How to Retire on a Shoestring

8 ways to stretch your retirement dollars.


Kilbea frequents discount stores, watches for grocery store sales, uses coupons, and tries not to eat out too often to stay on budget, even while she continues to work 30 hours per week as an aging specialist. She also changes her furnace filter regularly, unplugs her toaster, and has her TV on a power strip so it won't waste energy when not switched on. She's gradually switching all the light bulbs in her house to energy-efficient compact fluorescent bulbs.

Downsize your house. Housing, including mortgage interest, property taxes, maintenance, utilities, and furnishings, costs $13,273 annually for the average senior between the ages of 65 and 74, according to the Department of Labor. But housing prices vary greatly by region. "If you're living in a really expensive neighborhood, you can look around a little farther out or move into a rental apartment," says John Howell, author of Retirement on a Budget. "Your utilities will also be less because it costs so much less to heat a 10-apartment complex than individual houses."

Or you could move to an area with a more affordable cost of living and lower property and income tax rates. Hotvet recently had a client sell a pricey home in Pasadena, Calif., move to Oregon, and pocket the difference. "I've been to all 50 states," he says. "And there's lot of nice neighborhoods in the other 49 states that cost a lot less than California."

Tap your home. The value you've built up in your home can be tapped for emergencies. "If you own your home outright, you can start to draw down the equity of your home through a reverse mortgage as a solution of last resort," says Jean Setzfand, the director of financial security at AARP. A reverse mortgage is a loan against your home that doesn't have to be paid back as long as you live in that house. Homeowners 62 and over are eligible for reverse mortgages. After you pay a variety of fees on the loan, you can get a lump sum, monthly payments, or a credit line based on the value of your house.

"If you don't need the money today, you might want to wait until you are older because the more equity you have in your house, the more money available to you to draw on," says Barbara Stucki, director of home equity initiatives for the National Council on Aging. Most financial advisers agree that reverse mortgages should be employed only in extraordinary circumstances and not be used as an excuse for failing to save.

Get all the benefits you're entitled to. Most people know that they can sign up for Social Security beginning at age 62 and Medicare at age 65. But if you truly need extra money to help pay for prescription drugs, healthcare, and utilities, the National Council on Aging's can help you find and navigate the complex eligibility rules for federal, state, and local programs that you might not be aware of.

Find low-cost or free activities. Retirees have more leisure time, so entertainment expenses can actually increase in retirement. But you don't always need to go to a movie. Instead, David Smidt, president of, recommends checking out national parks and museums, especially those that offer free or low-cost admission to seniors. In many cities, seniors can also pay lower rates for public transportation. "Especially in local shops and stores, they may not advertise a senior discount, but if you ask for one, sometimes they'll give you that 10 percent off anyway," Smidt says. Another reason Smidt says you have to ask for discounts: "Employees don't want to presume that someone who is 40 years old is a senior."