Retirees' new pastime: Cutting costs in all sorts of ways

— -- Many retirees are finding their golden years tarnished by low returns on investments and smaller nest eggs than they'd hoped. Meanwhile, longer life spans, increased expenses — particularly rising health care costs — plus a volatile stock market and low interest rates on savings have baby boomers facing tough choices.

While seniors don't necessarily have to give up trips to see the grand-kids or spend afternoons clipping coupons before heading off to an early-bird special, eliminating some unnecessary expenses and keeping an eye out for ways to save can help keep precious dollars at home.

Not your parents' retirement

"This is the first generation that is experiencing multidecade retirements, and this is happening in a world where the burden for retirement planning has shifted from corporate big brother and traditional defined benefit pension plans to each of us individually with a three-legged stool of Social Security, employer based/IRA type retirement savings and personal taxable savings," said Manisha Thakor, CEO and founder of MoneyZen Wealth Management.

"That's a huge shift. It means you have to figure out how to make your retirement funds last much longer than previous generations, in the absence of fixed monthly pension to help define your budget for you," she said.

According to a new study from Fidelity Investments, the typical U.S. worker would face as much as a $2,100-a-month shortfall during retirement if current trends continue.

So just how will retirees bridge the gap?

While there are well-established guidelines when it comes to spending retirement funds, far fewer parameters apply when it comes to creating a budget and evaluating expenses.

"When it comes to budgeting in retirement, the chicken and egg debate is how much weight to give to fixed costs vs. discretionary costs." Thakor said. "Or said slightly differently, do you focus on the lake house — big things — or the lattes — little things?"

Move or downsize?

Many seniors look to their largest asset, their home, as a starting point for bringing in some much-needed cash while simultaneously cutting expenses.

"If you are not using every room in your house every day, there's a good chance you may have more home than you need," said Thakor. "Obviously, this isn't a great market to be selling into, but the key is really thinking about whether you are using all that space you are paying for."

Thakor also suggests homeowners ask themselves how much time and money is being spent on home maintenance vs. leisure and recreation.

"When your abode becomes an upkeep burden, which often can be the case with those alluring second homes, it's time to reassess," she said.

Selling the family home and purchasing or renting a smaller dwelling usually means lower utility bills, taxes and property insurance. Plus, any equity made from the sale can be reinvested or used to replace lost income to help offset expenses.

Moving to a less expensive area is another way to get a bigger bang for your buck. Thakor says those who live on the East and West coasts are often stunned by how much you can get for your dollar in middle America.

"That's magnified in certain states with more favorable income-tax structures," she pointed out. "The flip side is that there can also be a great deal of enjoyment that comes from having deep roots and a history in the place you are currently living."