Smart SpendingSmart Spending

5 ways to retire on a small income

Saving a bundle during your working years is not the only way to prepare for retirement. Follow these tips to improve your chances of being comfortable -- and happy -- later in life.

By MSN Money Partner Nov 11, 2011 11:48AM
This post comes from David Ning at partner site U.S. News & World Report.


We all want to be happy and comfortable in our golden years. To get there we focus on saving money every month, investing for the long term, and figuring out when we should retire.


A huge step in the right direction is to be financially free by the time we leave the workforce, and one of the quickest ways to get there is to make more money. However, asking for a raise or finding a more lucrative job are not strategies everyone can pursue. Luckily, there are many ways to prepare for a secure retirement without a large income. Here are five ways to improve your chances of having a comfortable retirement.


Focus on income.

One of the main reasons we fear retirement is because of the lack of steady income. Most people in their working years attempt to increase their net worth, ignoring how that lump sum can be translated into a stream of income for the future. As a result, they have to deal with the emotional impact of always seeing their nest egg decrease as they withdraw from their savings in retirement. Instead, focus on setting up income streams for retirement.


Cut spending.

One of the most efficient ways of reaching your retirement goals is to cut your expenses. When you are able to reduce how much you spend, you can not only save that extra money, but also learn that you need less to live a comfortable life. If you end up saving too much for retirement you can always inflate your lifestyle later. Post continues below.


Hang out with frugal people

No one wants to be called cheap. But what's deemed cheap in some social circles is admired in others. If you enjoy living frugally, then you will find it even more enjoyable meeting others who share your passion.


Enjoy your hobby, not the buying process.

Many people spend quite a bit of money on their hobbies, and they blame their passion for the increase in spending. I'm sure there are ways to enjoy the same hobby without buying so much stuff. Do you really need a different camera lens for every situation to enjoy photography? Is it a necessity to have the latest equipment to appreciate a sport? Learn to enjoy the hobby rather than the impulse spending. You might actually discover a whole new perspective towards your hobby.


Find a company where you like working.

Let's face it: Most people want to retire early. Yet people never quit their jobs if they love what they are doing. Some people will tell you to find a job in an area about which you are passionate, but the company has to have the right culture too. It doesn't matter how much you love the line of work if your boss is always being unreasonable. Find a company where you love the people and culture, and you will naturally be more passionate about what you do. When you enjoy your work, you can work well past traditional retirement age and still be happy.


More on U.S. News and MSN Money:


Nov 14, 2011 9:39AM

I retired a few years back at 55. I didn't have any money in the bank, and only a very small pension

  to support myself. (But I did have a couple of things going for me.) One was health insurance, I'm a veteran and the VA takes very good care of all my medical needs for very little cost. Secondly I was lucky enough to own my own home with no mortgage on it. (I just pay the monthly utility bills, and yearly property taxes.) I also don't owe anything. I learned to live without credit, credit cards, etc., so if I don't have the money to pay cash for what I want? I don't get it! I travel any place I want, and have all the material things I need. But here’s the funny thing about not having any credit history is that you can't get a loan for home repairs. (I can get a car loan though.) I tried a few months ago to get a home loan for some house repairs, and when I sat down with the local loan officer at the bank and he pulled up my credit score, he was astounded to see it read 0,0,0. He smiled and told me he had never seen this before, and he was sorry he couldn't help me. I smiled and told him that was okay. So here you have someone who owns their home, has a steady income. But because they have no credit history they can’t get a home improvement loan. Maybe I’ll start doing seminars and showing people how to live on a small income.

Nov 14, 2011 5:52AM
I retired at 65 and am 71 now,my wife is 69 and also retired , We live on our s.s. and medicare. We have medical insurance through my wife's company. We have no Bills  except the normal house hold expenses. electric ,water , etc. Our house is paid for . We have our 401's but never tap into them . We have money left over at the end of the month. We get 3300 a month between us in S.S. We really don't want for anything. Life is good , so far.
Nov 14, 2011 7:18AM
I'll add a comment that mirrors these 2 comments.  I live a most comfortable life and we prepared for retirement in the same way.  No debt and small house and gardening - in a rural area.  No stress and freedom to walk this earth in peace.
Nov 14, 2011 2:36PM
My husband just retired at age 56 after 34 years of work.  I quit work 20 years ago to be a homemaker, so we did this mostly on one income.  We are very comfortable.  Anyone can do it.  As mentioned by the previous posters, the biggest secret is to have no debt.  Here is how we did that:  We bought our first cars with loans.  After they were paid off, we kept the same payments going into our credit union to save for the next cars, which were purchased with cash.  We kept all our cars 10+ years and paid cash for them.  We paid off our home in 15 years by making a game out of seeing how fast we could pay it off.  Any windfall monies and raises went against the mortgage.  We used credit cards for convenience and air miles, but paid them off in full every month.  No exceptions.  If the money was not already in checking, we did not buy it.  We maxed out our 401(k) and IRA contributions every single year, paying ourselves first and living off the rest.  We saved from birth for our one child's college education.  He attended one year of college for free as a high school student, so now there is money for a year of graduate school.  We are middle class and live in a nice home.  We have 9 fruit trees and a veggie garden on our suburban lot.  We eat out only about once a month, preferring instead to cook delicious meals with our fresh produce.  We are frugal, but not kooks.  We are generous.  We have a great life.  You can too!
Nov 14, 2011 3:15PM

With very few exceptions, how you will live in retirement is based on how you live when working.  If you are a spender and have to always have the latest this and that, you will never be able to retire the way you want to or maybe not at all.  If on the other hand, you save from the start of your working career, live under your means, and continue to hone your knowledge of financial matters, you will probably be able to retire early if you wish to.


IT IS ABOUT CHOICES - WHETHER THEY ARE WISE OR FOOLISH!!!  Many people are apart of the DUMB MASSES - always having to try and keep up with other people or surpass them.


I will be 62 next April (will start my SS), and have been unemployed for over 2 years (36 years in the now corrupt banking industry).  Although we have a 92 Honda with 281K miles and a 1998 Toyota with 190K miles, they run great and look fine.  We have no credit card debt and only a small mortgage.  I have investments outside retirement made in the mid 80's thru mid 90,s as well as IRA's (traditional and Roth) and 3 former 401K accounts from previous employers.  I also have a small pension from my last employer.  My wife also has IRA and 401K from former employers.  


Health insurance is an issue.  We are trying to live healthy and exercise.  Spending time with my 93 year old Dad and doing work in my church is much more satisfying then trying to make some corporate goon wealthy! 

Nov 14, 2011 2:31PM

We are very well set up for retirement(SS, Pension, 401k and savings) and our only current debt is the house and cars.

but part of our plan involves selling the bigger family home and using that  money to either move into a smaller 1 story home...or rent...when the big house becomes too much and pocket the difference (it will be paid off before we retire).

Also, we plan to (if health allows) to have part time jobs to keep active and involved (also keeps us out of each others hair, a big concern for US,,,lol)...this would be "free" money for doing the little things in life.

Finally, we plan to live simply...enjoying family and friends

Nov 14, 2011 2:19PM
Thanks to all of the 6 commentors below, you have virtually told your stories just exactly as I have made my plans, and that has reenforced my beliefs that this is what must be done in this economic environment.
Nov 14, 2011 1:33PM
the fact is ss is not enough (1136) x month, I live in my condo all paid for, but utility, insurances ( car, health supplement, medications, diapers for incontinence,   etc....etc....) and the  money is gone. N0w I have food,clothing,  gas and registration ,cleaning lady ( I'm 82 and partly disabled).
I have some money into the IRA, from that I take  enough for propriety taxes and  some to leave on. All together I need a minimum of 24-28 thousand at  year, but i,m doing with less,
Any suggestion from any one? What can I do before, my IRA  is all gone?
Any suggestion well be appreciated. Thanks

Nov 15, 2011 5:29PM

Start to prepare for retirement early.  I am 41 years old and would consider myself very lucky.  I recently had open heart surgery to fix an anuerysm/valve problem.  After this experience you quickly realize that working is not everything only a part of a fulfilled life and that family and friends are the only items with true value.  I am about 6 months away from paying off my mortgage.  Our mortgage payment will then go into a retirement/college account.  I have 3 kids ages 11, 9 & 3.  My wife and I have both committed ourselves to retiring in our mid fifties (55-58).  The trick is to live within your means and always save first.  Do not buy on credit.  A happy and fulfilled life for most is not the possessions owned but the family and friends that you surround yourself with.  Be kind to everyone.  I would also say many people who don't retire have not developed interests or hobbies away from work.  Work to live a simple life and keep your home, work and relationships uncluttered.

Nov 14, 2011 5:38PM
I agree with KickitKickit, retirement is all about attitude both before and after a working life. Most people will pick a random number that they want to retire with, never giving a minutes thought to how much income they will need. In reality, it is a matter of having enough sustainable income to live on during your retirement years. The challenge is to continue to put some back for yourself and spend the rest. The second most important aspect of retirement is carrying no debt. It is easy to convince yourself that you need something when you really don't. When I think that I need something, I try to always sleep on it first. It is amazing what a good nights sleep will do to your thought process.  
Nov 14, 2011 1:26PM
I agree with most things in this article. I don't want to hang out with those frugal cheapskates. Each one wants to be cheaper than the next. You can find many free things to do with those who will spend a dime or two for laughs. Fishing out of a Zodiac raft is little overhead and big fish as you sneak up on them. Same people retired as their was at work. Some have fun money or not and those he never really get there. You fall apart - dental, medical so you will need an emergency fund. - In this stage of the game long term is tomorrow.   Smile
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


Smart Spending brings you the best money-saving tips from MSN Money and the rest of the Web. Join the conversation on Facebook and follow us on Twitter.