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What to do if Your Money Runs Low in Retirement

If this is something that is concerning you then be sure to read through these tips and guides.

How to get 5 for 2

You are 65 and don't have quite enough money, so work two more years past age 65.

Save your government super, and any surplus income.

After two years you might have saved say $30,000 to $60,000. Since you are two years older, your retirement savings have to last two years less, and the extra savings could easily give you a better standard of living for an extra 5 years.

Work your money harder for an extra 2%

A conservative diversified portfolio is likely to earn (on average) an extra 2% over and above bank rates over the medium to long term.

Say $150,000 invested at 2% above bank rates – $3,000 pa x 20 years – an extra $60,000 above bank rates.

Other retirement cash and income sources

Subdivide your property.

Go fruit picking in season.

Rent out your house and do live in property management.

Operate a bed and breakfast from your home.

Use old skills & work from home – carpenter, cabinetmaker, motor mechanic, sewing, remedial teaching, consulting, doing locums, teach one-on-one maths, English or art

Work part-time for the people who bought your farm or business, or for your previous employers.

Manage a business for someone who works seven days a week and needs a break.

Sell your house and buy two units – live in one and rent out the other.

Rent out your spare room.

Downsize but not too soon

Trade down your home and buy a smaller one, but not too early in retirement.

Be careful about moving and alteration costs – a hoped-for $100,000 can soon drift down to $50,000. Calculate all your costs carefully and get advice before signing anything.

Move to a cheaper town

Lots of them in NZ – Kaitaia, Foxton, Wanganui, Oamaru, or Ekatahuna.

Not ideal but cash in hand is a whole lot better than staying put and living on the breadline.

Retirement villages – fall back may not work – a one-way street

You pay $400,000 for a unit in a village and decide five years later that you want to leave.

They deduct 25% to 30% from the purchase price ($100,000).

You get $300,000 – ouch! Not a problem if you don't need to exit, but it is if you might run low on money.

Much later on

Live in a granny flat in your children's backyard (preferably with wheels).

Reverse mortgages (RAM)

Last resort only – get good advice first.

Sell your house progressively to your children

Complex but can be a win-win – more cash flow for you and an investment for them. Work together for the common good.

Don't be hasty or over-react

Don't be hasty, and keep any assets that you can fall back on up your sleeve for a rainy day.

And get good advice before making any major move or decision.

Buy Alan's Book in the GrownUps Store now.

This article was supplied by Alan Clarke who is the author of a book entitled "Retire Richer" which is a practical guide for everyone age 25 to 85. Alan also writes a regular blog on

Alan is an independent authorised financial adviser (AFA) and his disclosure statement is available on request and free of charge.