We all know we're supposed to save money for retirement, but saving money during retirement is a different story. While adding to savings may not be on most retirees' radar, here are a few good reasons to aim to pad your nest egg each year rather than simply deplete it.

1. Your needs might evolve

There may come a point during retirement where it feels like you're just coasting along. You have enough income to pay your living expenses, and there's even a decent chunk left over to buy you some entertainment and leisure. But what happens when your circumstances change, and suddenly you need to increase your annual withdrawal rate to keep up with your newly incurred expenses?

Senior couple with piggy bank

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That's why it's helpful to keep saving money in retirement -- you never know when you might start needing more of it. Take healthcare, for example. You might spend more on medical expenses in your 80s than in your 70s, which means the more you have saved, the better off you'll be. Also, don't forget that as you age, your likelihood of needing long-term care increases. If you don't have insurance to cover things like nursing homes or assisted living facilities, you'll need to be extra vigilant about stashing away money here and there.

2. You want more flexibility

Maybe you thought you wanted to retire in your suburban town, only to realize you're craving city life as you age. The problem, of course, is that living in a city is often more expensive than suburbia, so if you want the opportunity to make a move, you'll need the money to do it. The more you save, the more options you'll have for pretty much every aspect of retirement, whether it's where you live or what you do with your time.

3. You have a family to think about

If you're single and don't have family, there's no reason not to spend your entire nest egg on yourself. But if you have a spouse or children of your own, you should know that the more you add to your nest egg during retirement, the more opportunities you'll have to be generous with your loved ones. You might, for example, choose to leave some money behind to your grown children, or experience the gratification that comes with seeing how your openhandedness makes their lives easier. And if you have grandchildren, the money you save would no doubt be a welcome addition to their respective 529 plans.

How to save money in retirement

When we think about saving money during our working years, we typically mean not spending our paychecks in their entirety. Saving money in retirement, however, can take on different forms. It could mean working a side job or starting a business to generate income to add to a savings account, or it could mean making smart choices to earn money from investments.

You can pull off the latter in a number of ways. For one thing, resist the urge to dump your stocks in favor of safer investments. You can shift some of your portfolio into bonds, but if you're in your 70s, for example, keep a good 40% of your assets in stocks for higher returns.

Along these lines, load up on income-producing investments like dividend stocks and ETFs. This way, you'll get paid just for holding them, even if market conditions turn unfavorable and you're not seeing much in the way of capital gains.

Finally, invest in a manner that minimizes your tax burden so that you're able to retain more of your profits. Choose municipal bonds over corporate bonds to enjoy tax-free interest income (you might also avoid taxes entirely if you buy bonds issued by your home state), and hold investments for at least a year and a day before selling them to avoid short-term capital gains.

Just because you're retired doesn't mean it won't serve you well to save money. The more you manage to sock away during your golden years, the more choices you'll have for yourself and your family.

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