These Retirees Live Well, and Frugally

When Gary Pierce, 63, a former commercial real estate broker, retired 14 years ago, he and his wife moved out of their house and onto a sailboat in the Caribbean. Although they had to purchase the boat—he says a comfortable one goes for around $50,000—they cut their living expenses to less than $1,000 a month. "Instead of buying tailored suits and an Hermès tie, you can just slip on swim trunks." They lived on their boat for eight years before switching to an RV, which they drove around the United States for four years. "It's more affordable than a house," says Pierce, partly because there's no pressure to keep up with the neighbors.

[Slide Show: America's Best Affordable Places to Retire.]

Seniors are increasingly incorporating such frugal habits into their lives, but not all of the changes are so big. They're also being more vocal about asking for deals, tracking coupons, and using retailer benefits such as gift registries in order to save money. In many cases, it's out of necessity: A survey by the Transamerica Center for Retirement Studies found that 4 in 10 working seniors said they were just getting by or paying off debt, up from 35 percent in 2007. Some 45 percent said Social Security will be their primary source of income after they retire.

That's one reason Jan Cullinane, coauthor of The New Retirement: Revised and Updated: The Ultimate Guide to the Rest of Your Life, recommends asking for better deals from companies, a technique that's worked for her. After being disappointed in a monogrammed mat that wasn't returnable, she wrote to the store's president and received a $135 gift certificate in response. She also obtained free breakfasts for her family on a recent vacation to Key Largo, Fla., after asking the Hilton for the deal. For seniors who make long-distance calls, Cullinane recommends Skype, which lets users make phone calls through the Internet. She and her husband rely on Skype to stay in touch with their son, who lives in Japan.

Another technique for managing everyday expenses involves leveraging gift registries: Although they're often thought of as the domain of newlyweds, Cullinane says retirees can also use them. Cullinane, 55, and her husband, 62, registered for everything from bedding to dishes after they relocated to Palm Coast, Fla. Rather than signing up to guide others who might purchase gifts for them, Cullinane says they saved money when they purchased the items for themselves, because registries often come with periodic discounts. "It's a way to save money while we were spending it," she says.

[See: "Retire Early? Maybe With These Frugal Steps."]

Some retirees are also looking to earn extra income on the side during their retirement. Stacy Hammond, director of client experience at Charles Schwab, says that one client, a former banker, studied horticulture and now works in a nursery. Another became a short-order cook at his country club for 20 hours a week in exchange for free membership that allows him to play golf as much as he wants. "We're hearing from so many investors that they are working longer or working part time. The downturn in their portfolios can be made up for with part-time income," says Hammond.

Dorothy Atkins, 68, ramped up the small greeting card company that she'd been running from her home in San Jose, Calif., after accepting a buyout package from her job in the financial sector in her early 60s. "I needed something to pad my income after I'd retired," she says, and she also didn't feel ready to stop working altogether. Now, she spends several hours every day painting, designing, and selling her cards.

[Slide Show: Best Places to Retire on the Water.]

Catherine Collinson, president of TCRS, says she's also heard of retirees turning to creative living arrangements, including moving in with grown children and, for single seniors, teaming up as roommates, Golden Girls style.

Pierce, who writes about cheap living on his website at www.frugal-retirement-living.com, says his retirement account lost half its value in the wake of the stock market declines in 2008. After living in the RV, he and his wife in 2004 settled in Surprise, Ariz., a suburb of Phoenix, where Pierce says the cost of living is relatively low. If his budget gets too tight to maintain his house, then, Pierce says, "we'll go back to the RV."