[See A Simple Way to Become Wealthy.]

Eliminate your debt. Debt will destroy a fixed income, especially if you only make the minimum payment. Getting out of debt may seem like a daunting task, but it is something you can do yourself. You don't need to pay a debt consolidation firm or debt management company to do this for you.

A tried and true way to get out of debt is the debt snowball method. Debtors should determine how much they can afford to pay each month. Then use that money to make the minimum payment on all debts except the smallest debt, which you direct any left over money to. When you pay off the smallest debt, you direct the extra cash to the next smallest debt and repeat the process. The payments snowball with each debt you eliminate, making the debt reduction process easier.

Also, consider transferring your credit card balance to a card with a lower or even 0 percent interest rate. You may be able to consolidate several high interest cards into one 0 percent interest rate card, saving hundreds of dollars in the process. But pay attention to when the low trial interest rate ends and make payments above the minimum while still at the low interest rate.

[See Tax Breaks for Retirement Investors.]

Well rounded teams win championships. Your offense is important. You need to score runs to win the ball game. But if you have a good defense, you don't need to score as many runs to win. The same applies to your retirement planning. Continue investing and saving what you can, but work on reducing your expenses as well.

Ryan Guina is a U.S. military veteran, writer, and professional in the corporate world. He blogs at Cash Money Life and Military Finance Network.