What to Do If You’re Running Out of Retirement Money

Make the most of a disappointing nest egg with these strategies.

Older woman holding a small amount of change

Downsizing early and cutting off adult children, among other things, can help you avoid running low on funds in retirement.

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You know you should save for retirement. How much, when and what strategies to use are exhaustively dispensed by financial planners, accountants, economists and personal finance columnists. But what if you're already retired? What if you’re sure you're going to be around for a long time to come – but your money isn't?

It's a universal fear. In a 2010 Allianz Life Insurance Company poll of 3,257 people ages 44 to 75, 61 percent said they fear running out of money during retirement – more than they fear death.

As you've probably guessed, you don't have a lot of great options if you're in this situation. Gene Diederich, CEO and principal advisor at Moneta Group, a wealth management firm in St. Louis, lays out the path for most people: "For those in such a situation, there is often not much they can do but be frugal with their spending, take a part-time job, consider a reverse mortgage and get with a financial planner to maximize the return on their remaining nest egg."

Still, those ideas – and the ones below – may help remove some of the tarnish on your golden years.

[See: 12 Surprising Facts About Boomer Retirement.]

Downsize. If you've been living larger, start living smaller. The most obvious strategy is to sell your house, especially if the home is paid off and you'll receive substantial income from it.

"I know it’s hard to let go of the family home, or the home you have felt comfortable in for many years. However, the upside to getting rid of this big expense is the reduced stress and financial relief you will gain in knowing you have more cash now available," says Leslie Tayne, a financial attorney and debt specialist who runs Tayne Law Group, P.C., in New York City.

Maybe you need to sell your home and buy a smaller one. Or sell one car, if you and a spouse have two. Or perhaps it's medications that are killing your budget. Sandra Nohavicka sees a lot of that. She’s a licensed clinical social worker at the Visiting Nurse Service of New York, the largest nonprofit home health care agency in the U.S.

"The average retired person over the age of 80 takes approximately 11 medications a day," Nohavicka says. She says anyone with high co-payments or those who have hit the ‘doughnut hole’ – in Medicare Part D, the point where medication is full price – should check out needymeds.com, which offers information about patient assistant programs. "Some of my patients get one or all of their high cost medications for free," Nohavicka says.

You may be able to turn back the clock. Not as far as you'd like, but if you're under age 70, and you started collecting Social Security within the last 12 months, "you can repay everything back to Social Security, and it'll be like you never claimed it," says Kenn Tacchino, a professor of financial planning at Widener University in Chester, Penn. "And then you delay claiming it until you're 70."

It makes a lot of sense to wait, assuming you're in good health and will be around a while to enjoy that regular stream of income. Here’s why: If you claim Social Security at age 62, you'll receive 75 percent of your retirement benefits. Hold off until age 66, and you get 100 percent. But if you wait until age 70, you'll receive 132 percent of your benefits. Every year you wait up until age 70, you'll receive 8 percent more.

Earn supplementary income. Sure, you could try going back to work full time or get a part-time job, but what about renting out a room or sharing your place? It wouldn't necessarily have to be with a stranger – a friend or family member might know someone.

[See: 10 Ways to Start Earning Extra Money Now.]

Cut off any adult children. It likely won't be a big money saver, but this is a good time to talk with adult children who are constantly draining your resources, Tayne advises. "It's time to be frank with the kids," she says. "You have limited funds and while you love and care for them, you can only do so much for them while ensuring you still have enough to support yourself."

Consider a reverse mortgage. You've probably seen or heard the commercials. Reverse mortgages allow homeowners to leverage the equity in their house to get a stream of revenue flowing back in, right now.

"They always get a bad rap because of the fees," Tacchino says. But he says reverse mortgages can still can be a good option for some retired people who want to maintain their lifestyle and remain in their home. You'd likely want to get a government-issued home equity conversion reverse mortgage, Tacchino says. There are essentially three ways you get income from your house, he says: "You can get a line of credit, receive your money in monthly payments or in the form of a lump sum."

On the plus side, he says, it might be the perfect solution for an individual or couple who want to live in their house as long as they can and don't mind that there won't be a home to pass onto the children.

Which isn't to say you should do this. "You're still having to maintain the house, pay taxes and utilities as well as other maintenance," Tayne says. "All of this is likely to make less sense further into retirement years."

But it depends on the person. You may be in your 90s and find shoveling snow or mowing the lawn good, healthy exercise. You may think it's better to pay someone else to do it. Or you may be nodding your head in agreement with Tayne. If you like the idea of a reverse mortgage, however, you would be smart to consult a financial planner, which leads to the next bit of advice.

Consult a financial planner. If you have ample assets but are afraid of what's to come, Tacchino says, "I would always suggest looking for a planner. Retirement can get complicated, and the right planner can help you manage your money so it lasts longer."

[Read: How to Choose a Financial Advisor.]

Or consult another professional. If you're truly broke, start getting into the habit of asking for advice from every service or organization you can think of.

For instance, Nohavicka suggests that any retired person who has served in the armed forces contact their local Veteran's Administration office, ask to talk to a benefits specialist and see what programs are available to help stretch your dollar.

"Some veterans are entitled to pensions, assistance with medical care, housing, home care services, nursing home care and even in some instances, housing," she says.

Nohavicka adds that many retired people she comes across are unaware of their retirement benefits, which may be dwindling, but some companies and unions still offer them. She offers the following advice for people talking to professionals about their retirement benefits, but it could apply to anyone looking for help: "Ask questions. You might be pleasantly surprised with what answers you get."