10 Ways to Lower Retirement Costs

5. Spend taxable accounts first. It’s generally better to spend money that you have now and pay taxes on that first. The idea is to continue to defer taxes on your retirement accounts for as long as possible. “It clearly makes sense to take advantage of low capital gains tax rates and low taxes on dividends,” says Adam Bold, founder and chief investment officer of The Mutual Fund Store and author of The Bold Truth About Investing: Ten Commandments for Building Personal Wealth. "It is likely that there will be higher tax rates in future years."

6. Avoid investment fees. Administrative, investment, and transaction fees erode your nest egg over time. For example, paying an annual fee of just half a percent of your account balance can reduce the purchasing power of your savings at retirement by one-eighth over a 30-year career, according to the Center for Retirement Research at Boston College. And even after you stop contributing to your retirement accounts, many of the fees continue. “Go to the Web site and look up the expense ratio on the funds you have available. You can sometimes cut your expenses by 75 percent or more,” says David Loeper, president and CEO of Wealthcare Capital Management and author of Stop the Retirement Rip-off: How to Avoid Hidden Fees and Keep More of Your Money. Consider lower-cost mutual funds. “You can have a globally diversified portfolio covering all risk parameters for less than 75 basis points. That should be the absolute maximum," he says.

7. Find more affordable housing. Slashing your housing costs can give your nest egg a quick boost. Raymond Branz, 77, sold his 2,200 square-foot home on Florida's Marco Island and moved to a condo in Naples shortly before he retired from the real estate business in 2000. “We sold our home for twice what we bought the condo for,” he says. In many cases, there's little reason to hold onto a large house once the children move out. Also, consider moving to a low-cost locale in the States or even abroad where the cost of living and taxes are lower.

[See 8 Tips for an Affordable Retirement Abroad.]

An increasing number of retirees are living with their adult children, which can cut costs for both generations. You can provide affordable (or no-cost) childcare for your grandchildren, and you'll also have more people to assist with eldercare should you need it. Fanchone Myers, 66, a Spanish teacher in Malakoff, Texas, moved into a separate building on her adult son’s property about a year ago and now spends much of her free time with her three-year-old grandson. “We go fishing at a pond and that doesn’t cost much,” she says. “He can cast really well and reel them in too. That’s my entertainment.”