These days, many consumers are reeling from rampant inflation. And retirees on a fixed income are being hit notably hard.
If you've had to increase your 401(k) or IRA withdrawals to cover your living costs in recent months, you're in good company. But unfortunately, you could also be putting yourself in a position where you're spending down your savings too quickly. If you continue on that path, you could end up depleting your nest egg in your lifetime.
A better bet? Make these lifestyle adjustments to preserve more of your nest egg -- and avoid an even worse financial crunch down the line.
1. Go back to work
Many people don't relish the idea of working in retirement after leaving their careers behind. But if you keep having to dip into your savings to make ends meet, it's a move you should consider -- at least on a temporary basis.
The good news is that today's gig economy is booming, so the job you get during retirement doesn't have to be a traditional one that involves you answering phones at an office or helping customers at a store. Instead, you can take a hobby you enjoy and turn it into an income stream, such as selling baked goods for money or becoming a pet-sitter if you enjoy caring for animals.
You can also try leveraging some of your old job skills to pick up gig work as a retiree. If you're a former teacher, for example, you can sign up to be a substitute at your local school or become a tutor. And if you have a background in accounting, you can do freelance bookkeeping work for local businesses that may not need a full-time numbers person, but need help nonetheless.
2. Downsize your home
The decision to downsize isn't an easy one to make. But if you're rapidly depleting your nest egg just to stay afloat and you own a larger home that costs a lot of money to maintain, it may be time to consider shedding some square footage.
If you downsize from a larger home to a smaller one within the same area, you might end up spending much less on everything from property taxes to insurance to utility costs. That could make it so you're able to scale back on taking withdrawals from your savings.
3. Monetize your home
Maybe you can't bear to move out of your home, either because you're sentimentally attached or because you want to hang onto your larger space in case your adult kids opt to move back in. If downsizing doesn't work for you, try converting your home to a cash source, instead.
You may be able to rent out a finished basement or garage for a year while inflation is soaring and use your rental income to help pay your bills. You might also manage to rent out space in your driveway if it's large enough and you live in an area where parking is difficult to come by.
Don't whittle down your savings too quickly
You might think that withdrawing an extra $300 one month or $400 another month from your savings isn't a big deal as you attempt to ride out inflation. But remember, we don't know how long we'll be grappling with soaring living costs. And if you want to avoid a cash crunch later in life, then you'll need to find ways to limit the extent to which you tap your nest egg -- even if it means making some other sacrifices.