How To Retire On Less

Only a few years ago during the booming economy, many Americans were asking themselves when will they retire, not can they afford to retire.

With many retirement investments worth a fraction of their previous values, people nearing retirement age must carefully weigh their options.

The New York Times columnist Fred Brock explores the changing landscape of retirement in his book, "Retire On Less Than You Think."

He tells The Early Show co-anchor Harry Smith you don't need to save 70 to 80 percent of your pre-retirement income as the mutual fund industry advises.

He notes, "Those people are selling products. They want your money. What you need to look at is not your income. You need to look at your expenses. Look at expenses pre-retirement and expenses post-retirement. Expenses will dramatically drop post-retirement."

Part of assessing your future needs is to ask yourself some questions, Brock says, "I think the most important question is, do you want to retire. The baby boomers are kind of changing that question a little bit because, as a group, they're not going to retire in a traditional way, like being on vacation all the time. They're going to want to do things. They're going to want to work. They're going to want to do hobbies. They're going to want to travel."

So you have to consider what you would like to do at that time, he says,noting that people now are looking at retirement as a different phase of their lives.

He notes, "They might continue to do something but on their terms, under their own circumstances, at their own pace. Where you live, that's a tough question. But, in fact, if you live in one of these expensive coastal cities in the United States like San Francisco, New York, Washington, Boston and you own a home that's mostly paid for, you can probably sell that house and move to many, many parts of the country where the cost of living is dramatically less."

So if you're going to retire without that 70 or 80 percent cushion, there are certain things you need to do:

Consider Moving - Brock explains, "You may have to move. You're not going to retire in Manhattan, for instance. Or take a reverse mortgage. There are ways it could be done. But you might have to move. That may not be so onerous. You don't have to go very far or very far out of Manhattan before the cost of living goes down. Western Pennsylvania comes to mind as a potential spot around here. You sell your house, take the assets from your house, move to a new location; buy a house, live mortgage free. All of a sudden you have no mortgage or work-related expenses. Your cost of living goes down dramatically."

Cut Expenses – Brock says, "You give yourself a raise when you cut expenses. There's a wonderful Web site called It allows you to compare cost of living in various cities around the country. If you compare New York or San Francisco to places in the Midwest or the South or the southwest, you'll discover that you can live 50 percent to 60 percent cheaper. Now, imagine if you don't have a mortgage and you don't have work-related expenses. Then you live even cheaper."

Be Flexible - As you project forward, Brock says, it is important to be flexible and willing to re-evaluate your assets to turn them into cash.

He explains, "My wife and I have no children. We live in a four-bedroom house. We've got a basement. We've got three computers, seven telephones, two cars: typical suburban disaster. When you retire, you don't need all that. Get rid of that. You don't need four bedrooms. There are some who say, 'I want to have a house big enough for my grandkids. Why have a house big enough for them to visit you twice a year? Let them go to a hotel."

As for Social Security, conventional wisdom says not to rely on it. But Brock points out, "There are so many people in companies and around the country that would like to retire. They're in their 50s, early 60s. They would like to retire. They're scared they can't because they're listening to all these scare stories. Social Security is rock sound."