You've worked hard all your life. You do not want to enter retirement worrying about how you are going to pay for medical costs, insurance, groceries and your other bills.

The key to living a comfortable and stress-free retirement is to draft a realistic budget and to cut out unnecessary expenses. If you do this, you'll greatly increase the odds that your retirement years will truly be your "golden" years.

Reduce your spending

Financial experts say that you'll need 70 percent to 80 percent of your pre-retirement income to live happily during your retirement years.

However, that is just a general statement. Only you can determine exactly how much money you'll need during retirement. That is why you have to set your budget.

For instance, you'll need more money if you plan to spend your retirement years traveling the globe or booking cruises. You'll need less if your retirement plans involve spending time with your grandchildren, playing golf with your friends or fishing on a nearby river.

Your health plays a role in your retirement budget, too. If you are already suffering serious health conditions, the odds are high that your medical costs will be significant during your retirement years.

No matter what kind of retirement you'd like to live, though, you'll have an easier time reaching your goals if you reduce some of your expenses. Remember, the lower your expenses, the more dollars you'll have to do what you want during your retirement years.

First, consider your home. You might no longer need all that indoor and outdoor space. Maintaining a large home takes much work. Larger homes also often come with higher property taxes and homeowners insurance bills. Consider downsizing to a smaller home, one that comes with lower property taxes, as a way to cut your monthly living expenses.

You might also consider moving to a less expensive community in which to live. With your children grown and out of the house, top-notch schools and busy parks might no longer be a consideration. This frees you up to consider moving to a part of town in which consumer goods and property taxes are both lower. It is not always easy to leave the community in which you've spent decades, but sometimes moving to a cheaper town makes good economic sense.

Look at your existing insurance policies, too, as a potential source for savings. Now that you've hit retirement age, you might no longer need to invest in life or disability insurance. You might not have children that depend on you financially, and your spouse might be able to survive on his or her own financially without life insurance payments. Ditching those insurance payments can add up to significant savings.

Speaking of children, be wary of providing them too much financial assistance as you age. Yes, you want your children to be happy. You do not want them to struggle to pay their bills or provide for their families. However, if you spend too much money supporting your adult children, you could accidentally eat away at your savings, leaving you and your spouse in a financial bind. As you hit retirement age, your priority is to make sure that you and your spouse are financially secure.

Working longer can pay off

You can stretch your retirement savings, too, by working longer, either on a part- or full-time basis. This extra income that you earn during your retirement years can help you cover your basic living expenses, allowing you to leave more of your savings untouched.

It is important, too, to understand the possible drawbacks of collecting Social Security benefits too early. You can begin collecting your monthly Social Security payments at the age of 62. When you do this, though, your payments will be reduced. In fact, your payments will be lower if you begin taking them before your full retirement age. Your full retirement age depends on your year of birth but will fall somewhere between the ages of 66 or 67.

There are times when it makes sense to begin collecting your benefits as early as possible. However, most financial experts agree that it is better if you are relatively healthy and expect to live past 78 to wait until at least 66 or 67 to begin collecting your monthly Social Security payments.