If you don’t want to outlive your money in retirement, then you’ll need a plan to make your money last for the rest of your life, no matter how long you live. Otherwise, with no plan, you’ll need to count on hope and luck, which isn’t the smartest choice.

Let’s look at each of these steps in detail.

Here’s the first thing to remember: Don’t spend your savings in retirement! You might think this doesn’t make sense because isn’t that what retirement savings are for?

Many people use their retirement savings as a checking account to pay for living expenses, and as a result, they spend too much, putting them on a fast path to outliving their money. Instead, you should use most of your savings to generate monthly retirement paychecks that will last the rest of your life

Once you set up your retirement paycheck generators, spend no more than those monthly paychecks in combination with other sources of lifetime income, such as Social Security, pensions, and any annuities you might buy. When you manage your spending this way, you won’t outlive your money.

Once you know how much lifetime retirement you’ll have from all sources, you have a target for the total amount of living expenses you can afford to pay. Next, inventory all your living expenses, both your regular monthly expenses and the expenses that are paid infrequently, such as property taxes and homeowner’s insurance. Be sure to separately itemize your “must have” living expenses from your “nice to have” expenses.

If your total living expenses add up to more than your total monthly income, you’ll need to reduce your living expenses. Your first targets for reducing spending might be your nice-to-have expenses, which, in theory, you could reduce if necessary. However, there could be large must-have living expenses that you could also reduce, such as downsizing to reduce your housing expenses.