14 Ways to Stretch Your Retirement Savings

When you’re looking at the fast-approaching years of your planned retirement, you may be thinking about how much you’re looking forward to being free from a daily work schedule. But, if you’re like most folks, you’re also thinking about how on earth you’re going to pay for it all with your retirement savings.

It’s a rare person who can stare down their anticipated date of retirement without being concerned about financial planning and how they’ll fare after they’re no longer drawing a regular salary.

Fortunately, you can implement some proven strategies to help each retirement dollar work a little harder for you. The following 14 methods will help you stretch your retirement savings so that you can relax and enjoy your hard-won freedom from the daily grind.

1. Delay taking Social Security benefits as long as possible

Presently, adults in the U.S. can begin drawing Social Security benefits at age 62, unless they are disabled or legally blind. However, you’ll be entitled to draw your full benefits only once you attain your full retirement age, ranging from 66 to 67.

You’ll increase your benefits if you wait until age 70 to begin drawing Social Security. The downside of that approach is, obviously, that you’ll have to keep working (or have other sources of income) between full retirement age and your 70th birthday. The upside is that you’ll be entitled to a bigger draw. If your goal is to maximize your monthly income during retirement and you’re capable of working the extra three to four years, this is a good strategy.

2. Diversify your investments in a balanced portfolio

Make sure you’ve spread your investments between both stocks and bonds in a mix that can bring both growth potential and stability. In addition, your investments should reflect your risk tolerance. Generally, the closer you are to retirement age, the more secure and the less risky your investments should be. Diversification can help spread that risk among a broader base of investments, thus creating a more stable allocation of assets.

3. Resist the urge to dip into your retirement savings at every turn

Understandably, many retired people get nervous when their checking or savings account balances drop lower than expected. When you’re anxious about income, and not earning what you used to, it’s tempting to make up the shortfall from retirement savings. It’s also a bad habit to get into. Before you know it, that balance will dip dangerously, too.

Instead, aim to create an allocation of assets that you can rely on for regular distributions. That might include annuities (see below), dividends and interest payouts, or a segmented approach that spreads out your assets and their distributions for both the immediate future and the long term. Talk to a financial adviser if you’re unsure what the best way to accomplish this might be for your specific situation.

4. Create a budget and stick to it

A budget is a powerful tool that helps build financial security for life. It’s even more critical when you’re planning to enter into a period of life during which you’ll have a reduced or limited income. A formal budget will give you some certainty and power over what can sometimes seem out of your control.

To create a reasonable, workable budget, follow these six steps:

  1. First, list out your fixed and variable monthly expenses in separate categories.
  2. Highlight the expenses you can eliminate and those you can trim, together with the estimated final amount for each expense. Don’t forget to add in estimated sums for health care and entertainment.
  3. Add together the revised and estimated sums in both categories to get a monthly total. This is the amount you’ll need to cover with income and savings.
  4. Next, estimate your income from all sources, including pensions, annuities, 401(k)s, IRAs, and other financial accounts.
  5. Compare the two numbers to determine whether you have a shortfall or will be able to save additional money.
  6. If you’ll need to cover a gap between expenses and income, make a note of how much and use the other strategies listed here to help fill that gap.

A budget isn’t supposed to be a fixed, unchanging document. Instead, it should always reflect reality and whatever practical options you might have at hand.

5. Consider an annuity

Consider an annuity if you’re staring down an income/expenses gap. Annuities can help you generate guaranteed income for life so that you can manage your money more effectively throughout retirement.

In an annuity, you enter into a contract with an insurance provider that assumes the risk of a series of payouts over the years, in exchange for your investment of a single lump sum. Your future monthly payments continue for the rest of your life, thus guaranteeing you additional income.

6. Become a short-term landlord

You may not want to take on the burdens of being a full-time, long-term landlord. Still, services like Airbnb have created a whole new market full of travelers willing to shell out funds to stay in a room or ADU (accessory dwelling unit — a separate living space from your primary residence that’s built somewhere on your property).

With innovative marketing and the right price point, many Airbnb hosts earn a healthy monthly income stream to supplement their retirement income.

7. Become a rideshare driver

Another way to boost your retirement income and stretch those savings as much as possible is to sign up as a driver for Uber or Lyft. Rideshare drivers can set their own hours; thus, you can work as much or as little as you want. If you’re able to drive and you feel like this might be a good fit for you, being an Uber or Lyft driver can provide a healthy income stream in retirement, based on an equivalent hourly rate of anywhere between $8 and $12 per hour.

8. Downsize as much as you can

Selling a large family home and buying something smaller can help you reduce living costs considerably. As long as you have some equity in your home and you can find a cheaper living situation elsewhere, it’s a strategy you should consider.

While you’re at it, downsize your belongings. Make a list of items you no longer want to keep or maintain and then offer them for sale on sites such as eBay and Craigslist. List books, movie DVDs, and music CDs in relatively good condition for sale on Amazon. You can also hold a yard sale to generate some money from those items.

Finally, consider selling all but one if you have two or more cars. If you and your spouse or partner are no longer both working regularly, your transportation needs will likely change. A second vehicle may no longer be necessary. Selling one of those cars can help in two ways. First, you’ll get the purchase price of most likely a few thousand dollars at least, or possibly much more, depending on the age and condition of the vehicle. Second, you’ll offload those future carrying expenses such as gas, insurance, and maintenance. All of this can be a huge help for your retirement savings.

9. Move to a less expensive area

In addition to downsizing your home, consider relocating to a city or town with a lower cost of living. That way, even if you don’t increase your income at all, you can still benefit from making your limited funds stretch further. Look for articles from reputable sites that list out cities and towns with low CoL figures, narrow your list down to two or three choices, then schedule a visit to each to see which one feels best suited to your interests and needs.

10. Cut your expenses

Most folks think trimming expenses is the first thing you should do if you’re trying to stretch the spending power of your income. While other strategies may be more high-level and far-reaching in their impact, making lifestyle changes where you can to reduce expenses and costs is an immediate way to save money.

First, examine your regular recurring expenditures for places you can eliminate charges altogether or choose less expensive options. Your subscriptions, phone apps, cable TV, and streaming services are all great places to start.

You can also explore these other ways to trim your expenses:

  • Eat out less
  • Clip and save coupons
  • Shop at stores that offer deeper discounts and lower prices
  • Use mass transit when you can to save on gas and car maintenance
  • Shop around for recurring expenses such as auto and home insurance
  • Lay off the expensive coffee drinks and learn to make them at home
  • Invest in a water filter pitcher instead of expensive bottled water
  • Try to minimize your usage of water and other utilities

Finally, shop mindfully and really ask yourself whether you want to make that special purchase. Whether it’s pricey specialty foods, clothing, books — anything at all, really — take a minute and ask yourself if it’s within your budget. You can generally find less expensive options for almost anything you want to purchase.

11. Make catch-up contributions

If you haven’t put aside as much as you’d hoped by this point and retirement is looming, consider whether you can make catch-up contributions to your retirement savings. These are often allowed when you’re 50 or older. You’ll need to make the maximum allowable contribution in a given calendar year first, but then you can exceed that cap with additional funds so you can maximize your income after retirement.

For example, you’ll max out your contribution to the retirement plan offered by your employer at $20,500 in 2022, assuming you’re still working. However, if you’re 50 years old or older, you might be able to contribute an additional sum to that account to help top off your plan’s assets, up to another $6,500. Talk to your plan representative or HR officer at your place of employment if you’d like to pursue this strategy.

12. Consider a part-time job

Retirement from your career doesn’t necessarily mean you have to stop working altogether. Many retirees choose to take part-time employment to generate extra income and stay actively involved in the world. In addition, many employers are happy to hire more experienced older workers for part-time work.

13. Look for discounts

Lots of your favorite brands and establishments offer discounts to folks over a certain age. That age can vary widely, but is usually somewhere around 55 to 65 years old. Everything from hotel chains to your favorite restaurants to your neighborhood grocery store might offer some form of age-based savings or discount.

14. Stay as active and healthy as possible

Your most significant expenses in retirement, aside from shelter, are probably health-related. So it literally pays to ensure you stay in good health and get top-quality medical care when necessary. Most retirees in the U.S. are covered by Medicare, so it’s essential to start there and fully understand your options and coverage. Choose your supplemental plan carefully.

Staying active and being proactive about your health, from as early an age as possible, is the single best investment you can make for your retirement. Use your pre-retirement years to cement all the good-health habits you can to minimize your risk of disease and accident. Eat a healthful diet by eliminating processed foods and sugar and choosing nutritional whole foods whenever possible. Take great care of your teeth with flossing and twice-daily brushing. Stay physically active with daily walks and exercise. And make sure you get enough sleep every night.


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