01/31/2013 08:27 am ET

Retirement Planning Doesn't Have To Be Scary Or Expensive

"Affordable" and "retirement" are two words that haven't been used in the same sentence a lot in recent years, making retirement planning stressful for many nearing retirement age. Declining home values and incomes aren't helping, either, and most aren't taking rising health care costs into consideration (an estimated $240,000 out-of-pocket surprise). It's no wonder 34 percent of 60-to-64-year-olds surveyed by the Pew Research Center said they were "not at all" confident that their assets would carry them through retirement.

But it doesn't have to be that way, says Jeff Yeager. The author of "How To Retire The Cheapskate Way"' has written about adapting our lifestyles to work toward the affordable retirement of our dreams, profiling people he calls "black-belts of smart spending."

"I attempt to extract from those people and their stories the common attitudes and practices they have when it comes to savvy money management and life," Yeager wrote in an email to Huff/Post50. "Hopefully any one of any age, regardless of their retirement dreams and lifestyles, will find advice that they can use to plan for and enjoy their retirement more."

Sounds great, but how does it work? Yeager lists four things that "cheapskate" retirees do to prioritize their money management, listed from most to least importance.

1. "Reduce your dependency on money as much as possible, thereby reducing your need for greater cash flow." Cheapskate retirees in the making can do this in part by going back to money management 101 -- learning the difference between a want and a need and not living beyond their means.

2. Stay healthy. By keeping the doctor away, you can work to earn supplemental income when necessary and avoid the backbreaking costs of catastrophic medical expenses, Yeager writes.

3. Safeguard your assets (both liquid and fixed) as you obtain them. "The easiest dollar you'll ever learn is the one you've already earned and don't lose or waste," Yeager writes.

4. Attempt to maximize the growth of your portfolio and other assets as time and interest allow.

We were bowled over by the concept, so we spoke to Yeager to learn a little more about the "cheapskate way" of retiring.

What does it mean to have a cheapskate retirement? Does it mean downgrading your quality of life when retirement planning?

It’s not about living any one particular retirement lifestyle or dream, and it’s certainly not about leading a life in retirement that’s filled with sacrifice and deprivation. It’s about deciding what’s really important in your life –- and in your retirement –- and finding ways to achieve those things by being a smart-spender. The premise of the book is that you can enjoy whatever retirement lifestyle you’d like, and do so for less than you might think possible... or at least less than a lot of folks spend. It’s also not necessarily about amassing a huge nest egg, but it’s about making the most of whatever financial resources you have available.

How do cheapskate retirees look at retirement differently than the typical retiree?

From a financial perspective, for most cheapskates retirement is not the type of radical adjustment many Americans experience when they retire. Cheapskates have been living within -- and often below -- their means for much or all of their adult lives, whereas many Americans only begin to live according to their means and a household budget at the point they retire. In that way, cheapskates have been “test driving” their retirement lifestyle and budget all along, and I think that’s a very positive and comforting thing to do. [But] no matter where you are in life, it’s never too late to start by borrowing some pages from the cheapskate playbook.

That’s not to say that cheapskates don’t make lifestyle changes at the point they retire, although they tend to remain very active and engaged in retirement. In many instances cheapskates view retirement as a chance to “reinvent themselves,” not to sit in a recliner and watch TV. From setting sail for years on end on the high seas (yes, it can be done for cheap!) to turning a hobby or other interest into a mini-business (what I call “selfish employment”), from volunteering and spending more time with family and friends, cheapskates remain very active [in] retirement and can enjoy it more because they have their financial houses in order. In short: Better retirement living through frugality.

What would you say is the biggest roadblock getting in the way of people's retirement? How can they overcome that roadblock?

The conventional wisdom would be that most people fail to start saving early enough in life for retirement, or that the economy in recent years has caused many people’s retirement savings to implode and, as a result, they’ve needed to change their retirement plans and dreams. And those things are indeed true and important. But the point of my book -- and it should be a comforting message -- is that while you have little control over the income side of your finances, everyone has a least some control over their spending and consumption... although admittedly many American’s seem to be AWOL in that regard!

I think a reluctance to set priorities and grapple with the spending side of your personal finances is a huge barrier in most people’s retirement planning. Figure out what is really important in your life and retirement (hint: it’s often things that come without a price tag). A big part of that is treating personal debt like the plague. Cheapskate [retirees] believe that the biggest asset you can have when entering retirement isn’t something you have -- like a massive 401k, although that’s nice -- but rather something you don’t have: DEBT. In short, their approach is “retire your debt before you retire yourself,” and they show you how to do that primarily through smart-spending as opposed to get-rich-quick investing schemes.

What are the areas people can cut the most from to save for their retirement?

The two most important money-moves cheapskates make are limiting/eliminating debt from their lives and setting in motion automatic, relatively painless ways to incur savings on an ongoing basis.

In terms of debt, the average American is now projected to pay more than $600,000 in interest during the course of their lifetime! Cheapskates rack up huge lifetime savings -- and so they can set aside far more for retirement -- by keeping debt out of their lives as much as possible and, when they do take on debt (usually just for a home mortgage), paying it off as quickly as possible.

Cheapskates live by the old-school rule that “If you can’t afford to pay for it now, you simply can’t afford it.” Cheapskates don’t confuse “affordability” with what I call “borrowability”; in other words, just because you can borrow the money to buy something doesn’t mean you can afford it. For example, of the cheapskates I’ve surveyed, they tend to buy homes that cost only about 70 percent of the amount their bank tells them they can qualify to borrow to buy a home. How un-American is that?!

Curbing expenses is something that’s most effectively done when you make it automatic and routine, just like if you’re trying to lose weight: a crash diet isn’t likely to have a lasting impact, but rather you need to change your dietary and exercise lifestyle on an ongoing basis. So those are the kind of cost savings tips I try of focus on, everything from investing in the energy efficiency of your home, which can save you thousands of dollars each and every year, to driving a manual transmission automobile (if you need to own a car at all), which should save you about $30,000 over the course of your lifetime. And lots of little, ongoing savings measures, too, such as switching to a more convenient bank to eliminate “foreign ATM fees” (who gets any joy out of paying those?); always checking your grocery receipts for errors (about 30 percent of the time there are mistakes there that cost you); and drinking tap water instead of bottled water, which could save you more than $1,400 per year if you’re currently drinking only the bottled stuff!