Did you know that more than 6 percent of student loan borrowers are over the age of 60? Most are paying off loans taken out for children or grandchildren.

Although generous, holding debt as a senior makes retirement more difficult. Judicious spending and saving are important at any age, but are particularly essential for those over 50.

Wouldn’t it reduce your stress considerably to know you were on track to retire with buckets of money? The buckets represent money destinations, such as fixed expenses, variable expenses, savings and taxes. Fixed expenses are those that you don’t have much control over in the short term (one year), such as mortgages, property taxes and education loans. Variable ones are everything else—the ones you could trim in an emergency or to improve your bottom line.

These buckets are very different sizes. The variable expense bucket is like a water glass that you drink and refill frequently. It’s a smaller container because you refresh it every payday.

The fixed expenses bucket is larger. You contribute to it every paycheck, too, but your expenses are larger and sometimes infrequent. They’re often stored up for months at a time until a big bill—insurance, property tax, etc.—comes due. Since the expenses are fixed, you can determine how much of each paycheck needs to go in this bucket by totaling your annual fixed expenses and dividing by 12.

The savings bucket may be the hardest to contribute to. If your variable expenses fill a drinking glass and your fixed expenses fill a cooking pot, your savings bucket might fill a large recycling bin. It might seem futile even to attempt to contribute to this one since the drinking glass and cooking pot are so much easier to fill. But fill it you must.

The latest figure shows Americans save about 4 percent of their income on average. At that rate, it could take 25 years to save one year’s worth of income. A one or two-year retirement doesn’t jive well with our longer life spans and expectations of an enjoyable and stress-free retirement.

In contrast, a 20 percent savings rate will grow to about 25 times your annual income in approximately 40 years. At that point, you could likely draw 4 percent per year forever. Social Security can reduce that requirement somewhat, and any pension to which you’re entitled reduces the required savings percentage further. 

For maximum retirement flexibility, you can build up several funds from which you’ll draw your income. Tax-deferred accounts like IRAs and 401(k)s enable you to hold and grow your income pre-tax until you withdraw it. Roth IRAs hold already-taxed deposits, so there’s no further tax to pay. Individual accounts (such as a personal savings or brokerage account) are not tax advantaged. They are the most flexible, which also increases the risk that you’ll withdraw funds before retirement. With funds in each of these instruments, you can alter your withdrawal schedule depending on your tax situation in a particular year.

An underrated benefit of sticking to a high savings rate is getting used to a simpler standard of living. The obvious benefit is that it is fiscally conservative, helping you prepare for whatever surprises await you. An unexpected illness or accident is a lot more likely than an unexpected windfall. Health costs can wreak havoc if we live too close to the financial edge.

I’d argue that a simpler lifestyle is also better for the psyche and better for the environment, too. The best things in life may not always be free, but there’s freedom in not needing expensive experiences to enjoy life.

Finally, living more simply improves your ability and frame of mind for sharing your wealth with whatever causes most touch your heart. This may be elevating the world’s poor or contributing to medical breakthroughs. It could include funding your children’s and grandchildren’s educations, after you’ve taken care of your own retirement.

Organizing your financial life will ease your whole life, even if your financial picture is worse than you imagined. The truth will set you free—free to live and free to give buckets of money.

Common retirement money misconceptions