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How to Save During Retirement Without Going Back to Work

Taylor Moore

Taylor Moore

Finance & Insurance Writer

4 min. read

After spending decades in the workforce, probably the last thing you want to do is work during your retirement. But according to a Bankrate survey from 2016, most Americans plan to do just that, and 62% of them said money was a motivating factor.

We want to help you conserve your money so that you can fund a full retirement and not ever need to go back to work. We talked to two finance experts who specialize in retirement, and they shared their top six tips for maximizing your money while you’re retired.

1. Create a realistic budget

The happiest retirees “know that they have enough money to live the lifestyle they want,” says Jane Bryant Quinn, author of How to Make Your Money Last: The Indispensable Retirement Guide. “It might have meant cutting back from levels they maintained while working, but they’ve come to terms with it.”

To be able to live the lifestyle you want, you’ll probably have to make some sacrifices. Alexis Abramson, PhD, generational expert, advises retirees to examine their variable budget expenses and prioritize what they care about most. “Go [into discretionary spending] first, trimming as you work your way down the list. Almost all budget areas offer opportunities to find savings.”

2. Take advantage of off-peak discounts

Abramson says that retirees can reap the financial benefits of not going to work everyday. Since you no longer have a 9-to-5, you may consider lowering your transportation expenses by selling your “work” car. Casual clothing is typically less expensive than business wear, and waiting to buy clothing when it’s on sale can save you even more. Senior discounts and “early bird specials” at restaurants are valuable money-saving tactics, too.

Retirement also gives you the freedom to move about, since you don’t have to plan your time around the workday and any allotted time-off. You can plan vacations for the off-season and golf on weekdays when it’s cheaper. You can even “volunteer overseas in countries such as Costa Rica, Italy or China and write off the trip,” Abramson says.

3. Consider downsizing

The house you may have raised your children in may not be the ideal home for your retirement. While it may be full of memories, it may also be full of too many things to maintain. Having to do chores all the time can become its own full-time job. “If your current home is too large and too expensive to maintain or if yard work is becoming difficult, consider selling and buying (or renting) a smaller home,” Abramson advises. This move could not only save you money — it could also save you time. Abramson adds, “Less time mowing the lawn and cleaning the house is time that can be spent traveling or enjoying a new hobby.”

4. Diversify investments

Whether you’re an experienced investor or a beginner, it’s important that you don’t keep all of your eggs in one basket. This is especially relevant as you don’t want to lose all of your savings accumulated over 40+ years in the event of an economic downturn or sour investment. Abramson says, “Balance your fear of losses with your need for gains by making smart choices about what percentage of your savings should be in safer certificates of deposit and other fixed investments, and what percentage should be invested. It’s best to make this determination based on your age, what you need the money for, when you’ll need it, and how much you’ll be withdrawing at a time.”

5. Switch to an online bank

For money needed in the short-term, you’ll likely need to keep your funds with a bank instead of a brokerage firm. However, that doesn’t mean you have to forgo potential earnings. Online banks, which do not have brick-and-mortar locations, tend to have much higher interest rates on savings accounts and CDs than traditional banks. Our top picks for online banks are all insured by the FDIC, offer nationwide ATM access, and 24/7 customer success. It’s relatively quick and painless to transfer your money to an online bank.

CDs from online banks, in particular, are valuable because of their competitive interest rates, which are higher than those of savings accounts. CDs have a guaranteed rate of return, though it’s important to note that you must keep your money in them for the entire term length to avoid early withdrawal penalties. Quinn says, “They’re not for money you’ll need tomorrow, but for one-year or two-year money.”

6. Leave room for fun

Perhaps most important of all, don’t lose sight of the benefits of retirement and why you’ve saved diligently for so long. Quinn believes that everyone should make room in their budget for what they enjoy the most. “I encourage retirees to work out a plan that lets them spend on the things that make them happy rather than save compulsively.” She adds, “I had to beg a friend to replace a lost tooth – she had more than $1M in investments but still was afraid to spend.”

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