7 Ways to Manage Spending in Retirement

New retirees may need to make their retirement savings last for several decades. When the regular paycheck is gone, it's important to properly manage your spending needs to sustain a healthy retirement nest egg. If your daily living expenses are unnecessarily high, you'll have less money left over for things like visiting family, bucket list travel and higher cost leisure activities.

Keep your spending in check by utilizing these seven ways to manage costs in retirement.

1. Create an income strategy. When you enter retirement, your spending money will come from various sources instead of a paycheck. Before you can start planning your spending, you'll need an income strategy to make sure the money is available to spend.

Determine a monthly spending budget based on your liquid assets and life expectancy, then aim to start each month with that amount in your primary checking account. Supplement your Social Security and any pension money received with annuity payments, transfers from savings and investment income. Funding your checking account with no more than your maximum spending amount on the first of the month will make following your budget easier.

[See: 10 Costs You Can Eliminate in Retirement.]

2. Maintain a budget. Budgeting is a key to personal finance success. Planning out your spending every month and following that plan will help to ensure your retirement savings will last.

Budgeting doesn't have to be complicated. A simple pen and paper budget will do. Broadly define your regular spending categories to make tracking your budget less tedious. If you like details, consider a free online tool such as Mint.com to automatically import data and track your money. Create special budgets for one-time large expenses such as home repairs or vacations.

Build in wiggle room and modify you budget month to month. The main benefit of budgeting is knowing exactly where your money is going so your spending doesn't go awry.

3. Simplify. As you approach retirement, aim to simplify your finances as much as possible. Simplification will make it easier to manage your spending and investments, freeing more time for enjoyment and leisure.

One approach is to close all but one credit or debit card and use it for all your spending. You can also limit yourself to just one checking account and one savings account. Consolidate your investments into one brokerage for ease of access and tracking. Then eliminate any wasteful spending by cutting out unused subscriptions or services that require a monthly fee.

The fewer accounts and recurring expenses you have, the easier it is to manage and track spending. As a bonus, you'll have less online logins and passwords to remember.

[See: 10 Costs to Include in Your Retirement Budget.]

4. Automate. Once you've simplified your financial life, manage your bills from your desktop computer or smartphone using the electronic bill payment service available from your bank. Most financial institutions provide many online services for free. You can also automate investment withdrawals and fund transfers to ensure you have enough money in your primary checking account at the start of each month.

Automating your finances might be uncomfortable if you've always managed things manually, but you remain in complete control and can always make adjustments. Make sure to save your passwords and logins in a secure and memorable location. Inform your partner of where the information resides and document how you've automated your finances.

Automation ensures you won't miss a bill and stabilizes your cash flow. Plus, it gives you the flexibility to live more and worry less about money.

5. Prioritize health care. Proper health care coverage is paramount to a happy and financially secure retirement. Make health insurance your top spending priority every year. Understand all the available options in your locality and choose the one that best suits your needs. Ensure you and your spouse are adequately covered at every stage of your retirement so a medical bill doesn't throw a wrench in your budget or long-term goals.

6. Downsize to save. Housing costs account for the largest portion of monthly expenses for many Americans. Entering retirement in a paid-off home or affordable rental that suits your needs is ideal. Having a large mortgage payment can jeopardize your retirement security. Retirees should aim to keep housing costs as low as possible to free up money for other living expenses.

Consider downsizing to a smaller home to unlock home equity and decrease your housing expenses. Smaller homes require less maintenance and have lower taxes and utility bills. For your new home, choose a location convenient to your family, health care and basic living needs. When you downsize to a smaller home, the unlocked equity from your previous residence can be used to increase your comfort level, charitable giving or to fund exciting new experiences.

[See: 10 Ways to Reduce Your Housing Costs in Retirement.]

7. Embrace frugality. After years of working and managing a family household, additional free time in retirement allows for more thoughtfulness and creativity when planning for purchases. For example, a gift that may have been a store-bought item during your working years can now be handcrafted in your spare time. The extra time will enable you to be a more conscious shopper, find sales on items you need and pass on stuff you don't. Around the house, sell, donate or repurpose unused items to declutter and add comfort to your home.

If you're capable, consider a do-it-yourself project instead of hiring out work around the house. When the restrictions of time are lifted in retirement, you're empowered to complete the projects that were put off for so many years.

Over time, savings from frugality and DIY projects will add up, freeing more money to spend on higher priority living expenses and experiences.

Craig Stephens is a blogger at Retire Before Dad.

Craig Stephens is a blogger at Retire Before Dad where he writes about investing, personal finance and travel. He aims to retire at age 55, one year earlier than his Dad did. You can follow him on Twitter @RetireBeforeDad.