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Good News? Most Spend Less When They Retire, Stretching Savings

NEW YORK ( TheStreet) -- Amid all the scary warnings about retirement, there's a comforting statistic: On average, retirees spend less as they get older. There's less travel, less dining out, fewer expensive toys.

Of course, the idea of winding down an active lifestyle is not really something to look forward to, but at least it reduces the odds of outliving your money . And savvy planners can reduce retirement risks by preparing a good fallback plan, a low-cost way of life that would be as satisfying as possible.

So just how much does retirement spending decline, and how solid are the numbers?

"Households led by people ages 65-74 spent, on average, $40,685, about 12% less than those in the 55-64 age band," writes Christine Benz, director of personal finance for Morningstar , the market-data firm. "Those age 75 and above demonstrated an even sharper drop-off in spending: Their average expenditures of $30,946 were 24% lower than those of the 65-74 cohort."

Similar results were found in another study looking at the same households over time rather than different ones in various age brackets, Benz says, noting that cuts in spending for such things as travel more than offset increased spending on health care.

But here's the catch: How do you know these were voluntary spending cuts, not belt-tightening due to shrinking assets? How many perfectly healthy people stop going on cruises or visiting national parks because they just can't afford to? On this, the data are less clear, Benz says. She notes, though, that one study showed that wealthy people tend to reduce their spending, too.

Of course, the averages may not apply in your case.

Obviously, the less you spend in your early retirement years or the later you start retirement, the more you'll have in the later years. But who wants to give up all the pleasures of an active retirement to prepare for a worst case that may never occur?

One option is to devise two retirement plans: the one you hope to follow and a fallback that, though cheaper, could be satisfactory.

For many people, the primary plan relies on the traditional 4% rule, which says you can spend 4% of your retirement assets the first year and increase the dollar amount to match inflation in each year that follows. While this is a good general plan, it pays to be flexible, or else drawing a steadily increasing sum would chew too deeply into your nest egg in the years stocks and other assets dip in value.

In other words, make sure your fixed costs for things such as housing, utilities and food are well below the amount you plan to withdraw. That way you can trim discretionary spending -- for things such as travel and entertainment -- whenever the financial markets are mistreating you or you face an unexpected expense such as a health bill or big home repair.