Tips for Retirees to Live Well on a Budget

Seniors are turning to second jobs, frugal habits and even RVs.

Older male florist standing with arms crossed looking and smiling at camera

To alleviate money concerns, retirees are earning extra income by working for themselves or others.

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When Gary Pierce, a former commercial real estate broker, retired 20 years ago, he and his wife moved out of their house and onto a sailboat in the Caribbean. Although they had to purchase the boat – he says a comfortable one goes for about $50,000 – they cut their living expenses to less than $1,000 a month. "Instead of buying tailored suits and a Hermès tie, you can just slip on swim trunks," he says. They lived on their boat for eight years before switching to an RV, which they drove around the United States for four years. "It's more affordable than a house," Pierce says, adding that there's no pressure to keep up with the neighbors.

Seniors are increasingly incorporating such frugal habits into their lives. They're also being more vocal about asking for deals, tracking coupons and using retailer benefits such as gift registries to save money. In many cases, it's out of necessity. The recession had a big impact on many retirees' and soon-to-be retirees' savings and investments, and not everyone was able to recover their losses in the years since.

That's one reason Jan Cullinane, coauthor of "The New Retirement: The Ultimate Guide to the Rest of Your Life," recommends asking for better deals from companies – a technique that's worked for her. After being disappointed by a monogrammed mat that wasn't returnable, she wrote to the store's president and received a $135 gift certificate in response. She also obtained free breakfasts for her family on a recent vacation to Key Largo, Florida, after asking the Hilton for the deal. For seniors who make long-distance calls, Cullinane recommends Skype, which lets users make phone calls via the Internet. When her son lived in Japan, she and her husband relied on it to stay in touch.

[See: 11 Easy Ways to Slash Travel Costs.]

Another technique for managing everyday expenses involves leveraging gift registries: Although they're often thought of as the domain of newlyweds, Cullinane says retirees can also use them. Cullinane and her husband registered for everything from bedding to dishes after they relocated to Palm Coast, Florida. Rather than signing up to guide others who might purchase gifts for them, the couple saved money when they purchased the items for themselves, because registries often come with periodic discounts. "It's a way to save money while we were spending it," she says.

Some retirees are also looking to earn extra income during their retirement. Stacy Hammond, a vice president at Charles Schwab, says one client, a former banker, studied horticulture and now works in a nursery. Another became a short-order cook at his country club for 20 hours a week in exchange for free membership that allows him to play golf as much as he wants. "We're hearing from so many investors that they are working longer or working part time. The downturn in their portfolios can be made up for with part-time income," Hammond says.

[See: 7 Ways to Take Advantage of Your 401(k).]

Dorothy Atkins, another retiree-turned-entrepreneur, ramped up the small greeting card company that she had been running from her home in San Jose, California, after accepting a buyout package from her job in the financial sector in her early 60s. "I needed something to pad my income after I'd retired," she says, adding that she also didn't feel ready to stop working altogether. Now, she spends several hours every day painting, designing and selling her cards.

Catherine Collinson, president of the Transamerica Institute and Transamerica Center for Retirement Studies, says she's also heard of retirees turning to creative living arrangements, including moving in with grown children and, for single seniors, teaming up as roommates, "Golden Girls"-style. Other options include taking on contract, part-time or freelance work.

[See: The Best Side Business Ideas for Busy People.]

Pierce, who writes about cheap living on his website frugal-retirement-living.com, says his retirement account lost half its value in the wake of the stock market declines in 2008. After living in the RV, he and his wife in 2004 settled in Surprise, Arizona, a suburb of Phoenix, where Pierce says the cost of living is relatively low. If his budget gets too tight to maintain his house, then, Pierce says, "we'll go back to the RV."


Updated on May 20, 2014: This story was originally published in June 2012 and has been updated.